… if you are not just buying a product,
but are expected to attract new customers.
There is an extremely fine line between a serious offer and a rip-off.
You have received a tempting offer on Facebook. The person who has contacted you is young and dynamic. You see pictures of dream holidays, luxury cars and expensive watches.
Your profile was discovered, “your potential has been recognised” and they want you to be part of their team. You should also be able to become wealthy with only a little bit of work, by for example selling subscriptions to financial training sessions.
Caution – avoiding cause yourself, your family and your friends losses, as a result of you exploiting their trust!
Typical features of network marketing in the near-financial field:
- The prospect of being able to earn a lot of money
- You have to make a large initial investment
- Rising up through the ranks in the system is presented as being very simple
- You are instructed to recruit your friends and acquaintance to the scheme
- Large events and parties in top locations
- Emphasis on community spirit
- The system is portrayed as a new movement
- Incentive systems for travel, cars etc.
- Advice is provided by persons who do not work in the sector, with a low level of knowledge and without the necessary education
- Real products are not sold, but webinars or trading signals on WhatsApp
- The product remains in the background, the emphasis in the foreground is on your place in the sales pyramid
Ask yourself whether you would also purchase the product if there wasn’t the whole network marketing system behind it. Is the product itself valuable in its own right?
Distinction from illegal pyramid schemes
The difference between this and an illegal pyramid scheme is that the latter requires you to pay to join the scheme without receiving anything in return. Newly invested money is distributed among other members in higher levels in the system.
The FMA’s role
The FMA is only able to act, where the products are financial instruments or where investment advice takes place, without the required licence being held. In the vast majority of models, services requiring a licence are not required – nevertheless you should remain cautious. Don’t let yourself be conned!
Legal and serious: valuable products are sold directly
Legal and dubious: the products wouldn’t be sold without the system
Illegal: no real products or assets