Protect your Money and Avoid Pyramid/MLM Scams.
“Never trust a person that tries to sell you by how righteous they are. I'm telling your right now, it's a scam.”― Richie Norton
" So here I am, penning down everything I know about the QNET scam in one place.
Brief:
In year 2021 I was about to be trapped by one of my university senior in a Ponzi Scheme in name of eCommerce Business Opportunity. I got saved by chance, searched on internet and found out that a lot of people got scammed or are in stream as the unique thing about qnet is they sell trust - like my senior contacted me whom i consider a trustworthy guy that time - After I found out that here in Kingdom of Saudi Arabia officially they are banned but in Pakistan, india, UAE they are still looting people, I consider it important to copy the article here that will save you from any such loss in 2023 and let you focus on your goal.
Disclaimer: Although I didnt write the article but this is the same story happened to me. Unfortunately, the writer deleted the article but i had a copy already that you are going to read. Hyperlinks are not working. Just Read and Save Yourself.
Painting the Picture
"If something is described as chocolatey, but you’ve never tasted chocolate, you have no clue what they’re describing." - Seth Godin
The year is 2021. The world is still facing the repercussions of the recession caused by the pandemic. Many people have lost their jobs, and suddenly one of your friends calls you up, sounding overexcited, for you to be a part of an up and running business. Perhaps, you have lost your job or are on the verge of losing, so you ask him for more details. He tells you to have a one-to-one interaction, but you insist he gives some of the details since you have to decide whether to have a meetup or not. He tells you that they are a micro franchising business - helping international brands tap into the Pakistani market and that they have clients on board (does it ring bells? It should, I believe). He continues to utter that this will be a billion-dollar company five years later (does it ring bells again?). Moreover, he brags about the Wapistani mentors shaping the entrepreneurial landscape of Pakistan."
"Be careful of opportunities to get in on the ground floor of the “next big thing” or “once in a lifetime” deal." - Financial Mentor
After selling you unwarranted dreams of being Richie-Rich in an uncertain world, avoiding the conversation regarding short-term, but deemed necessary, monetary benefits as a cofounder (salary, commission, shares, etc.), he compels you to meet him and his other business partners and advisors, in a day or two, at a cafe (either Coffee Wagera - Bahudarabad, Cafe Timeout or Chai.com cafe at The Forum Mall, or Dunkin Donuts at Tipu Sultan Road, in Karachi).
"It’s hard to trust someone who has a secret method." - Seth Godin
Since your mind is perplexed after hearing about his business, you ask him to lend you some time to make a decision, but the caller is in a rush (Jhat mangni, pat biyah in the South Asian context) and wants to meet you just after two days (this one does not ring bells). You make a seemingly legit excuse the day after, and he agrees to postpone the meetup (nice save!). A week later, this entire scenario recurs, but with another person calling you this time. The strikingly same level of overexcitement of the other person as of the first person finally gives off the fact that what was told to you by both of them was a scam. How on earth can your tone exactly match with the other person? Both calls went through a rehearsal. Calls - to a friend - were rehearsed.
"Never allow trust, friendship, or emotion [to] get in the way of doing your due diligence." - Financial Mentor
Out of curiosity, you plan to meet them. The meeting turns out to be pretty awkward. The representatives ask you to transfer an amount ranging from 4000-8000 USD, under the guise of investment, in the business you have no freaking idea. The said business is nothing but a pyramid/Ponzi scheme. Anyways, since you do not have enough cash in hand, they blatantly ask you to take a personal loan from friends and family or compel you to ask for your share of the family inheritance within 48 hours. They will insist you arrange money, or else you would not be able to avail the so-called golden opportunity, which you decline if you are sane enough.
"Be wary if the salesperson encourages you to borrow money or cash in your retirement accounts to make the investment." - Financial Mentor
The Selling of Unwarranted, Big Dreams
The world of entrepreneurship, as portrayed by the media, is a glamorous one. You have got flashy cars, offices with an eye-pleasing ambiance and a nice view of the outside, and loads of cash. However, in reality, the world is dull. Hard work, patience, persistent failures, not giving up on the cause, sleepless nights, and most importantly, uncertainty. While start-upping at an early stage, you do not have a freaking idea about what will happen the next day, let alone the five years. Blitzscaling and The Lean Startup discuss this uncertainty. It is this uncertainty that humbles down the startuppers and makes them embrace the present reality. If you are doing legit business, you will seldom try to sell anyone unwarranted, big dreams of being Richie Rich in an uncertain world. If you are doing the contrary, you are outright duping.
