(x) asaso003 Feb 16th 2012, 09:29pm MY1BRO COMPANY IS A NEW ELOAD BUSINESS COMPANY! Income of not only 5 ways BUT 8 WAYS TO EARN 1PHONE 1SIM LOAD EVERYTHING! ANG MY1BRO IS PRO NETWORKER ANG INCOME 25 SA COMPANY AT 75 SA NETWORKER UNLIKE SA IBANG NETWORKING COMPANY UPLINE LANG ANG YUMAYAMAN! UNG THE REST MAGTITIIS NALANG SA PRODUCT NA NKUHA NILA OR ONETIME PROMO NA BINIGAY SA KANILA... Price is P3,988 Includes: DEALER's ATM/ID CARD INSURANCE worth 100k DEALER'S GUIDE RETAILERS GUIDE FORMS/FLIERS/ POSTERS PERSONAL WEBSITE ACCOUNT UNLIMITED RETAILER ACTIVATION Be a Dealer of 1BRO (1 Basic Republic of Opportunities) One Sim Loads All Dealership Powered by LoadCentral Income of not only 5 ways BUT 8 WAYS TO EARN THE MOST GENEROUS COMPENSATION PLAN as compared with other One Sim Loads All Companies. COMPENSATION PLAN 1. DIRECT SELLING OF LOADS. Earn up to 25 of loads for more than 400 Prepaid Products. EXAMPLE: You sell 100 smart,red,sun,globe, tm load 100x8 (. =80 so mean 80pesos ang load at may kita kang 10pesos pano kung marami kang nabenta??sympre mas malaki ang kitaan!!! 2. UNLIMITTED RETAILER SIGN UP. 1BRO Dealers can Register Unlimited Retailers
Transcript
(x) asaso003 Feb 16th 2012, 09:29pmMY1BRO COMPANY IS A NEW ELOAD BUSINESS COMPANY!Income of not only 5 ways BUT 8 WAYS TO EARN1PHONE 1SIM LOAD EVERYTHING!ANG MY1BRO IS PRO NETWORKER ANG INCOME 25 SA COMPANY AT 75 SA NETWORKERUNLIKE SA IBANG NETWORKING COMPANY UPLINE LANG ANG YUMAYAMAN! UNG THE REST MAGTITIIS NALANG SA PRODUCT NA NKUHA NILA OR ONETIME PROMO NA BINIGAY SA KANILA...
Be a Dealer of 1BRO (1 Basic Republic of Opportunities)One Sim Loads All Dealership Powered by LoadCentral
Income of not only 5 ways BUT 8 WAYS TO EARN
THE MOST GENEROUS COMPENSATION PLAN as compared with other One Sim Loads All Companies.
COMPENSATION PLAN
1. DIRECT SELLING OF LOADS. Earn up to 25 of loads for more than 400 Prepaid Products.
EXAMPLE: You sell 100 smart,red,sun,globe, tm load 100x8 (. =80 so mean 80pesos ang load at may kita kang 10pesos
pano kung marami kang nabenta??sympre mas malaki ang kitaan!!!
2. UNLIMITTED RETAILER SIGN UP.
1BRO Dealers can Register Unlimited Retailers
Earn P200.00 each per Retailer Registration under your Account..Not just 20 but UNLIMITED Retailers ONLY AT 1BRO Ex. 50 Retailers x P200.00 = P10,000(EXAMPLE PALANG ITO E PANO KUNG WALA NANG BAYAD ANG RETAILERS MO??MAS MAGANDA DAHIL MAS MALAKI ANG PAG ASA MO NA MAS MARAMI KANG RETAILERS AT MAS MALAKI ANG KITAAN)
(sa iba, 20 Retailer Activation Card lang! Dito sa 1BRO, UNLIMITED PO! kaya san ka pa? )
NOTE: yung iba kasi ang akala yung 20pcs. na card na sinasabi sa kanila ni Pare V. ay prepaid card! SIM ACTIVATION lang po yun! Lagi kasi sinasabi 20pcs. x P250 5,000 BAWI na daw agad ang capital! alin ang mas Maganda UNLIMITED RETAILER REGISTRATION x P200 sa 1BRO??? or 20pcs. x P250 kay Pare V.???
o pede mo naman ibigay ng libre diba??take note unlimited retailer registration tayo
3.GROSS RETAILER OVERRIDE Dealers Override up to 5 from unlimited number of Retailers ONLY AT 1BRO
What if you have more than 50 Retailers?What if they load more than P500/day?
