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A friend of mine join a network marketing organization by investing 10,000 because his girlfriend is in it. He introduced his handler/manager and he gave a speech about how easy it is to earn by only investing 10,000 and his main selling point was that its possible to earn 2-4 million in a year. And my job is to just get my left and right node(of the tree).

The product the company is selling is some online tutorial/course which is totally useless(esp to me).

I have done some online research on it and got mixed reviews regarding the company hence I am really skeptical about joining it. Additional reason for being skeptical are:

  • I find the whole 1:2 and 2:1 ratio rubbish. Its more reason for not getting paid.
  • And that I will get paid 2700 when I get that 1:2 and 2:1.
  • By my calculation I(or my child nodes) have to get 18 people to join to break-even my investment.
  • Every year I have to deposit 3500 to remain active in the company, else my account gets expired.

I think I should not name the company here. And I know Company name/brand/goodwill plays a major factor in deciding whether to invest in it or not.

I need advice, should I invest? Is the probability of getting returns in network marketing good?

What are the chances that I will get a good return in investing in this network market compared to investing in some other places like SIP?

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    Read your own question out loud and I bet you are smart enough to come up with an answer.
    – Pete B.
    May 17, 2016 at 11:47
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    haha...then I guess I should delete this question before someone starts downvoting my question......（⌒▽⌒ゞ
    – j4rey
    May 17, 2016 at 11:53
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    This is not Stack Overflow. People come here to seek and provide help. In your case it was much better of you to ask then to rush out and do something.
    – Pete B.
    May 17, 2016 at 11:55
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    I had a friend like yours, once. Now he is not my friend anymore because he was willingly and purposefully trying to scam people. Run.
    – STT LCU
    May 17, 2016 at 14:12
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    Due to a number of similarly themed questions in the last few weeks, we should really have a F.A.Q. or somehow linking such questions together, in the means of: "Is your question whether a scheme which promises for your investment an earning of orders of magnitudes larger than what can be found on the normal markets, while promising no or negligible risk, a scam? Then our answer is: yes, it is!"
    – vsz
    May 17, 2016 at 16:23

3 Answers 3

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The basic way that these "work" is this:

Every year I have to deposit 3500 to remain active in the company, else my account gets expired.

You are paying money into the system. The only way you make any money is to:

By my calculation I(or my child nodes) have to get 18 people to join to break-even my investment.

Intuitively this should tell you that:

  • The only way you make money is if more people join (who then do not make money unless they also get more people to join)
  • Everyone at the "bottom" loses money

What normally happens in this sort of thing is that people get conned/excited/tricked/whatever and sign a few of their friends up, but then quickly run out of people to bother/annoy/hassle/harass into joining and then they lose money on the whole thing.

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    exactly......the whole concept of the business is to collect money from the bottom guys and distribute some of it upwards.....the whole concept of 2:1 and 1:2 means not all upwards guys gets paid......Thanks...
    – j4rey
    May 17, 2016 at 13:33
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    In layman's terms - this is a classic example of a Pyramid Scheme - en.wikipedia.org/wiki/Pyramid_scheme
    – SnakeDoc
    May 17, 2016 at 17:04
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    And, of course, even bigger tragedy than losing the money (and what makes these scams so despicable) is that in the worst case after the friends and family members you've recruited lose their money, you lose your friends and sever ties with family members as well.
    – Moyli
    May 19, 2016 at 9:29
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"if it looks like a duck, walks like a duck and quacks like a duck, then it's a duck"

This cliche is appropriate for your situation. Every aspect of this endeavor says "scam." It's a classic pyramid scheme with a product for sale that you don't even believe in. Too bad it's a friend that brought it to you.

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    Just want to note that most of these schemes are not scams per se (being completely legal) but they are absolutely "pyramid schemes".
    – Kaz
    May 17, 2016 at 15:42
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    Pyramid schemes, by definition, are illegal.
    – JTP - Apologise to Monica ♦
    May 17, 2016 at 16:07
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    Indeed. Some schemes (called MLM - multi-level marketing) might be on the verge of plausibility, where you don't have to "invest", you just have to buy the product and try to sell it, and additionally, you can earn some percentage from the sales of those who you recruited. But on the other hand, having to pay a huge sum of money up-front, with a promise that you might get back some of it if you convince enough people to also pay huge sums of money up-front, is no longer a MLM, but an outright pyramid scheme.
    – vsz
    May 17, 2016 at 16:27
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    @JoeTaxpayer: Can we collectively say that pyramid schemes are illegal? I'm not that deep into this topic but.... I doubt that international there isn't any country that is not prohibiting this.Or is this se site restricted to specific country and I just failed to read the corresponding about site here?
    – Zaibis
    May 18, 2016 at 9:49
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    Not every last country. en.m.wikipedia.org/wiki/Pyramid_scheme and, unfortunately, we do not know where OP lives. Keep in mind, the legality wasn't critical to my answer, legal or not, it's a bad investment.
    – JTP - Apologise to Monica ♦
    May 18, 2016 at 12:30
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If you're selling a product of actual value, and willing to do the recruiting hustle then a Network Marketing Scheme might work out for you.

If you can't make money just selling the product, or it's not a product you'd support I would stay far away.

In the US, it is my understanding that MLM is legal if your earnings can surpass your sponsor's.

Disclaimer: I did Quixtar (Amway online) in college. But I didn't succeed because I didn't nag all my family and friends to join nor hustle the products. I have met folks who have actually done well with it, and I think without really screwing anyone else over.

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