Differences between Direct Selling and Pyramid Scheme prove falsity of QNET scam stories

Gone are the days when ignorance about the differences between pyramid schemes and legitimate direct selling and multilevel marketing companies prevailed. Exposure to literatures on the subject has cleared the air of confusion and doubt. Recently, Amway India Managing Director and CEO, William Scott Pinckney and two Indian executives were arrested for cheating members of their direct selling network. Ajay Chanam, Head, Corporate Affairs (India) of the Hong Kong based direct selling company QNET has clarified important aspects related to the potential filled profession of network marketing. This has truly been an eye opener.

The recent arrest has laid emphasis on the need of a law that demarcates legitimate direct selling companies and illegal pyramid schemes. The latter cheats people by portraying themselves as genuine multilevel marketing companies and dupes people of their hard earned money. Many people have voiced their questions behind the coining of the name ‘pyramid’. Companies and people associated with such schemes pay commissions or payments on the basis of recruitments. The person who begins this vicious cycle is the one who makes money. Commission can be generated only when recruitment takes place. Mr Chanam says that it would be a welcome move to ban such kind of businesses. With such ventures out of the picture, stories like QNET scam will fade into oblivion.

In the interview, he defined direct selling, too. He says, “Direct Selling is the marketing of products and services directly to consumers in a face to face manner, away from retail locations. Individuals join a direct selling company to consume the products at a discount or to earn by retailing the products/services to people they know and also have the opportunity to earn when the products/services get promoted or consumed by the people they have introduced into their personal network.”

Mr Chanam has clearly defined the points of distinction between genuine network marketing businesses and pyramid schemes. The former has a lot to offer to individuals in the form of a promising career, but it involves tremendous hard work and perseverance. MLM companies retail products that use cutting edge technology and enhance the standard of living of people all across the globe. Organisations that employ the pyramid scheme do not have such kind of products to show their credibility and reliability.

Direct selling offers a lucrative compensation plan to individuals, but restrictions have been incorporated. This is done to ensure that the opportunities of earning an income are even. It has been ensured that a balance is maintained. In pyramid schemes, this is not the case. In this scenario, up lines earn a great deal of money and the down lines cannot earn a sufficient amount of money due to late participation. After the clarification of such key concepts, people will certainly understand the hollowness of QNET scam stories.

In legitimate direct selling companies, recruitment is not the way to a good compensation. Independent Representatives can earn by promoting and retailing their unique range of products. In fraudulent pyramid scheme companies, you can expect financial returns if you recruit people. Due to such establishments, people have falsely misconstrued the business model of legitimate network marketing companies.