4. DIRECT REFERRAL. Dealer can refer anyone to become a Dealer also and earn P500.00 per Dealer (Unlimited number of Dealers). ONLY AT 1BRO
Ex. 50 Dealers x P500 = P25,000
5. INDIRECT REFERRAL BONUS. Earn additional P50.00 for every referral of your Direct Referrals and Indirect Referrals up to 8th Level. ONLY AT 1BRO
6. PAIRING BONUS - No Flush Out(meron pa din kahit papaano kasi kung walang flush out lubog yan). Earn P500.00 per pair. Not only 60 pairs BUT Maximum of 142 PAIRS A DAY. Earn not only 30K BUT up to P71,428.00 per day / 500K a week / 2M per month! ONLY AT 1BRO
7. LEADERSHIP OVERRIDING BONUS. Earn 10 - 50 from the total income of your 3rd to 7th Direct Referrals. ONLY AT 1BRO
Not to be deducted from your Direct Referral's income (It is to be paid by the company)Kaya ang bawat isa ay gaganahan ng husto para mag Direct Referral at kapag kumita ng husto yun downline mo, kikita ka din panigurado aside from pairing bonus.
EARN EVEN IF YOUR TEAM A AND TEAM B (Left and Right) is NOT BALANCED)
MERON BA SILA NITO???? ONLY AT MY1BRO!!!!
8. UNILEVEL INCOME ON PERSONAL CELLPHONE LOAD. ONLY AT 1BROito po ay applicable kapag ang dealer mo ay nag paload ng 500pesos direct sa company meron po kayong makukuhang 2pesos(mukhang maliit lang diba) pero kapag marami kang dealer take note mas lalaki dun yang 2pesos nayan
monthly saan ka pa!!
FYI: Before you read 8ways I donts PROMISE instants YAMAN instants business YES! to EARN more you need to buy effort, The good thing in this BUSINESS you can have UNLIMITED Retailers work for you and 8ways to EARN!!!! pls read carefully... wag maakit sa magandang promo ng iba review the marketing plan!ANG PROMO ay 1time lang after that kikita kapaba? THE BEST BUSINESS ung kikita ka talaga lalo na pag masipag ka kumuha ng retailer mo or makapag sponsor ka. Ang ELOADS BUSINESS DAPAT PAG NAGLOAD KA WLANG BAWAS PERSONAL LOAD MO UNLIKE OTHERS MY1BRO was power by LOADCENTRAL which has own GATEWAY! anyway to give you more ideas pleased read carefully OUR MARKETING PLAN!
AVAIL OUR DEALERSHIP PACKAGE1.)1 headMembership fee = Php3998Package; Franchise fee cert, personal insurance worth 100,000, materials, flyers and tarpoulin
2.)3 headsMembership Fee = Php 11,964Package; Franchise fee cert, insurance, materials,plus instant income of Php 1500with FREE MYPHONE CELLPHONE!
5. 100 SUPPORT FROM ME AND FROM OUR GROUP - kapag sumali ka sa 1BRO tandaan mo may support kang makukuha dahil we work together walang iwanan dito!!
Refer 120 New Dealer in 1 month and i'll give you FREE VACATION IN Palawan good for 2 persons (free airfare back and forth plus P5,000 pocket money)
To claim your GIFT/REWARD just inform me if you have reach your target!
O ito pa gusto mo bang maging 1BRO DEALER subalit
wala ka pang sapat na puhunan??wag kang mag alala gagawin kitang 1BRO DEALER kung mag iinvite ka ng 12persons na gustong maging 1BRO DEALER din!!MADALI LANG DIBA??KAYAT ANO PANG HINIHINTAY MO SALI NA!!AT MAG
SIMULA NG MAGPAYAMAN KASAMA NAMIN BRO!!