In Business Today, Dipak Mondal writes:
"The greed to make 'easy' money is so intense it sometimes overpowers their financial wisdom. They get attracted to flashy schemes, promises of impossible returns and weird business models of little-known companies. [...] Call it [the] victory of 'greed' over good sense! [...] In the end, let's face it - there's no easy money; wealth creation is a long-term process that needs time and patience and requires the investor to be vigilant all the time."
Pro-Tip
One of my close friends gave this tip:
"Make sure to delete the banking app from your smartphone before heading to meet the scammers."
The-then education coordinator for Florida's Division of Consumer Affairs in 1996, Terri Norton's piece of advice appeared in the book titled "You Can't Cheat an Honest Man: How Ponzi Schemes and Pyramid Frauds Work." Following is her piece of advice:
"If you go to an MLM presentation, take someone with you who isn't interested in the business and leave your checkbook at home. You get caught up in the mood and excitement. You sign up right then and there without reading what you're signing. If they're [...] legitimate and want your business, your money will be just as good later" .
The Forbes' Endorsement
See Forbes Asia covering the story of Eswaran in a good light and acting as a mouthpiece for QNET - the very same man who has been declared an absconder in India and is the founder of a business that rips off people.
The Forbes writer falsely claimed that workshops conducted by the nonprofit Moneylife Foundation, created by Sucheta Dalal, are paid when Dalal raised questions on the inclination of Frazier towards QNET.
The writer, in one of his articles, writes the following:
"Similar phony charges in ... countries over the past ten years have also been made."
The article in question is neither an op-ed (the worst form of journalism, IMO) nor a piece of investigative journalism (the best form of journalism, IMO). How can a journalist decide whether the charges filed by the victims of QNET are 'phony' ?
Activating the Common Sense
If one sounds over-excited (in this case, two, as seen in Painting the Picture) while communicating the business idea or about an up and running business or the business idea seems too good to be true, you are better off not signing up for that stuff. Activate your common sense and think of why a full-fledged international business, already tapped into non-familiar markets single-handedly, will desire to be a client of a recently launched startup that helps multinational brands enter Pakistan? Such a brand can enter into a joint venture (JV) with a "renowned" local market player to tap the maximum market potential, but being a client of a newly-incepted company merely to enter the market is a story worth not buying.
Tapping into Global Markets
The book "Marketing Management" by Philip Kotler and Kevin Lane Keller sheds light on how companies can find their way to global markets. Following is an excerpt from the book:
"Just doing business in another country may require the firm to license its product, form a joint venture with a local firm, or buy from "local suppliers" to meet "domestic content" requirements."
The book also cites some examples of joint ventures. Following are some of the examples cited in the said book:
[You may have heard of Johnson & Johnson - the pharma brand most famous for baby care products;
DuPont - if you are aware of the 2020 French products boycott that led to the (wrongful) boycott of Continental Biscuits Limited in Pakistan;
and Sanofi-Aventis - the famous pharma company that manufactures Flagyl medicine.]
What is mutual in all of them? - They all are key players in their respective industries.
[You may have never heard the name, but Sub Pop Records is the music label that helped popularize grunge music in the 80s by signing Seattle-based bands - leading to the famed record label.]
Key takeaway: Sub Pop Records was a famed label with which Warner Group entered into a JV.
[You may have never heard of Mabe, but it became the leading exporter of home appliances in Mexico in 1960. General Electric entered into a JV partnership with Mabe in 1986 - 26 years since Mabe became a top market player.]
Key takeaway: Mabe is a reputed company and a reliable manufacturer of home appliances with which General Electric entered into a JV.
Repeating the statement that I made above in Activating the Common Sense:
"An international business can enter into a joint venture (JV) with a renowned local market player to tap the maximum market potential, but being a client of a newly-incepted company merely to enter the market is a story worth not buying."
