In his recently released video on YouTube Sandeep Maheshwari delves deeper into the scam of MLM, providing his viewers with more insights on the matter, and this time he did not take any name and gave a full informative take upon fraudulent practices taking place under the garb of MLM. Here is a detailed description of what Sandeep Maheshwari talked about in his video titled MLM Scam Exposed | By Sandeep Maheshwari #StopScamBusiness –
In India, there are currently thousands of multi-level marketing companies operating, some of which are genuine, while many are involved in scams. In fact, there are numerous companies in the toothpaste sector that have engaged in significant scams. After such scams, either these companies shut down or their owners collected all the money from the public and fled. As such scams increased significantly in our country, the Government of India took a very positive step for public welfare by introducing the Consumer Protection Direct Selling Rules. The good thing is that these rules are written in both Hindi and English, making it accessible for everyone to read and understand. The link to these rules is in the description below this video.
Before I discuss what these rules are, it is crucial to understand how the direct selling industry began and the logic behind it. When this industry started, the logic was quite simple: if you purchased a product and liked it, as a consumer, you recommended it to your friends and relatives. When you recommended it, and the company made a profit, a percentage of that profit was given to the person who recommended the product. If this business is conducted ethically, there is nothing wrong with it.
These companies often use different plans such as binary plans or requiring members to bring in a certain number of new recruits.
However, it is important to note that MLM structures have been controversial, and many governments have banned or regulated such schemes due to concerns about their legitimacy. Participants are often encouraged to recruit more members to earn bonuses or commissions, creating a pyramid-like structure.
Your example mentions a company with a large number of members and a significant turnover. While the numbers may sound impressive, it’s essential to be cautious when evaluating such opportunities. MLMs can be misleading, and success stories are often presented to attract new recruits.
If you are considering joining such a company, it’s crucial to thoroughly research and understand the business model, compensation structure, and potential risks involved. Many people do not achieve the financial success promised by MLMs, and the majority may end up losing money.
In any case, always be wary of schemes that seem too good to be true and ensure that you make informed decisions before getting involved in any business venture.
The car that most of these people have, in other words, if a person is saying, “I am earning a crore rupees per month from this company,” then how much is that in a year? If he earned ₹1 crore in a month, that means he made ₹12 crores in a year. Besides, if you observe another interesting pattern in the structure of these companies, if you understand the structure of the company where there is one person at the top and 20 to 30 people below him, referred to as downline, who are earning lakhs of rupees per month. Now, let’s do a basic calculation. In that company, the rest of the people, i.e., 1 million people, how much money is coming into their hands? The person at the top got ₹12 crores, and the 29 people below him got ₹30 crores, so it becomes ₹42 crores. This means that at payout level 50, I assume that the payout of that company is 50, so how much is left? ₹8 crores. Now, out of this ₹8 crores, who got it? The remaining 1 million people. In the hands of one person, it comes to ₹80 per year. Now, here is the thing to understand: this ₹80 is an average for calculation purposes. In reality, it may be anything. Someone might get ₹8000, and someone might not get anything at all. So, I am not saying that you should or should not do this; this decision is yours because it is not just your money at stake; your time is also involved. Plus, when you join such companies, there are many costs that you have not calculated in the beginning, such as the seminars of these companies. Usually, you have to buy tickets for that, and there are travel expenses. Your time is also being invested here, so you have to walk through all the calculations to see how much money and time you have invested and what is the possibility of earning money at the end of the year.
It means that if there are 10 lakh people in that company and someone is claiming that they have a car worth 3 crores and are earning ₹1 crore per month, then instead of applauding, it is important to ask that person how many others in the company are like him. This question is necessary because the money that person is earning is coming from your pocket. Now the question arises whether all the multi-level marketing companies are fraudulent. It’s not true; some companies are genuine, but the challenge is how to differentiate between genuine and fraudulent ones. Today, we are going to work on understanding this in detail. We will delve into the rules set by the government through a notification on December 28, 2021, for all direct selling companies.
I have studied all these rules in detail, and I have highlighted some important points that are crucial for us as consumers to understand. According to these rules, no direct selling entity shall adopt any unfair trade practices in the course of its business. Before selling its products or services or before joining the company, the company must fulfill all the commitments made through its advertisements or its direct seller network. If a company is making any false commitments, it is completely wrong according to these rules.
Another important point is that every direct selling entity shall ensure that advertisements for the marketing of goods and services are consistent with the actual characteristics, access, and usage conditions of such goods and services. It means that no direct selling company or its network of direct sellers can give any advertisement anywhere that exaggerates or falsely represents the product, service, or plan of the company. If any company is doing this, it is a scam.
To give you a practical example, if you are a housewife and want to earn lakhs of rupees sitting at home, contact us – if any company is advertising in this way, it is a scam.
Here is a list of various points made in the Sandeep Maheshwari’s Latest Video on Youtube:
- Questioning Claims: The importance of questioning individuals who make extravagant claims about their earnings and possessions in a company.
- Verification of Claims: Emphasizing the need to ask how many people in the company share similar success rather than just applauding individual achievements.
- Money Source: Highlighting that the money earned by individuals in the company ultimately comes from the pockets of others in the network.
- Distinguishing Genuine and Fraudulent Companies: Expressing the challenge of distinguishing between genuine and fraudulent multi-level marketing companies.
- Government Rules: Referring to a government notification on December 28, 2021, that established rules for all direct selling companies.
- Commitment Fulfillment: Stating that direct selling companies must fulfill all commitments made in advertisements or through their direct seller network.
- False Commitments: Labeling companies that make false commitments as completely wrong according to the established rules.
- Advertisement Consistency: Direct selling entities are required to ensure that advertisements are consistent with the actual characteristics, access, and usage conditions of the goods and services.
- Exaggerated Advertisements: Prohibiting companies and their direct sellers from giving exaggerated or false representations of products, services, or plans.
- Practical Example: Providing a practical example where an advertisement claiming that housewives can earn lakhs of rupees sitting at home is identified as a scam.
In conclusion, the video emphasizes the critical importance of questioning extravagant claims made by individuals within multi-level marketing companies. It underscores the need to verify such claims by inquiring about the prevalence of similar success stories within the company. The speaker highlights the ultimate source of the money earned within the network and raises the question of distinguishing between genuine and fraudulent companies in the multi-level marketing landscape.
Furthermore, the video references government rules outlined in a notification from December 28, 2021, which set clear guidelines for direct selling companies. These rules stress the necessity for companies to fulfill commitments made in advertisements and prohibit the dissemination of false or exaggerated representations of products, services, or earning potential.
The practical example provided in the video, where an advertisement targeting housewives to earn substantial amounts from home is identified as a potential scam, serves as a tangible illustration of the points discussed. Overall, the video encourages a critical and informed approach to evaluating claims and understanding the regulatory framework to distinguish between legitimate and questionable practices in the realm of multi-level marketing.