Network Marketing gives people the opportunity, with very low risk and very low financial commitment, to build their own income generating asset and acquire great wealth. - Robert T. Kiyosaki, Entrepreneur and Author
It is hard to fail, but it is worse never to have tried to succeed.-Theodore Roosevelt
Self-trust is the first secret of success.-Ralph Waldo Emerson
The journey of a thousand miles begins with a single step.-Lao Tzu
Success in this industry is not in finding the right person, but in becoming the right person. Dr. Forrest Shaklee, Founder of Shaklee
You don t have to get it perfect, you just need to get it started Joe Schoeder, Network Marketer and Trainer
visit http://1broloadbiz.blogspot.com or http://my1brobiz.com for more info!!!Contact:SMART - 63-908-303-0196 (Verified)GLOBE - 63-917-488-3146 (Verified)SUN - 63-942-645-9954 (Verified)Look for Raymond
How to Join and Start Load Business??
1. text me for schedule at
2. attend our 1BRO Seminar/Orientation
@ our main office UG10 MEGAPLAZA BLDG, ORTIGAS CENTRE, PASIG CITY
every monday to saturday3. study the business, duplicate and help your team!
How about if your in province?and can't go to our office
Pwede ka pa din maging member at maging dealer itext mo lang ang iyong (FULLNAME,ADDRESS,EM AIL AD)
At babayaran mo po ang package then ipaparegister po namin ikaw at ipapadala ang iyong package kits via LBC
Wag nang ipagpabukas pa, ngayon mo na simulan ang pagpapayaman mo para maabot ang iyong mga pangarap at mahawakan ang iyong sariling oras.
ABUTIN MO ANG IYONG PANGARRAP SA 1BRO! » 0 User(s) likes this.
(x) koddywaters Feb 16th 2012, 09:32pmMisis, Papasuk lang ako jan kapag poor na ako. Sa ngayun namamakla pa ako
(x) shifty_mayhem Feb 16th 2012, 09:32pmsalamat n lng bata,,magdadasal na lang aq ky bro pra yumaman..
(o) sam. Feb 16th 2012, 09:43pmAng laki nmn ng parte ng company. Yung company ang yayaman jan.
(x) asaso003 Feb 18th 2012, 04:06pm@sam ANG MY1BRO IS PRO NETWORKER ANG INCOME 25 SA COMPANY AT 75 SA NETWORKER
basahin po ng maigi
(x) enimatepmahtem Feb 18th 2012, 04:09pmpanu ba manalo jan?
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We all fail or fall short at one time or another. But there's abig difference between the successful and everyone elsewhen that happens.
The successful person will say something like, "Well, I seethat doesn't work" or, "Darn, I didn't take that into account"or "OK, let's go to Plan B."
The unsuccessful person, on the other hand, will come upwith excuses.
What is the difference between an explanation and anexcuse? An excuse is a reason that explains why it's not your fault!
I saw that behavior a lot in my corporate days. When something would go wrong it started the search for theguilty and the punishment of the innocent.
What a waste of energy! How much more useful it is to ask,"What can we learn from this? How can we do it differently?"
Our quote is right on the money when it points out thatexcuses lead to more and more failure. It happens to youin your life, too, if you beat yourself up because somethingwent wrong.
What you learned is more important, in the long run and inthe short run. So avoid excuses like the toxic waste that theyare.
How to differentiate a legitimate direct selling company from pyramiding using the 8-point Test
1. Is there a product?2. Are commissions paid on sale of products and not on registration/entry fees?3. Is the intent to sell a product not a position?4. Is there no direct correlation between the number of recruits and compensation?5. If recruitment were to be stopped today, will the participants still make money?6. Is there a reasonable product return policy?7. Do products have fair market value?
8. Is there a compelling reason to buy?If the answer to all the questions is YES, then the company being evaluated is a legitimate company. But if the answer is NO, then there is a high probability that it is a pyramid scam.
Industry Professionalism
How To Handle Pyramiding and Proselytizing in the Direct Selling Industry
(Speech delivered by Josiah Go during the 1st Direct Selling Management Conference held August 9-10, 2001 at the AIM Acceed Center, Philippines)Ladies and gentlemen, good morning.
I shall divide my presentation into 2 parts: The first part deals with pyramiding, while the second one with proselytizing (or more popularly known as piracy of distributors).
I. Introduction
In 1995, a Texas-based company called AuQuest International started offering gold coins, among other products. The company used the binary compensation plan allowing individuals to buy up to seven business centers with US$200 personal business volume qualification for each of these center.
In May, 1996, AuQuest was sued by the state of California and the Monterey County District Attorney's office. It was charged, among others, with conducting a pyramid or endless chain scheme. The state brought three lawsuits, including criminal felony charges against the owners, an injunction lawsuit against the company, as well as a separate lawsuit seeking to confiscate US$328,000 seized in Houston bank accounts. The company countered with its own lawsuit against the government officials for violation of their civil rights. The Monterey County Superior Court issued a temporary restraining order and a preliminary injunction.