The Scam Syndicate in Question: QNET
In one the article of the wirter he mentioned briefly about the ongoing QNET Scam. Individuals from QNET target young minds ranging from school-going students to graduates who had their last class 1-3 years back. Due to the unfortunate circumstances (joblessness and the fear of uncertainty) created by the pandemic, they are actively working on duping people for the past eleven months. I and close to 20 friends of mine, so far, were approached in the said period.
"Investment fraud intentionally appeals to the basic human emotions of fear, greed, and wanting something for nothing, so that you'll make an irrational decision. Be wary of any salesman who draws out your emotions as part of the sales process." - Financial Mentor
QNET scammers show you the following video to exploit your fear:
In the words of Thomas Hayes, Dean of the Williams College of Business at Xavier University, Ohio, as appeared in You Can't Cheat an Honest Man: How Ponzi Schemes and Pyramid Frauds Work:
"The whole concept of multilevel marketing is that they feed on people's emotions and greed. Especially in hard economic times, people are looking for [...] something that will make them rich. The only pure guarantee in a multilevel marketing scheme is that you will lose friends" .
The Company Background
QNET incepted 22 years ago in 1998 with operations worldwide, underwent several business name alterations from being QI Limited to GoldQuest to QuestNet. QNET also goes by the name "Infiniti." The company is involved in numerous controversies and faces a ban in approximately a dozen countries (Australia, the US, Canada, India, Saudi Arabia, Turkey, Iran, Afghanistan, etc.). The founder of QNET, Vijay Eswaran (not Mallya), rightfully faces the music for ripping off individuals of their hard-earned money in India.
The QNET Success Theatre
Success Theatre is a term coined by Eric Ries (not Worre) for an already prevalent phenomenon of faking success in the business world. Success theatre involves:
instead of working on the product/service offering for the better. QNET does the same in the form of a partnership with Manchester City FC and other ways.
"Never trust the fa?ade, but instead look deeper to find real substance." - Financial Mentor
Quashing the Partnership-Linked-With-Credibility Claim
QNET scammers falsely claim that QNET is a credible business since it partnered with the United Nations (UN), World Economic Forum (WEF), Microsoft, and HSBC Bank.
Does Partnership with the UN and WEF Equate to Credibility?
Many businesses involved in scandals partnered with the UN Global Compact and the WEF. Following are some examples:
Scandalous WEF Partners
Scandalous UN Global Compact Partners
Reckitt Benckiser - see the opioid drug scandal.
WEF partners - Deloitte, Deutsche Bank, and Ericsson - are also partnered with the UN Global Compact.
Is QNET a Partner of Microsoft and HSBC Bank?
No, QNET is merely a customer of Microsoft. HSBC is only partnered with financial action and money laundering task forces and with trade councils.
The Presence of QNET in Pakistan
As far as their presence in Pakistan is concerned, they have been operating here since at least 2013 in several cities like Karachi, Lahore, Islamabad, and Peshawar, to name a few. They began duping Karachiites with an office at the Parsa Tower, Shahrah-e-Faisal.?Now, they have an office in the Federal B. Area of Karachi.
QNET operates in Pakistan through a franchise named Parwaaz Trading. The franchise is not SECP-registered (pictured below).
Following is a raw image of the VCC 2021 event that happened somewhere in Karachi in March 2021 under the banner of QNET and Infiniti.
Legal Status of QNET in Pakistan
As evident from the SECP company name search portal, QNET is not operating legally in the Pakistan region. Moreover, SECP and the State Bank of Pakistan (SBP) have issued public notices to beware of pyramid/Ponzi schemes and multilevel marketing, in general
Moreover, according to sections 301 and 304 of the Companies Act, 2017, the High Court possesses the authority to dissolve a company involved in multi-level marketing, pyramid, and Ponzi schemes - clearly what QNET is doing. Also, companies like QNET go against the SECP Memorandum of Association.
Does Legal Status Even Matter?
In India Today, Dipak Mondal writes:
"Most Ponzi schemes operate under the guise of MLM or plantation company. Some entities are registered as firms under the Companies Act, some even flaunt an ISO certification, but in most cases they do not have the approval to collect deposits from the public."
