Beware of Binary-Type Pyramiding by Josiah Go

Beware of Binary-Type Pyramiding by Josiah Go

Articles
With inflation in the Philippines running over 6%, many people would be looking for extra income to augment the rise in consumer prices and maintain or improve their lifestyles. Considering some 88% of Filipinos are classified in the income range of DE (lower income), most will resort to selling products using credit lines extended to them or low capital businesses, such as multilevel marketing (MLM), a legitimate and innovative type of direct selling where one is compensated not just for personal sales but also from the sales of direct recruits as well as indirect recruits (those recruited by direct recruits) after meeting the qualifying sales volume of their company. One “pseudo-type” MLM uses the binary scheme, claiming to be MLM but may be illegal in reality. What is Binary? Binary…
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Q&A with DTI Secretary Ramon Lopez on Championing The SMEs

Q&A with DTI Secretary Ramon Lopez on Championing The SMEs

interviews, Q&A
The Department of Trade and Industry (DTI) under the new president Rodrigo Duterte and Secretary Ramon Lopez defined its overall mission as alleviating poverty and uplifting the quality of life of all Filipinos. This will be done through sustainable economic growth that generates more income opportunities through employment and entrepreneurship. Secretary Lopez, a champion of SMEs for the last eleven years with his Go Negosyo advocacy, shares his insights about this mission. Q1: Which industries do you consider as globally competitive and innovative in the Philippines that are capable of generating more quality employment and higher income opportunities? A: Our mission is to develop innovative, competitive, job-generating and inclusive industries that will create employment and income opportunities and address inequality and bring prosperity for all. These would be industries where…
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Deterring Pyramiding By Josiah Go

Deterring Pyramiding By Josiah Go

Articles
Many people want to have their own business but lack the capital. The Duterte government wants to push for more businesses. In fact, the new Secretary of Trade and Industry (DTI) Ramon Lopez wants malls and major chain stores to allocate free space to SMEs to give them a fighting chance to grow. A practical way to be an entrepreneur with low capital is to first be an independent distributor of a network marketing or multi-level marketing (MLM) company. Some four million Filipinos are doing that. They belong to companies who are members of the Direct Selling Association of the Philippines (DSAP), the industry association of legitimate direct selling and MLM companies affiliated with the World Federation of the Direct Selling Associations (WFDSA) based in Washington DC, USA. (DSAP chairman…
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Q&A with SEC Chairperson Teresita Herbosa on Fighting Pyramiding and Unregistered Investment

Q&A with SEC Chairperson Teresita Herbosa on Fighting Pyramiding and Unregistered Investment

interviews, Q&A
Atty. Teresita Herbosa is the Chair of the Securities and Exchange Commission (SEC) tasked to implement two major laws, the Corporation Code, where they act as the registrar and monitor of all corporations and partnerships, and the Securities Regulation Code (SRC), where they regulate securities and capital markets. According to the Direct Selling Association of the Philippines (DSAP), many new companies have emerged using schemes undermining legitimate multi-level marketing (MLM) companies. Among these violations are pyramiding firms using the binary compensation plan which balances the number of people instead of sales volume, a violation of the Consumer Code of the Philippines against head hunting. A twin violation is asking people to put money in multiple business centers (known as headers), a type of investment. For instance, Person A will be…
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Q&A with Direct Selling Association of the Philippines (DSAP) Officers  on Understanding Pyramiding Scams

Q&A with Direct Selling Association of the Philippines (DSAP) Officers on Understanding Pyramiding Scams

interviews, Q&A
Q1 Question to Max VP for Asia Joey Sarmiento: Using layman's terms, what is pyramiding and what's the main difference between legitimate multilevel marketing (MLM) and pyramiding? Answer: Network marketing or MLM is a legitimate mode of business wherein products are sold via person to person selling instead of the traditional way of selling from a fixed retail location; the objective is to sell products to the end consumers. The difference between MLM and direct selling is in the commission system wherein participants in MLM generally benefit from the sales made by people under their line of sponsorship even if they are several levels deep (e.g. an independent distributor in an MLM earns commissions not only on his/her personal product sales, and not only on the sales of a person personally recruited by him/her, but also on…
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The curse of MLM by Josiah Go

The curse of MLM by Josiah Go

Articles
MLM is an acronym for Multi-Level Marketing, also known as network marketing. It is a form of direct selling but with the compensation plan as its core innovation; rewarding sales from people directly and indirectly recruited. The MLM compensation plan is designed in a way that network members will recruit their own downlines, which used to be the never ending job of personnel department. Mere recruitment alone gives no compensation. The grand old daddy of the MLM compensation plan is known as the stairstep-breakaway. It was adopted and proven legitimate by Amway in the USA in 1979 when it was questioned by the Fair Trade Commission (Click http://www.antipyramiding.8m.com/article3.htm for the decision). Another one of the 5 types of MLM compensation plan is the binary plan. In a binary plan, only…
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Pyramiding & Unregistered Investment by Josiah Go

Pyramiding & Unregistered Investment by Josiah Go

Articles
My article, “Identifying Pyramiding Scams”, has become the most popular entry in my blog www.josiahgo.com to-date.  As network marketing or multi-level marketing (MLM) becomes more popular, so are the numbers of unscrupulous companies calling themselves ‘MLM’ increasing, when they are actually scams. Some readers may be curious about binary plans that balance the number of recruits on your right and left sides, a scam that is masking as a legitimate MLM. To become legal, a binary plan must balance sales volume instead of the number of recruits. Others are interested to know about the 7-headers investment wherein a recruit is convinced to pay for seven business centers as they sign up with a company, an unregistered investment being peddled as a non-investment. Koscot Interplanetary was sued by the U.S. Fair Trade Commission…
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Identifying Pyramiding Scams by Josiah Go

Articles
Among the multilevel marketing (MLM) or network marketing compensation plans being used (and abused) nowadays is the binary plan. This kind of plan allows distributors to have only two direct or first-level distributors. Any additional distributors sponsored have a "spillover" effect, meaning, they are placed at levels below the sponsoring distributors' first-level. Compensation is paid based on balancing volume on the right and left leg. There is no law that states that a binary compensation plan is illegal or is a pyramiding scheme, however, binary plans, being one of the five more popular types of network or multilevel marketing compensation plans, operate under the same laws that govern other multilevel marketing schemes, specifically the provision that disallow the practice of pyramiding schemes. Article 53 of R.A. 7394 of the Consumer Code of the Philippines states "Chain distribution plans or pyramid…
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