Today, we read parallel cases in the Philippines and elsewhere. Consumers would complain, the Department of Trade and Industry and / or the Securities and Exchange Commission would investigate and file the appropriate charges against these so-called pyramiding companies. The defendant companies, on the other hand, counter sue to convince the Court of Appeals to issue a temporary restraining order against government authorities, so they can continue operations and refer to it as freedom, their mockery of the network marketing concept.
Pyramiding is an illegal money scam, often confused with legitimate network marketing plans, where people are convinced to pay money for a chance to profit from the payments of others who might join later.Why is pyramiding illegal?
1. Pyramiding violates the Consumer Code of the Philippines, specifically Article 53 of Republic Act 7394, which states "Chain distribution plans or pyramid sales schemes shall not be employed in the sale of consumer products."
2. As far as the Securities and Exchange Commission (SEC) is concerned, they treat this type of scam as an illegal sale of investment contract or securities.
In its simplest explanation, a security is best thought of as a "passive investment", where the return on money invested is substantially caused by one other than the investor, i.e. not solely from your own work. For instance, investing in the stock market is a passive investment.
Like the stock market, an investment in a multilevel program which involves headhunting and inventory loading, where distributors expect to profit not by selling products to retail customers but by merely introducing other investors is actually classified as an unregistered investment contract in the United States. I shall share the Philippine scenario before I end this section on pyramiding.
3. History has shown that plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when a plan collapses, most people -- except those at the very top of the pyramid -- lose their money.How to recognize pyramiding vs. legitimate network marketing?
There are many companies using pyramiding schemes today. They manipulate the get-rich-quick mentality of many people. They take advantage of the lack of manpower of the government in monitoring these schemes and they exploit certain ambiguities of the law by going around its real intent.
For instance, Article 4 of the same Consumer Code defines Chain distribution plans or pyramid sales schemes as "sales devices whereby a person, upon condition that he makes an investment, is granted by the manufacturer or his representative a right to recruit for profit one or more additional persons who will also be granted such right to recruit upon condition of making similar investments: Provided, That, the profits of the person employing such plan are derived primarily from the recruitment of other persons into the plan rather than from the sale of consumer products, services and credit: Provided, further, That the limitation on the number of participants does not change the nature of the plan."
In the above definition, unscrupulous companies offer token products to go around the intent of the law, hiding under the pretext that they are offering products, even if these products:
* have no real world value,* are priced in an inflated manner,* or have both no real world value and are priced in an inflated manner.
Fortunately, by defining the 4 basic truths about legitimate network marketing operations, we can easily spot pyramiding. As I present these 4 truths, I shall also present some case studies. You be the one to determine whether these can be classified as pyramiding.What are the 4 truths about legitimate network marketing companies as practiced by members of the Direct Selling Association of the Philippines (DSAP)?
1. Low entry barrier -- When distributors signs up, sales kits are sold at cost. There is no other investment required and distributors are not forced to buy training materials or sales aids. This is because companies should not be dependent on selling the business opportunity alone, nor should they resort to merely selling sales aids at exorbitant prices while awarding commissions. Doing so establishes what is actually a headhunting or pyramiding system.
2 tests of low entry barrier exist. The first is to determine if people are recruited and asked to pay amount not proportionate to the reasonable content of the firm's sales kit and second, whether distributors are paid based on recruiting.Case study1 -- Suppose some cookware companies would charge close to P3,000.00 registration fee per participant just to attend a hyped-up business opportunity meeting and about half of the amount goes to the upline. Wouldn't headhunting or recruiting become the prime task here? After all, the distributors can make substantial money by simply recruiting. Imagine, for every person recruited, a distributor makes close to P1,500.00, recruit one every day and the distributor makes close to P40,000.00 a month without selling a single product.
3. Fair market value/regular retail requirement -- Fair market value is defined as price determined in an open market system, while regular retail requirement is defined as an ongoing buying and selling of a firm's products to customers who are not distributors.
2 tests of fair market value/regular retail requirement exist. The first is to determine if consumers would still be willing to buy a product at its quoted price even without participating in the compensation plan. The second is to ask "If all recruiting stopped today, would the company still be able to pay monthly commissions in the immediate future?