The above holds for Pakistan as well. The Companies Act, 2017 and The Companies (Invitation & Acceptance of Deposits) Rules, 1987 are relevant to the case of QNET. The latter governs whether a company is allowed to collect deposits from individuals, as the QNET takes money in the name of investment. According to the rules:
"No private company shall invite or allow or cause any other person to invite deposits from the public whether by [the] issue of and advertisement, public notice or otherwise."
Summing it up, the deposits collected by the QNET in the name of investment are unauthorized as deemed by the SECP.
Pictured below is a notice by the SECP listing the companies indulged in unauthorized activities (source). However, in the end, on the second page, it says:
"Please note that the mere registration of a company with SECP does not authorize it to seek deposits from [the] general public. The general public is hereby cautioned in their own interest to be vigilant with their investments and not to be misled by such lucrative schemes offered by any company."
Hence, a company involved in defrauding people and being registered with the SECP does not equate to the company's legitimacy.
QNET is not a Company
Definition of Company. QNET cannot qualify as a company since, before 2017, it had not registered itself under the Companies Ordinance 1984. In 2017, the Companies Act came into being, and QNET has not formalized its business yet in Pakistan. The registration is mandatory for QNET to qualify as a company. A company, by definition, is a legal entity, and QNET does not adhere to this definition.
Tax Theft. QNET is evading dual taxation since it is not registered by the SECP yet.
Memorandum of Association. If QNET is to qualify as a company, it must prepare a memorandum of association document and submit it to the SECP. QNET has not documented it to date.
QNET is not a Direct Selling Enterprise
Direct selling involves a zero-channel or a direct channel of distribution. In simpler terms, a zero-channel creates possession utility directly from the producer to the end-customer, without the intervention of middlemen, agents, or brokers. In the QNET's case, IRs purchase products from QNET and then sell them to others. Hence, QNET is not a direct selling enterprise.
The QNET modus operandi
In simpler terms, like in a typical pyramid/Ponzi scheme or MLM, QNET tricks you into losing money. You have become their partner in crime by now. Your job is to convince others into losing their money so you can recover your whole amount gradually. Nidhaan Shreshtha, an investment banker, summarizes the modus operandi and the QNET representatives in three words - Scammed to Scam.
Many other scams operate on a similar model, Tiens Group (Tianshi International), B4U, Forever Living Products, Family of Eagles, Oriflame, DXN, and Gold Mine International (GMI), to name a very few.
How is QNET so Successful?
$15m, $50m, and $500m - this is the recorded worth of the QNET scam in Srilanka, Turkey, and Iran, respectively.
You can blame the:
However, these are not the only factors contributing to the success of the QNET scam. See Clearing the Air below.
Clearing the Air
If you happen to be curious about multilevel marketing scams, you may have heard or read that if an MLM company focuses more on the induction of recruits than the product itself, it is a cent percent scam. It is considered the easiest way to spot an MLM scam. However, this notion is wrong.
In business terminology, the engine of growth phrase describes the phenomenon by which businesses achieve growth in the long run. This growth can either be monetary or non-monetary. There are three (03) growth engines. However, we will only discuss the viral engine of growth.
Every successful social media platform, for instance, Facebook, stands today due to the network effect and the viral engine of growth. I will not care to explain the former term since we are better off understanding the reason for the success of QNET without diving deep into the network effect concept.
Shared below is a slide from a deck on the Internet privacy topic I made two months back. The deck is not publicized yet and enlists the laws and concepts that govern the growth of social media platforms. More or less, the same goes for any business that desires to achieve growth.
MLM companies also use the viral engine of growth to scam as many people as they can. Another business phrase introduced - the viral coefficient. The viral coefficient is an actionable metric used to determine the impact of the viral engine of growth. For instance, if an MLM company offering has a viral coefficient of 0.1, it means that 1 out of 10 recruits will bring in one more recruit. A business focuses on increasing the viral coefficient (like increasing the number of recruits) because a minor change in the viral coefficient will cause a noticeable, exponential impact. Also, an increasing viral coefficient results in fewer customer acquisition costs (CAC). Now you know the reason why an MLM company, like QNET, focuses on the induction of more recruits.
The above paragraph describes why it is misleading to spot a scam using the notion of more focus on recruits than the product itself.
