“Today you’ll be a new member, next week you’ll be part of the expectations…but please don’t ask questions because I am sure you’ll find them answered during my talk!” This was how presenter Mohamed Magdy Abdallah started his vague presentation.
I had been invited by a colleague to attend a leadership skills training session only to find myself stuck in one of those MLM [Multi-Level Marketing] company talks – remember the Qnet talks you used to hear about a couple of years ago? Yup, those ones!
What he should have said was: I shall proceed to ramble on for the next hour and a half without pause till you possibly forget all questions and any asked shall be answered with vague unrelated answers which my passionate friendly tone shall compensate for].
Sadly, I couldn’t believe we were starting 2019 and that people are still falling for these scams. So today I think as a responsible citizen we should discuss MLMs, pyramid schemes, and anything else that would spread a bit of awareness out there so that no one gets bamboozled into losing their savings.
What are MLMs?
MLM is a multi-level marketing company. Multi-level marketing (MLM) is known by a variety of names: network marketing, referral marketing—and more pejoratively (and/or when done unethically), pyramid marketing. In this structure, marketing and sales reps not only receive compensation for their own sales but also receive a percentage of the sales generated by other salespeople they recruit (commonly known as one’s “downline”). Consultants involved in multi-level marketing usually sell products directly to consumers through relationships and word of mouth.
So, what’s a pyramid marketing scheme?
In a typical pyramid scheme, you pay to join. The scheme relies on you convincing other people to join up and to part with their money as well. For everyone in the scheme to make a profit there needs to be an endless supply of new members.
Some pyramid scheme promoters disguise their true purpose by introducing products that are overpriced, of poor quality, difficult to sell or of little value.
In the words of the ACCC [Australian competition & consumer commission]: Pyramid schemes are illegal and very risky ‘get-rich-quick’ schemes that can end up costing you a lot of money.
So now that we’ve established a few definitions, let’s get to the real talk.
How to recognize an MLM/pyramid scheme?
- They always appeal to the vulnerable side of your life by preaching about an appealing and easy lifestyle.
Their slogan is “I TAKE CONTROL BACK”. The presenter, who’s also a member and a recruiter himself, went on drawing big spider-like hierarchies of points and numbers that somehow magically add up to a member earning 75,000 LE in a week! Thereby, implanting dreamy ideas by asking questions like “what if you could reach Bill Gates success in 3 or 5 years?!” Followed with promises of becoming an entrepreneur by flirting with the idea of being financially free and having the opportunity to travel with your family anywhere.
- They claim not to be a ruse [nassabaya].
Their explanation is that they sell products, unlike points as Qnet used to do in the past [they never mention Qnet by name]. So, their money is guaranteed! They also claim legitimacy and that they’re not a scheme with the argument that they help organize big international forums and have headquarters in developed countries. Oikaa claims that LO is an Italian fashion brand, with Oikaa being an Egyptian company, with headquarters in the USA.
Now assuming this is true, most people would think to have headquarters in a developed country like the USA would be a sign of legitimacy, which is probably what Oikaa is aiming for.
However, even in the USA people suffer by being misled and abused by MLMs. They even have a caucus for direct selling! When are we going to learn that not everything that comes out of the West is verified and safe!?
- The false promise that by recruiting a small number of people [and you know many for sure], you’ll be making money.
The presenter ensures the listener that even if they’re not successful they’ll still be winning since if their success is 0.5% it would still amount to 5000 LE per year because you’re bound to know someone right!?! And that someone knows someone and so on, so it’s a guaranteed success.
However, author of “False Profits: Seeking Financial and Spiritual Deliverance in Multi-Level Marketing and Pyramid Schemes”, Robert Fitzpatrick who’s been studying pyramids schemes since the 80s explained in 2013 that the math doesn’t add up:
“The math is a distortion, manipulation of what they call exponential expansion. Exponential expansion is two times two times two times two. And almost all of these schemes tell you that you can make money by just recruiting three or four, five, let’s say, five. Then you let the five do their five. That gives you 25. That’s the exponential expansion. That’s the trick of the whole thing. What they don’t show you is that you can only do that 13 cycles. And you would exceed the population of the earth. So it can’t work. However, it still always dooms the vast majority and it can never keep going, so it’s unsustainable.”
We did the math! Today in 2019 after 14 cycles you’ll exceed the world’s population – and assuming that EVERYONE wants to be recruited, it’s still impossible to move up their supposed hierarchy to become a leader.
Another key strategy of theirs is marketing to communities with certain mindsets. They look for those who are desperate and in need, those who are family oriented and want a better life for their families. Sounds familiar? They target countries like Egypt, India, South Africa, Mongolia, Venezuela, and in large countries like the United States some of their prime victims are minorities like Latinos, as is shown in the documentary “Betting on Zero”.
- The bandwagon of an influential founder/president.
One of the influencers who impacts Oikaa the most is its founder, Khaled Obeya, who has around 15000 followers, and a Facebook flooded by praise!
You’ll find photos of him attending the WFDSA forum in Dubai representing Oikaa. However, it’s important to note that a few years back, he was QNet’s 1st Diamond Star; a type of ranking they give to premium members.
- Their influential side plays on “humanitarian” tunes.
If the influential, inspirational array of coaches don’t work on you there’s always your soft side. Oikaa makes extreme claims. Like the idea that their “The Kingdom Bootcamp” is educational, to enhance leadership and/marketing skills; or that their vision is to “eliminate poverty”!
It’s kind of hard to visualize people who are persuading a crowd that investing 5-20 thousand LE -claiming it’s not real money – to actually be the kind of people who’ll “eliminate poverty”.
- MLMs always have something that makes them seem legitimate.
For example, Oikaa’ fashion brand LO dressed the national team during the world cup and now a year or so later, they still have their profile picture of Mohamed Salah wearing their suit and logo pin. It doesn’t mean he endorses the company or its activities but it’s definitely something they’d like viewers to think and will mention extensively during their talks. So, in the viewers’ mind, if they’ve worked with such high profile celebrities, they must be legitimate.
They also make claims like contributing NYFW [we have yet to find proof of that].
What they don’t tell you is: In Egypt, according to Rebel Economy, several regulations prohibit this type of activity; while in some countries like Australia, pyramid schemes are entirely illegal.
When are we going to start using our minds and realize that there is no such thing as easy, fast money and that anything that claims otherwise has to be a scam?
Well if our education failed to help us with the math, let’s work on awareness. Now you know what Oikaa really is; we should take control back, of our lives… and brains.
So today, I have an exciting opportunity for you to make the world a better place. To eliminate the reasons that make people poorer. And it’ll take only 30 seconds of your time. If someone you know is planning on investing money in Oikaa or a similar MLM, this is your chance to make a difference!
Get them to know that this a scam, and that network marketing will ruin them. So please share this to stop people from getting involved in these scam schemes because MLMs are taking advantage of people going through hard times and it’s our responsibility to spread the word.
Has this ever happened to you or anyone you know? Let us know in the comments!