MLM compensation
Kategori: Allmänt
In conclusion, the blame should be placed on infinite chain sales schemes that are inherently fraudulent systems, which enrich a few at the top at the cost of a great number of downline participants, that find yourself being victimized by the scheme. The ideal thing regulators can perform is to limit harm by focusing on MLM compensation plans. It is expected they'll make use of the concepts in this paper to accomplish more affordable enforcement of current laws for protecting consumers in a more proactive manner -- and wait for complaints to come trickling in. At the very least they could warn users against these types of apps -- preferably against ALL MLM's, as the consumer cannot be expected to recognize the extremely rare program that may be legitimate.
Conclusions In case an MLM application is found to own all five (or maybe four) of the aforementioned traits, it is actually a recruiting MLM, or product-based pyramid scheme in theory, structure, and effects -- regardless of caliber of products offered, kind of compensation plan (binary, break away, matrix, unilevel, etc.), company policies about recruiting, establishment of "rules," or other efforts by company officials to make its program appear to be valid. The main emphasis will be on deriving income from recruitment, because the bonus to retail products or services will likely be relatively slight.
The leverage in an MLM compensation plan, leading from the foregoing elements, is an two-edged 28 29 sword. As a general rule, the better it's to your top "distributors," the worse it's for people beneath them. This is especially true when the payment program is focused not only on selling to non-participating customers, but rather mainly on recruiting participants who buy large quantities of products to "do the business" -- which can be the case with nearly all the MLM compensation plans I have studied. Almost all their posturing about being lead marketing applications is belied by their benefit system.
While not one of the five faculties alone constitutes a pyramid scheme, a combination of the five together suggests a detrimental (and probably illegal) pyramid scheme, if properly known. Conversely, if a company displayed only three of these characteristics, it's probably benign. Four is questionable.
The effects of highly leveraged compensation plans can be quantified by requiring MLM businesses to produce data in company payout to most participants (not just "active" ones) by percentiles after subtracting average purchases for revenues. Where MLM businesses using such reimbursement plans have released honest statistics on income distribution, the results are shocking. After all statistical manipulations of data that was published have been removed (which must be done by qualified and impartial analysts because MLM reports are typically full of deceptions), the results have shown that payout by the firm has shrunk inordinately to top "distributors." Obviously, you will find anecdotal exceptions -- which can be organized as examples of prospective recruits.
The loss rate for recruiting MLM's (about 99.9 percent) far exceeds that for no-product pyramid strategies (87.5-93.3 percent). In comparison, recruitment MLM's create no-product pyramid approaches appear extremely profitable.8 So the assumption that MLM's are not as bad as classic no-product pyramid schemes is patently false -- the inverse is correct.
