Front-End Loading

Akramdin66 SG

I have noticed that many MLMs here lure or even require their members to buy large amount of products when they sign up as a distributor. Beware of such practice as it contravenes a very basic MLM principle that one is not required to invest a large sum of money to start an MLM business and that there should be minimal risk in MLM.

MLM members generally purchase products for their own consumption and if they like, they can retail some. But when they are required to purchase stocks that can fill up their HDB store room, something is not right. Most new distributors are not trained in sales and unable to move these stocks and suffer losses as a consequence.

I have just returned from a trip to Malaysia where one company even collaborates with a local bank to provide RM20,000 loans payable in 10 years for new distributors! They have been very successful in their cunning device, the company sold millions of products, top leaders earn insane bonuses and the bank have found thousands of new borrowers. Unfortunately, those same thousands are now in debt, with their monthly salary deducted to pay for the loan to pay for the products that the majority of them couldnt move.

Phaze SG

The practice of “front end loading” makes it a pyramid scheme.

Akramdin66 SG

Phaze, your definition would categorize many MLM companies here as Pyramid schemes, and many of them are actually members of DSAS. eg, in WBG, members were made to purchase a years supply of nutrition. Bel-Air encouraged their new potential members to spend $21000 on their aromatic oils. Even US companies like Nu Skin, did not escape, some of their local leaders manipulated the business and introduced a system where new members were required to purchase $10,000 worth of products that ultimately went under the bed. The list goes on and on.

I would hesitate calling them Pyramid schemes because they do move products and commissions are paid to the uplines on the volume of products sold, not based on recruitment. However, in my opinion, the practice of 'Front-end loading' or 'Upfront loading' is unethical and has brought financial ruins to many MLMers here. It has tarnished the image of the entire MLM industry.

Phaze SG

Yes. Many MLM companies are fronts for pyramid schemes. They may be members of DSAS just to get credibility.

It's how they pitch to the new prospect. They tell the prospect, "hey we're not a pyramid scheme. No one gets paid unless product gets sold."

But then they tell the prospect, "well if you can't sell the product, just buy it yourself. It's an investment in your business!"

That makes it a pyramid scheme.

laurence82 SG

Membership of DSAS do not readily clear any company of being an pyramid scheme

Its not an "association of licensed MLM companies"

DSAS is mainly concerned with ethical selling and prescribe to certain codes of ethics such as 7 days cooling off period

Its effectiveness is questionable, sometimes i see the list of companies, i give a big sigh, and that its scope of authority is only limited to selling methods, but does not question the integrity of the various MLM schemes

Back to the question, front loading and movement of products arent the main factors of a scam

The more ingenious one include pushing people to front load in guise of pure recruiting. Products do move also

lolz

mrleech SG

From what I understand on what DSAS does, is that they only check the marketing plan as well as their policies and regulations.

They have no authority (as mentioned earlier) over how business is conducted.

Sadly, this is the plain and simple truth of MLMs here in Singapore.

So just do your own homework.