After explaining what is WhatsApp Stokvel and How It Works some people are still asking if WhatsApp Stokvel is a pyramid scheme or Multi-Level Marketing (MLM).
Today I will explain the difference between the two business models and at end of this article, you will know how to classify If WhatsApp Stokvel is a Pyramid Scheme or Multi-Level Marketing (MLM).
I will also show you if it is legit to operate a Pyramid Scheme (Ponzi Scheme) or MLM in South Africa.
So you can stay away from trouble if you are planning or operation this kind of business model.
By way, if you are looking for an opportunity to earn some extra income or legit business model that does not involve recruiting people or paying expensive stocks.
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Is WhatsApp Stokvel a Multi-Level Marketing (MLM)?
Let look at the Wikipedia MLM definition then you will understand if WhatsApp Stokvel is Multi-level Marketing (MLM).
“Multi-level marketing (MLM), also called network marketing or pyramid selling, is a controversial marketing strategy for the sale of products or services where the revenue of the MLM Company is derived from a non-salaried workforce selling the company\’s products or services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system.”
After reading this definition you understand that the WhatsApp Stokvel is not an MLM business model.
There is no direct product to sale to the public.
Members of the WhatsApp Stokvel are making money by recruiting other people to join the group by paying a once fee to earn an urge return by recruiting more people in the group.
Is WhatsApp Stokvel a Pyramid Scheme?
Again let look at the Wikipedia Pyramid Scheme definition.
“A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products”.
In this case, the WhatsApp Stokvel is a pyramid scheme. There is no direct product to sale or any kind of product to sale to sale to the public.
People are making money by recruiting other people to join their WhatsApp group and pay a once fee of R200 and expect to earn R1000 by recruiting more people in the scheme.
This kind of business is illegal and it will destroy your relationship with your friends and family members.
Is Pyramid Scheme Legit? Is it MLM (MLM) Legit in South Africa?
That is a very good question. I will explain those two questions in more details whenever someone invites you to this kind of business model you will know what you are getting involved.
It will help you to stay away for the trouble and also save time and money.
Is a Pyramid Scheme legit in South Africa?
Pyramid Scheme is also known as the Ponzi scheme is not legal in South Africa and it is illegal in most of the countries.
Why Pyramid Scheme is legit?
- Firstly there is no product to sale to the public and people are making money by recruiting other people to join the scheme by paying once fee and promise new member high rate of return.
- Secondly, there is a limit number of people on the earth and you cannot go behind the earth population. Eventually, the Pyramid Scheme will collapse if you cannot recruit more people.
If Pyramid Scheme collapse most of the new members will not break even and they will lose their initial fee.
The Pyramid Scheme is also called stealing for Paul to pay Peter or Paul and Peter scam.
Therefore, if you want a legit way to make some extra money or build an online business part-time or full time you can subscribe to My YouTube Channel for tips and training.
Is Multi-Level Marketing (MLM) legit in South Africa?
On the paper, Multi-Level Marketing is legit in every country and MLM Distributor makes money by selling direct products to the public.
Companies like Herbalife, Longrich, Amway, LulaRose and others are MLM companies.
Multi-Level Marketing (MLM) become illegal if those companies main focus are only recruiting people or distributor revenue comes for recruiting new distributors.
Let me explain…
Those MLM companies do not have stores.
You will never go to a mall or shopping centre and find Herbalife or Amway Store.
They are selling their products through people like me and you who are interested in making some extra income or start your own business
That is a marketing strategy it helps those companies to save more money on advertisement and other Traditional Marketing.
You can sign up as a distributor and start selling those companies product and there is nothing wrong with that.
But to increase your earning as distributors you are required to recruit other distributor and build your downline and make commissions for their sale.
Some companies have expensive products that lead distributors to focus only on recruiting other distributors this is where the problem starts.
Other companies come with low-quality products just to cover their pyramid scheme.
Most of those MLM companies like Herbalife, LulaRose, Amway and others has been accused by Distributors and US government Federal Trade Commission for operating as Pyramid Scheme.
This video below will explain more in details how MLM company work and why should stay away from MLM and Pyramid Scheme.
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All you need is a laptop and internet connection.
This not a WhatsApp Stokvel Pyramid Scheme or MLM business model and I will never promise you Overnight Success or Get Rich Quick Scheme.
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The question may be how do you make money by writing content that you access it for free right?
Look around this article you will find display ads every time someone clicks on those ads I will get pay.
To be honest those ads do not pay much…
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Any business model that promises high rate return by recruiting people without selling products to the public is a pyramid scheme and a Pyramid scheme is illegal in South Africa.
Both Pyramid Scheme and MLM also look seductive on the paper.
But it is very tough to make decent money with this business model and there is also a high chance to fall for scams or not making money at all.
I hope I have answered this question “Is WhatsApp Stokvel a pyramid scheme? Is it MLM?” and also help you to understand the difference between Pyramid Scheme and Multi-Level Marketing.
If you want to learn more and stay alarmed for new opportunities and even avoid scam online please Subscriber to My YouTube Channel.
Share your WhatsApp Stokvel Pyramid Scheme Experience
Are you a member of any WhatsApp Stokvel, or have you been in the past?
Please consider sharing your own experience in the comment below whether good or bad it matter as long as it is helpful to our visitors.
Thanks for your support!