Why Multilevel Marketing Should be Avoided

Multilevel Marketing is a concept where the sales force is paid a commission for every product sold or they are also encouraged to recruit more people to receive a portion of their commission as well. Hence, enjoying the passive income generated by others by being at the top of the pyramid.

Millions of Americans try selling cosmetics, clothing and more to family and friends and eventually end up fighting with close friends and family while most people make less than 70 cents an hour. Therefore, some go into debt as they are not able to cover the costs of inventory and other costs while others make it successful.

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Similar schemes have also initiated in the Maldives where some had turned out to be illegal while others are currently in use. Such as serious scams were operated were the people who participated lost all the money they used on the scheme. However, there are other schemes such as student referral programs where the student who brings in new students gets a 5% discount on the total course fee which is considered legal as it is not a fraud and does not lead to any losses.

According to Maldives Banking Act, under section 68, the people who initiate or directs a pyramid scheme is guilty of an offence and so is liable to pay a fine between 100,000 Rufiyaa and 1,000,000 Rufiyaa or an imprisonment between 2 and 5 years based on the seriousness of the offence. It has also been prohibited in China where 2 men have been sentenced to life imprisonment during this year for a pyramid scheme of USD 2.39 billion.


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