News Stop: Battling Misconceptions in MLM

We refer to “Battling misconceptions” by Mira Kashinath in Today Online, Sep 27 2006 (Wednesday). The article discusses about the problems of image for multi-layer marketing and how the industry is not picking up in Singapore. We also provide a short commentary for this article.

Honestly, I am never a fan of multi-layer marketing (MLM) and I often tell others to stay clear of it. The reason is simple because I have encountered students who were burnt by this kind of marketing and went into debt for no rhyme and reason. Part of the problem is that young people want to be successful fast and are naive to believe that they can sell a lot of units. The best way to make money is to come up with an product or get a retailer to sell your stuff. My advice is clear and I often told my students, “Don’t waste time on MLM. It looks easy but the chances of you getting into a sham here in Singapore is high, because so many pyramid marketing companies dressed up like them.” Even if the definition for pyramid schemes are different from MLM, the problem is the regulation of the industry. Day to day, even poor aunties and uncles are conned by some self-proclaimed MLM but are actually “pyramid” companies. If DSAS want to do something about this, they need to start putting up some regulation that will take the people with the pyramid shams and put them behind bars. If possible, perhaps, they can get these sham companies to pay the people back. Something needs to be done for those fake MLM companies.

Anyway, you can read the excerpts of the article and judge for yourself:

It’s been over five years since the law was amended to allow legitimate multi-level-marketing (MLM) firms to operate here came into effect, but the direct selling industry remains dogged by the negative image many associate with pyramid selling.

“In the early tough days, legitimate direct sellers were held back by suspicion. But sadly, this scrutiny of legitimate direct sellers continues till today; it is uphill still for us,” said Mr Benjamin Tan, a founding member of the 30-year-old Direct Selling Association of Singapore (DSAS).

To improve its image and win public confidence, the body — which is made up of 22 of Singapore’s biggest direct-selling companies — is calling for tougher self-regulation.

It is drafting rules to tighten loopholes in the industry — currently the association doesn’t step in if any of its member firms collapse. With the new rules, it will step in to help affected consumers.

Also, it will step up on checks on its members: Those who repeatedly don’t abide by its code of ethics and conduct will face expulsion.

“We will look into how we can better protect consumers’ interests, whether through further collaboration with the Consumers Association of Singapore, or through local regulatory and industry partners,” said Mr Nicholas Chia, chairman of DSAS.
The association is setting up a one-stop information centre for the public next month.

This centre will allow consumers to check — for free — the legitimacy of any direct-selling company, and help organise public education forums to inform the public on the differences between direct selling and pyramid selling (see below).

“However, if the negative mindset about the industry persists, we are under severe threat of losing a large pie of the potential multi-billion revenue that the global industry will generate,” said Mr Chia.

Multi-level marketing is legal in S’pore

Multi-level marketing (MLM) and single level marketing (SLM) are the two forms of direct selling practised in Singapore. Consumers still tend to confuse the two forms of direct selling with pyramid selling, which is prohibited in Singapore.

“Direct selling is the sale of a consumer product or service, person-to-person, away from a fixed retail location. It is a popular alternative to traditional employment for those seeking to supplement their household income, or whose responsibilities or circumstances do not allow for regular part-time or full-time employment,” said Mr Tan.