领英推荐
Reasons to Not Invest in QNET
"All your eggs are in a low-chance basket. You’re taking a wild gamble, and it’s your dream. And you want a shortcut. The problem, of course, is that this isn’t a resilient long-term plan." - Seth Godin
The QNET Hiring Criterion
Firstly, you need to understand how the business partnership of a legit company works. You do not need a sound knowledge of business terms and concepts to understand this. Common sense and logic will do. Choosing a business partner requires a thorough interview, including a technical one, and is a step-by-step process in some cases. That is true even in the case of a friend willing to induct you as a partner. Remember, no one will declare you a partner once you pay cash in the first meeting. The fun fact is QNet is hitting on many for them to be a business partner.
Secondly, a legit business investment requires money. But a legit business does not force you to take a personal loan or ask your share of inheritance from your family to make you invest.
In the book titled "Scams and Frauds: Financial Crime Exposed," the author writes:
"Nothing screams "scam" more than the fact that you must pay for training or to join the program. Legitimate companies would not do this ... The scam-within-a-scam is the bogus "training seminars" offered by the MLM programs ... to make big bucks ... The training seminars can cost thousands although the company ought to be paying you to attend and learn how to sell its product" .
The So-Called Best Products
The tagline, The Best Products in the Right Business, is misleading in itself. I'll quash this false claim with an example of a product found on the QNET eStore Personal Care and Beauty category.
Consider DEFY Dirt Fighter, a 100ml face cleanser listed on the QNET eStore priced at $37 (shipping costs excluded).
To compare the product price, I chose close variants of the DEFY facewash in the form of products of popular beauty brands, Garnier, Nivea, and Pond's, as seen in the chart below:
Following is an example of another product of the same category. Consider the Physio Radiance Regenerating Night Cream priced at $106 (shipping cost excluded) for 1.7 fl. oz.
On the other hand, a close counterpart, Olay Regenerist Retinol24 Max Night Face Moisturizer, costs $32.98 for 1.7 fl. oz., priced 68.8% lower than the former.
In "Scams and Frauds: Financial Crime Exposed" , the author says that:
"Unfortunately, the focus of all the programs is not on the products they sell, which are often bogus or are readily available at often lesser prices ... they sell you products that are grossly overpriced ..."
Robert Kiyosaki & The Rich Dad Seminars
The scammers associated with QNET often quote Robert Kiyosaki, the famed author of Rich Dad, Poor Dad, since he is a strong advocate of network marketing (see The Reality of the Network Marketing Industry).
Kiyosaki has his fair share of controversies. He conducts free-of-cost Rich Dad seminars to disseminate financial education. However, the CBC Marketplace investigation revealed that the Rich Dad seminars are less about education and more about upselling expensive stuff up to $45,000. Upselling is not an unethical practice but bullying someone to make sure they pay for costly offerings is unethical, something the organizers of seminars were found guilty of doing.
The Reality of the Network Marketing Industry
The networkers and Independent Representatives (IRs) of QNET introduce themselves as global entrepreneurs running a global franchising and business distribution business. Some of them even identify themselves as franchise partners at Bernhard H. Mayer or QVI. However, the legitimate network marketing industry is legal to a certain extent, like any other industry. The network marketing industry comprises three kinds of players. I will discuss two - single-tier marketing players and multi-tier marketing players.
Single-Tier vs. Multi-Tier Network Marketing
Single-tier network marketing constitutes a salesperson selling a product/service to the customer. The business transaction ends there. On the other hand, in multi-tier marketing, there is a tree, and endless chain, of sellers and buyers, passing onto the same product/service to the other. This kind of transaction does not end soon.
While single-tier marketing is considered legitimate, most businesses involved in multi-tier marketing (also known as multi-level marketing) are deemed illegal (as pyramid/Ponzi schemes) by the respective authorities. QNET is one such company.
In "Scams and Frauds: Financial Crime Exposed" , the author notes that:
"Once upon a time, multilevel marketing was a legitimate business system ... The whole MLM industry is hype, deception and bluff. Many promoters tell you that you should lease expensive cars, buy new clothes etc just so your prospective clients think that you are successful. Again, it's all image and deception" .
Also, in the book titled "Fraud!: How to Protect Yourself from Schemes, Scams, and Swindles" , the author writes:
"The multilevel marketing plan is an illegal pyramid scheme" .
