Open the Gates to Success

Do you Believe in DESTINY?

Services

Navigation

MLM in the Philippines

Article 2(K) of The Consumer Act defines pyramiding sales scheme as sales devices whereby a person, on the condition that he makes an investment, is granted by the manufacturer or his representative a right to recruit for profit one or more additional persons who will also be granted such right to recruit on condition of making a similar investment.

In this definition, the profits of the persons using such a plan are derived primarily from the recruitment of other persons into the plan rather than from the sale of consumer products, services and credit.

House Bill 5601 adopted the definition but added that pyramiding could also mean that a "substantial amount" is derived as profits from recruitment rather than from the sale of the product.

Article 53, the existing law that bans pyramid sales schemes, forbids the use of chain distribution plans or pyramid sales schemes in the sale of consumer products.

Angping's bill more important is that it included the definitions of a legitimate multilevel marketing (MLM) plan that are not present in both the Consumer Act and the DTI administrative order.

Section 4 of HB 5601 clearly defines "permissible sales practices" for MLM, including:

A low entry barrier such as minimal processing fee or reasonable sales kit demonstration materials, sold at cost as prospects sign up as distributor.
A low exit barrier by way of a "buy-back" policy (at a reasonable rate of the price paid) whereby the firm will rebuy within 90 days from last purchase, the unsold, unopened, unused, unexpired, undamaged and salable inventory held by distributors resigning from or terminating their contracts with the company.
An indispensable need for regular retail requirements for the distributor to earn continuously. There is no offer in income by simply recruiting and products are sold at fair market value.
An obligation for distributors to sell at least 70 percent of their previously acquired inventory before they are allowed to make a repurchase. There is absolutely no inducement for inventory loading.

This excerpts have been taken from an article made by Max De Leon, Manila Times, April 28, 2003

====================================================
Complete Online Business

Do you want to sell your products online and accept credit cards online? I have the solution... ClickBank

Even if you do not have products but want to earn income from the internet, Clickbank offers you thousands of products which you can market and earn Commissions.
Join ClickBank Now, and did I not tell you... It's Free to join.

Why Wait... Join Now!

Look at some of their amazing Products

Credit Secrets Bible - Since 1994. Pays 70% Commission ($43.17/Sale) The #1 Credit Course In America Now Pays 70% Commission! Free Tools At: Http://www.creditsecretsbible.org

Google Snatch - The Free Click Formula. Step By Step Blueprints To Attract Millions Of Cash Paying Visitors From Across The Internet, In Large Numbers Without Google Adwords And Without Paying A Dime In Advertising.

There are thousands more waiting for you.

Here is to Our Mutual Success...
Remus Romano Reyes

Pyramiding Schemes

Pyramid Schemes
     The most common of these schemes which have victimized many an eager investor is what comes under the generic heading of "pyramid" schemes. In a Pyramiding scheme the promoters, who are at the top, entice others down the line to bring in others in an ever-widening triangle, so that the base feeds those at the top.

     One might also liken a pyramid scheme to the familiar "chain letter" where a recipient of a letter is asked to send out a multiple of the letter he has received to others. To mask the scheme, promoters make it appear and name the "recruits" as "independent business owners", or some other nomenclature showing some form of independence. The independence is more often than not illusory since it is the promoter that controls the flow of the money and the giving of so-called credits or awards. Even business opportunity meetings mirror only the scheme of the promoter.

    Another variation is where the Promoter offers investors "exclusive distributorship rights" to sell the distributorship to others for a specified amount, usually considered an "initial investment" to pay for a set of products which are "exclusively marketed" and not found in regular stores. Investors get a percentage or "commission" from the sales of the products of the other investors they have recruited. So Promoter gets the initial investment plus a share in the sale of the investors distributorships, and so on down the line. The investors recruited by the promoter, and the other investors recruited by the initial investors are called "downlines."

    The come-on is that the more downlines you recruit, the more commissions you are able to earn from the sales of those who come after you. Downlines are recruited from the investor's circle of friends, co-employees, even family. The catch is, in order to keep the scheme afloat, the number of recruits has to increase geometrically, that is, you have to keep raising the number of recruits to the power of the original set recruited. In the end, if this scheme has to keep going, the number of recruits required may even have to exceed the population of the community, or even the country, to push it to its absurd limits! Thus in a pyramid, the Promoter or those at the top would likely able to get back their investment and then some, as the money flows upward from those down the line. The problem is, the unwary investor never really knows where he is in that pyramid.

Are Pyramid Schemes Legitimate

    Pyramid schemes are illegal under Section 53 of the Consumer Act of the Philippines. Moreover, pyramid schemes also fall under the category of investment contracts insofar as it involved a solicitation of money that is pooled into a common fund with promises of profits through the efforts of others. Being in the nature of investment contracts these should be registered with the Securities and Exchange Commission pursuant to Section 8 of the Securities Regulation Code (SRC). Offering unregistered investment contracts is illegal and carries a penal sanction under Section 73 of the SRC. The recent "G. Cosmos" affair is an example- SEC ruled that they were selling investment contracts without the proper SEC registration and thus slapped the company with a "cease and desist" order. Multilevel marketing organizations are legitimate types of pyramid operations whose primary purpose is to sell a product and not mainly to sell the distributorship itself. The entry fee is usually small and used to pay for an initial purchase of the products to be sold. They do not promise unbelievably high returns from the investment. Income is derived from the sale of the products being marketed.

Multi Level Marketing

Multi-Level Marketing

     Multi-Level Marketing is a legitimate business strategy for achieving a wider distribution of products while lowering costs. The most well-known and probably considered the origin of multi-level marketing is the Amway Corporation, which started with its Nutrilite product line.

    To make a long story short, the Nutrilite product was a food supplement which was supposed to have unusual therapeutic value, and which were sold to the friends of the inventor, at a commission. Significant out of state distribution of Nutrilite supplements began in 1945 when a company, Mytinger, Casselberry and Rehnborg, and some 15,0000 door to door salesmen were selling them with a booklet "How to Get Well and Stay Well."

    The company ran afoul of the law when outlandish claims (through testimonial letters in the booklet) about diseases responding to Nutrilite treatment were made and a permanent court injunction was issued forbidding the exaggerated importance of the supplements. Amway's founders were friends who became Nutrilite distributors after high school graduation, and became extremely successful with a sales organization of over 2000 distributors. Fearing the collapse of Nutrilite products, they formed a new company, the American Way Association, later renamed Amway, and began marketing biodegradable detergent products and other household cleaning products, later diversifying their product line to include beauty aids, toiletry, jewelry, furniture, electronic products, and other items. 2/ Distribution of these items were done through multi-level marketing plans, also known as "network" or "matrix" marketing.

    These plans typically promise that if you sign up as a distributor, you will receive commissions - for both your sales of the plan's goods and services, and through the sales of the people you recruit as distributors. Typically, a multi-level marketing plan usually promises to pay commissions through two or more levels of recruits, known as the distributor's "downline." One distinguishing feature of a Multi-Level Marketing plan is that there is a product or service of real value that is sold and that the commissions are primarily derived from the proceeds of the sale of such product or service.

A watchful Eye

Let us all maintain a watchful eye on those that promise us the easy way to make a buck. I too am a member of an MLM industry that is still flourishing today.

MLM is a legitimate business. It offers people the opportunity to rediscover the business world without taking all the risks of traditional or conventional business.

If you want a sample of a legitimate MLM business in the Philippines

Click Here

Or Visit these Online

Bravenet.com