These days, there is a lot of MLM and pyramid scheme talk. What are they? Are they different sides of the same coin?
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Tired of being a peasant, a lowly 9-5er, or a corporate slave? You can be your own boss, you can have the financial freedom of the “ቅባት ልጅ” you detest. You just need to work hard, have a positive mindset, and attend a seminar. That’s how it starts. So then, you go to the seminar because you are cool like that, willing to try anything and everything to accomplish your dreams. A seminar can’t hurt, right? There, you hear motivational speakers speak of the struggles they once faced, life coaches who are now the epitome of positivity, and mentors who have a God-fatherly figure who is welcoming and supportive. So, how do you get started? First, you need to buy packages. “Be a product of the Product.” Does it all sound familiar?
These days ,there is a lot of MLM and pyramid schemes talk. What are they? Are they different sides of the same coin?
What is Multilevel marketing?
Multi-level marketing has been around for a very long time. It is a strategy used by direct sales companies to sell and promote products and services. They encourage participants to recruit others into the program as participants. While they may not be pressured to do so, signing up new contractors provides a financial incentive for participants, who receive a percentage of the sales of their recruits and their recruits, and so on. MLM business models are a legal business model however, highly controversial the common practices in these business models are self-help content promotion, big conventions each year, and the “selling of dreams”. It all sounds appealing to the young and desperate, those who are struggling to make ends meet. In Ethiopia MLM is legal yet Pyramid schemes are prohibited by the law. So how do we distinguish one from the other?
Pyramid schemes: A marketing hierarchy or secret cults?
A pyramid scheme is a scam disguised as a business. Unlike MLMs, these schemes don’t make money from selling real products. Instead, recruits pay fees, and that money is used to pay the people above them. Those at the top get rich, while those at the bottom lose their savings.
The layers of the recruitment stage are like a grand staircase spiraling into the sky, each step a promise of wealth. At the base, eager recruits flood in, stacking the foundation. As the climb continues, the steps narrow, space dwindles, and fewer make it higher.Meaning if each person adds 5 people considering all the world’s population, by the 13th step, the ascent stops—no more room, no more recruits. The ones below bear the weight, their dreams crushed under the promise that only those at the top ever touch the treasure.
Remember "Fias 777"? It was one of those schemes where people exploit others, posing as a legit MLM or network marketing gig. Your profits just pay the folks above you. Struggling despite recruiting and buying? It's your fault. But hey, you can recruit more underlings—and they can recruit too. Still not working? You're just not positive enough.
Everyone wants a lavish life without financial stress—it's human nature. We're bombarded with info, self-help gurus, and positivity preachers claiming to want the best for us. Failing? They say it's your lack of mindset or attitude. Guilt and shame keep you in line, and questions aren't allowed. Sounds like a cult to you?
How can we recognize these scammers?
The red flags in this business model one must be wary of is that this so-called business model mainly focuses on recruitment. You live and breathe off bringing new flesh to the market making them purchase “The products”. You might have even got teary eyes from the quotes being thrown here and there like “Broke is a mindset”. They might have called you family, they might have even given you the care and affection your touch-deprived body craves. But beware these people are not your family. In the West, there are even stories of how predatory they are and how they target those who are already vulnerable. There is always a promise of high returns in a short period. These companies have no demonstrated revenue from retail sales. It is always something with financial statements and documentation, they convince you to simply “Take their word for it.”
So what are the precautions one must take?
1. Do Your Research: If a company sounds too good to be true, Google it. Look for reviews, legal issues, and whether people actually make money selling products (not just recruiting).
2. Ask the Hard Questions: If the person recruiting you gets nervous when you ask for financial statements, company history, or product details, something is off.
3. Start Small: If you’re considering joining, don’t invest all your money at once. Test it out first.
4. Be Skeptical of Flashy Success Stories: Real business success takes time. If they claim you can earn millions in months, they’re lying.
5. Trust Your Gut: If it feels like a cult, sounds like a cult, and behaves like a cult… it’s probably a scam.
So keep in mind, Be cautious when you invest. Avoid shortcuts. As the saying goes “ የነ ቶሎ ቶሎ ቤት…..”