The Fake Bill Gates Quote
The Introduction page of the Direct Selling Association of Pakistan website houses the above web banner. The same can be found on the Conduct Between Companies page of the same. Bill Gates never said the above. This quote originated from a book by Robert Kiyosaki titled The Business of the 21st Century. Following is an excerpt from the book:
" In the early 1990s, I ran into a friend named Bill who was a retired multimillionaire. We got talking, and lo and behold, Bill told me that he was involved in building a network marketing business!
[...]
All the same, if I had to do it all over again and start from scratch, rather than building an old-style business, I would start ... by building a network marketing business."
You must be thinking that if not Bill Gates, the retired multimillionaire Bill said the above. However, the above was the account of Kiyosaki himself.
The Amazon Story
The scam artists at QNET argue that they are doing what Amazon - the business giant - is doing, i.e., network marketing. They continue to say that when no one has a problem with Amazon doing the same, being a legitimate business, so why question us at QNET? Sorry to break the bubble of legit business practices of Amazon, but Amazon is no saint. Individuals have raised concerns over citing somewhat similar business practices of Amazon found in pyramid schemes.
QNET vs. Amazon
Moreover, the comparison of QNET with Amazon is off. Unlike QNET, Amazon does not face a ban alongside severe legal battles in various nations (previously mentioned in The Company Background).
Unlike QNET, Amazon did not rob people of their hard-earned money (source).
Unlike Vijay Eswaran of QNET, Jeff Bezos of Amazon is not a prime accused in the case of defrauding people in India (previously mentioned in The Company Background).
Unlike QNET, Amazon did not abet A Aravind - a victim who lost a fortune to QNET, to commit suicide (source).
Unlike QNET, the offices of Amazon were not raided by the authorities for their involvement in human trafficking (source).
Putting the Blame on the Governments
Another argument that comes from these scam artists is that the governments of Pakistan and India have deemed pyramid schemes illegal to hide their incompetency, while first-world countries, like the US, supports these businesses.
It is too easy to blame governments in third-world countries for everything. However, their groundless argument falls flat since pyramid schemes are deemed illegal in progressive regions as well, such as the US itself (previously mentioned in Reasons Not to Invest in QNET).
Some go even further to claim that QNET is a registered business in Pakistan. I debunked this claim above in?the Legal Status of QNET in Pakistan.
Spotting Fallacies (False Reasoning) of QNET Scammers
In the book titled "The Confident Student" , Carol C. Kanar illustrates fallacies in an argument through a chart. QNET scammers tend to have fallacies that ignore issues. Surprisingly, their reasoning falls into all six subcategories.
Why Do Motivational Speakers Support MLM?
Motivational speakers and coaches get paid for delivering motivational sessions. For instance, Tony Robbins does so for QNET. Moreover, a video by Vivek Bindra is used as a defense mechanism by QNET scammers. In the video in question, Bindra supports MLM scams by uttering outright, blatant lies, far distant from facts and research.
The Video Breakdown
The entire 17-minute video is based on differentiating between "good" and "bad" MLM businesses. That is just like saying that there are both "good" (Afghani Talibans) and "bad" Talibans (TTP), even though both are involved in the suicide bombings.
2:19 (Translated from Hindi): People who did not get to taste success in MLM defame it because they do not want to see others' success.
Globally, 90% of startups fail. Despite the significantly high failure rate, the startup and entrepreneurship culture attracts positive reviews. Now the question arises, what is so peculiar about MLM that it gets defamed by those who fail, while the Internet is filled with encouraging resources regarding startups?
7:15: (Translated from Hindi) Actually, the power of compounding works in network marketing.
99% of network marketing businesses are Ponzi/pyramid schemes. As written by Tamar Frankel in "The Ponzi Scheme Puzzle" :
"Because one of the attractive features of a Ponzi scheme is the promise of a higher return than current market yields, payments to these new investors must be covered from yet other new investors. Therefore, a Ponzi scheme is the inverse of compounding in finance. New investors’ money must cover not only the high obligations to the new investors but also the high returns to the previous investors (who covered the obligations of the investors before them)" .
7:22: Einstein says compounding interest is the 8th wonder of the world.
Whether the above was said by Einstein or not is yet to be determined, as evident from the Snopes fact-checker.
