Pyramid of Lies: How MLM Lures the Desperate
Two years ago, at her graduation ceremony, Ayesha Ali beamed with confidence. A degree from a prestigious business school seemed like a guarantee for a promising career. However, after nine exhausting months of job hunting, her hopes crumbled as she failed to secure a suitable position.
Desperate for work, 22-year-old Ali reached out to her network in hopes of finding a job. Her efforts bore no fruit until one day, she stumbled upon an enticing Instagram story from a former classmate about earning in dirhams from home.
“The story depicted a women-led event promoting home earning potential with training included,” Ali recalled. “It caught my eye. Eager to support my family who invested heavily in my education, I reached out to my classmate to learn more about this opportunity and if she was involved.”
This was the moment Ali fell prey to the intricately organized and seemingly legal MLM schemes, an industry notorious for exploiting young adults and recent graduates yearning for financial stability.
Multi-level marketing (MLM) programs thrive by recruiting individuals to sell products or services while enlisting new members. Unlike traditional businesses focused on product sales, MLM schemes prioritize recruitment. Those at the top of the pyramid benefit at the expense of those below, who often struggle to recoup their initial investments.
Though some MLMs operate legitimately, many mimic illegal pyramid schemes, banned in several countries due to their exploitative nature. Despite regulations like the Companies Act of 2017 and the Prize Chits and Money Circulation Schemes (Banning) Act of 1978 in Pakistan, such schemes persist, particularly targeting youth through social media.
In Pakistan, with a youth unemployment rate exceeding 8.5% and crippling inflation, many young people are driven to these schemes in desperation. Recruiters exploit this situation by encouraging recruits to purchase products or starter kits upfront, which often have little market value. The real profit lies in recruitment. This psychological manipulation leaves recruits believing failure is their fault, fostering a cycle where they invest ever more effort and money with little to show for it.
Amid rising living costs with a Consumer Price Index (CPI) surpassing 30% in 2023, young professionals face immense financial pressure. This makes them prime targets for MLM recruiters promising quick riches and financial freedom.
As job opportunities dwindle, MLMs appear to offer a flexible income stream, appealing to jobless youth. Pressured to contribute financially, many are entrapped by offers of immediate gains, all while recruiters tout stories of success, lavish lifestyles, and high earnings to lure in the unsuspecting.
Ali shared her experience: after investing around 200,000 rupees, she realized the only individuals benefiting were those at the top of the pyramid, while people like her struggled. The use of social media platforms such as Facebook, Instagram, and WhatsApp makes these MLM schemes particularly pervasive, enticing graduates with promises that seem too good to be true.
Sabreena Khadim, a mother of two, was nearly ensnared by such a scheme through a Facebook post. When she voiced skepticism, she was immediately blocked, prompting her to share her cautionary tale to prevent others from falling into similar traps.
Graduates, often burdened by educational debts, turn to MLMs in hopes of relieving financial stress, only to find themselves deeper in debt. Stories like Ahmed Hameed’s, a master’s graduate in Chemistry, are all too common. Persuaded to invest in a dubious health supplement MLM, he ended up with debt and a damaged reputation.
Far from providing the promised returns, these ventures often revolve around recruitment rather than actual sales, as confirmed by Sarah, a recent IT graduate. Lured by the prospect of a lucrative income, she ultimately found herself in a predicament, losing both money and mental peace.
Potential recruits can avoid MLM traps by recognizing telltale signs, such as exaggerated claims of effortless profits and a focus more on recruitment than product sales. It’s crucial to verify a company’s financial structure and startup costs before involvement.
Despite existing legal frameworks, MLMs persist in Pakistan, often due to regulatory gaps and weak enforcement. Fraudulent companies frequently change identities and use offshore accounts, complicating authority efforts to curb their operations. Active monitoring and shutdowns of deceptive MLM activities are essential.
Moreover, educational institutions must teach students about financial scams to shield them from such pitfalls. By prioritizing skill development, legitimate entrepreneurship, and viable employment, youth can avoid impractical shortcuts to wealth.
Pakistan can only protect its future generations from these fraudulent schemes by enforcing stringent measures and fostering awareness. As these challenges loom large, a concerted effort to create authentic job opportunities is critical for the nation’s economic well-being.
