In October, a small news story about direct-selling scam emerged. At first, it looked like another MLM scam, but asthe story unfolded, it quickly became a high-profile scandal due to the scale of damages and the number of people involved, most of them celebrities and those in entertainment business.
What I found amazing and unbelievable, however, weren’t those details, but the sheer amount of inventory the victims were asked to buy and stock. What happened was that in order to sell those products, they had to spend more money to do marketing and advertising in hopes of quickly selling the goods while recruiting others to join their sales networks
Rapid network building is akin to increasing purchase volumes to support one’s own sales, as it allows the products to be resold through a broader network. The key motivation here is that the more products one sells and the more recruits one finds, the faster the returns will be. Many people are not driven by a desire to become celebrities or drive expensive cars, but the allure of quick and substantial profits is universal.
The most affected group is those at the lower tiers of the network who are unable to sell the products, having already sunk their investments. Meanwhile, people who benefit along the way are those at higher levels without the need to hold inventory, but continue to receive money from their recruits below, expanding their base.
Let’s stop here. What do you see?
Here’s what’s happening: the flow of money within the network has come to a halt due to lack of real demand. Previously, the demand was artificially created through increased purchase volumes.
Just consider a single recruit with 10 people in their network; the person above them effectively has 100 people to sell to. This raises questions about how many buyers or users exist in the market and how marketing efforts are directed toward these potential buyers. The concepts of wealth and success are often portrayed as a glamorous image, not as actual products with genuine usage.
This situation is reminiscent of scams where individuals are lured into investing money by impersonating credible people and companies, promising returns of 7-10 percent per month.
If we pause and reflect on whether it makes sense to invest our hard-earned money in this kind of scheme, we may realize that we are being blinded by greed. There are some questions we must ask ourselves to understand the hidden greed.
Will we be able to sell the inventory? Do people around us actually use them? If so, do we really need to buy that much? Moreover, we should question why a well-known company wouldn’t opt for issuing bonds or borrowing from banks instead of soliciting our money for high returns.
Protecting and managing our hard-earned assets to prevent losses is as challenging as acquiring new ones. Losing invested capital can be mentally devastating, undermining our confidence and self-esteem. This is different from utilizing funds for meaningful investments or caring for loved ones, as the latter involves losing money in a constructive manner.
It’s not wrong to seek wealth and profits, but excessive greed can cloud our judgment and lead to evitable losses. The emotional toll can be far greater than the financial loss.
In light of these events and for the future, we need to keep our greed in check. Recognizing how much greed influences our thoughts can help prevent us from making poor choices that could result in losing everything, leaving us with debts.
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