11:56 (Translated from Hindi): Many peoples' nature does not match the MLM business, thus the reason for them being unsuccessful.
In "Scams and Frauds: Financial Crime Exposed" , the author narrates the reason for being unsuccessful in MLM scams:
"98% of people drop out or lose enthusiasm [in MLM scams] after they get continual "knockbacks" by people who aren't as gullible as they may have been."
14:17 (Translated from Hindi): People who rely on logical cause and effect and go systematically step-by-step, how can they succeed in network marketing? They cannot.
Thinking logically is one of the traits of critical thinking, one of the most sought-after soft skills. The importance of thinking based on logic, facts, evidence, and history in the business world is highly immense. Thinking logically takes decisive action and business is full of conscious decisions, both short-term and long-term. MLM belongs to the league of business if we go by the words of Vivek Bindra himself, so how come a critical thinker will not succeed.
The Myth of Sustainability
The scammers based in Pakistan and India falsely claim that the network marketing business is sustainable everywhere but Pakistan and India. As they blame the respective governments, they blame the natives of both countries as well. Their illogical argument goes like this: "People who fail in these businesses continue to malign the company" . However, in "You Can't Cheat An Honest Man: How Ponzi Schemes and Pyramid Frauds Work" , the author writes:
" ... because of the entrepreneurial and patriotic rhetoric that marks recruiting meetings and MLM literature, people often assume that they're to blame if they aren't able to recruit enough people to make money" .
Jon M. Taylor, associated with the network marketing industry since 1994, says that the loss rates are more than 99%. Talk about industry business practices? In the words of Taylor, MLM is deceptive, unfair, predatory, and fast-growing cancer.
Besides the study by Taylor, an investigative report on QNET by the Serious Fraud Investigation Office (SIFO) of India is living proof of the extraordinary loss rates. The report says:
"As per the data provided by the Managing Director, the GoldQuest and QuestNet sold products for a price of Rs806.15 crore to 2.39 lakh individuals. Out of these, about 50,000 people ever received any amount of commissions. Only about 20,000 were able to get more commission than Rs30,000, the initial amount of investment. So even though people were sold the concept and bought the products as a business opportunity, about 2.20 lakh people have actually lost money" .
The Mathematics of Non-Sustainability
The chain begins with six participants, i.e., the scammy company pays you for every six individuals you recruit. By level 11, the number of participants will exceed the US population. By level 13, the number of participants will exceed the global population - a feat impossible to achieve, thus proving that pyramid schemes are unsustainable.
The SECP illustrates the non-sustainability of pyramid schemes through the chart pictured below:
Following is an excerpt of a blog post by Sherwette Mansour that was also quoted by Moneylife, the brainchild of Sucheta Dalal - the business journalist who exposed the 1992 Indian Stock Market scam:
“By level 11, you will exceed the population of Egypt. So, I am assuming that the business flourish(es) and reaches level 10, which will have 60,466,176 (6.04 crore) people. Let’s assume that all these people will join the business, keeping aside the fact that Egypt is a POOR country and not everyone can pay an average of $1,000 to join the business. By level 9, the last level making [a] profit in the country assuming everyone will join, an average of 60,466,176x$1,000 = $60,466,176,000 ($6,046.6 crore) is sent outside the country for all members in level 9 to make [a] profit. Please do keep in mind that this number of people entering the business is almost impossible because a small percentage of Egyptians can actually afford to pay an average of $1,000 to join the ‘business’.”
The QNET's Unsustainable Binary Scheme
The chain begins with two participants, i.e., the scammy company pays you for every two individuals you recruit. By level 27, the number of participants will exceed the Philippines population.
The Long-Lasting Scam
Another assertion made by the QNET scammers is that a scandalous company couldn't last for as long as more than 23 years. However, they do not tell that the Bernard L. Madoff Investment Securities scam lasted for more than 20 years. Similarly, the Brothers Fund scam lasted for 20 years.
The Lack or Absence of Prompt Legal Action Against Scams
The following is pictured from the book titled " Contemporary Business" that sheds light on why the Securities and Exchange Commission and the concerned authorities throughout the world are unable to take prompt action on scams similar to the one in question but in the context of the Madoff scam mentioned in The Long-Lasting Scam:
Spotting Some More Lies
In a video by The Networker YouTube channel, Nuwan, from 1:50 to 4:43, explains why "media" is against network marketing. His definition of media included everything from news media sponsorship to celebrity endorsements, earned media, search engine marketing, and social media marketing. He says that the reason for the hatred by the media is that network marketing does not need to rely on media for advertising since the people associated with the network marketing itself advertise it. But he fails to recognize some facts listed below:
QNET relies on PR Newswire - a paid media channel.In another video, from 4:08 to 4:47, Nuwan says the following:
"Initially, right now, we are not focusing on selling products ... our main goal as a networker is to build a network, a strong network ... we are more business-oriented than product-oriented ... we'll be building this distribution channel until we "eat"?(possibly "reach" )?1 billion people. By the time we "eat" 1 billion people, our focus will be selling products to the whole world" .
The above said by Nuwan contradicts the claims of QNET being a direct selling company, as mentioned on the About QNET page of the official QNET site since Nuwan himself said that QNET does not focus on selling products. Talk about non-alignment of the company's vision and mission statements with what Nuwan said? The vision and mission statements, as listed on the QNET India's site mention phrases like:
" ... helping individuals ... with life-changing products" .
" ... to be the global eCommerce leader within the direct selling industry, leveraging this position ... to be a positive influencer in the development of sustainable and professional network marketing communities around the world" .
Terms like "products" , "eCommerce leader" , and "direct selling" mentioned above do not align with what Nuwan said, i.e., selling products is not the focus. Moreover, his saying that QNET will focus on selling products once it "eats" 1 billion people is also contradictory to the QNET's vision statement. The vision statement implies that QNET will begin building networks once it becomes a market leader through the selling of products (one of the core business operations of an eCommerce market player) - quite the contrary of what Nuwan said in hiIn a video by AVP Narjis Ryweck, she falsely claims at 3:58 that network marketing has created "the biggest number of millionaires in the world." This is far from reality as real estate holds the prestige for creating the most number of millionaires.Yet another video falsely claimed @0:32 that QNET does not ask for a registration fee. However, the QNET Pre-Enrolment portal suggests otherwise, asking for the mode of payment.
Legal Status of QNET in Hong Kong
In this section, I'll tell whether QNET is registered in Hong Kong - the headquarter of QNET. Moreover, I'll quash another false claim of QNET scammers that QNET is registered with the Central Bank of China.
As far as the registration of QNET in Hong Kong is concerned, it is not a registered business, as evident from the list of registered institutions on Hong Kong's Securities and Futures Commission website (pictured below).
Hence proved that QNET made a false claim of incorporation in Hong Kong, as seen in their IR Certificate (pictured below).
Now proceeding to the false claim of QNET being registered with the Central Bank of China (Taiwan). The Central Bank of China is void of the business registration authority. In Taiwan, this is done by the Financial Supervision Commission. QNET is not registered with the FSC as evident from the FSC's official website (pictured below).
QNET is not even registered by Malaysia's Securities Commission, as evident from the official website (pictured below) - some of the scammers, when losing an argument, further falsely claim that QNET began operations in Malaysia in 1998.
A Peculiar Encounter with a Scammer
Once I argued with a scammer that QNET's registration status as a legal entity is void. He replied with "We are dealing with verysign (he meant VeriSign) security" . VeriSign is a domain name service registry provider that has nothing to do with the legal status of the business (IT and cybersecurity people would second that).
Evaluating This Article Through Applying Standards of Evaluation
Authority
Conclusion
It is evident by now that QNET is an illegitimate scam. From their hiring criterion to business practices, everything gives off the fact that they carry an ulterior motive to deceive and loot people. Stay safe from the ongoing pandemic as well as easy money traps.
"When you don't understand an investment, it doesn't mean you're dumb, it simply means the investment doesn't make sense." - Financial Mentor
ARTICLE COPYRIGHTS TO SALMAN MUHAMMAD.
Marketing Leader & Story Teller | Digital Marketing & AI | Brand Strategy & Governance | Communications & Content | Media & PR | BTL Activation & Events | Alliances | x MCB | x UBL | x FBL | x Indus TV & MTV Pakistan.
1 个月Cfbr