Case study 2 -- this type of companies offer compensation plans that only require a one-time purchase. The rationale is quite simple, would products of no real world value or sold at inflated price be able to really attract retail customers? If not, wouldn't their real product be the business opportunity. But think about this for a moment. If only
one-time purchase is required, where is the new money coming from to pay the commissions? A company can only pay to the extent of the money they received, so the only way the program can continue is if the participants continue to do recruiting. Is this not a type of pyramiding? For instance, do you think people will buy gold coins at US$700 without joining the compensation plan when the market value is less than half of that? Can evidence be presented that there exists substantial retail sales to non-plan participants at US$700?
3. No inventory loading -- direct sellers make money by simply booking orders, not committing to a substantial investment that may cause financial distress to the distributor subsequently. On the other hand, pyramiding companies do not ask their distributors to buy products to sell to consumers, they are instead asked to buy into a position. To circumvent the law, tangible products are added as a way to go around encouraging people to invest and "to move money" to make money!A test if inventory loading is not being practiced is to determine whether firms have a safeguard policy against excessive purchases. Firms can actually enforce a policy not to sell to distributors unless at least 70of previous stocks bought have been sold, plus a reasonable buy-back provision, which I shall discuss later.
Case study 3 -- Certain types of compensation plans, often called binaries, offer potential to earn more by investing in multiple business centers, with the requirement to invest more money in each business center, isn't this inventory loading in disguise? Wouldn't inventory loading be considered a substantial investment subject to the SEC rules? In the United States, an investment of US$500 to US$1,000 is already considered substantial. It would be interesting to know how many percent of those involved in binaries actually have multiple business centers, because the emphasis of many binaries program appears to be that to convince people to buy multiple business centers than the purchase of product for resale to the ultimate non-plan participant consumer.By the way, for those not familiar with binaries, these are actually a relatively new innovation in compensation plan where a distributor is limited to recruiting only 2 people directly under them. This allows for "spill over", which means that new distributors are enrolled in the next available position below existing distributors who have already filled up the maximum available positions of a certain level. An upline can again sign up to become downline of a downline by buying so-called business centers. Please do not get me wrong, I am not against binaries per se. I am against inventory loading. It would be great if binary companies will allow additional business centers without additional cost to the qualifying distributors.4. Low exit barrier -- protection is given independent distributors who may want to get out of the direct selling distributorship business.
A test is to determine if the company offer a "buy back" policy at a pre-determined formula that the firm will repurchase, within a reasonable timeframe from last purchase, the unsold, unopened, unused, unexpired, undamaged inventory held by distributors resigning from the company.
Case study 4 -- Closely linked to case study 3, when products cannot be returned within a reasonable time frame, wouldn't that allow opportunity for irresponsible inventory loading? Wouldn't that also suggest that the product may not have real value making it difficult to be sold in the marketplace?
What is being done about pyramiding?
1. The most recent prosecution of several website companies by the SEC under Chairman Lilia Bautista shows that the SEC is serious and decisive in purging pyramid schemes hiding as network marketing companies. They have classified these companies as selling securities or investment contracts that need prior registration and approval by the SEC.
However, in the Philippines, since there is not much precedent, the interpretation of the Philippine Court will now serve as the backbone of the direct selling industry. A decision different to how the U.S. court treat pyramiding will open a flood gate of pyramiding companies in the future and put the legitimate direct selling industry at significant risk.
2. The DSAP has in the past used the print media to regularly warn the public about pyramiding. To this day, it has made itself readily available to the Department of Trade and Industry (DTI) and the SEC for education, consultation or simply to provide a second opinion about companies suspected to be a pyramiding front.
3. Individual companies like Amway and Waters have come up with their own anti-pyramiding campaign and brochures.
4. At the De La Salle University, students who took a 3-unit full semester "Network marketing and direct selling" course decided to launch an anti-pyramiding website. (The essence of education after all, is in being able to apply what it learned inside the classroom and thereby become productive members of the society). They have decided to help protect consumers and fight pyramiding via the education route, supplementing the effort of the DSAP. If you are interested to view the collective work of these young people, visit www.antipyramiding.8m.com. You will see that it only takes commitment to get anything done. Another group of students printed and distributed thousands of brochures while a third group saved their "baon" so that anti-pyramiding posters can be posted in the DTI and other government offices nationwide. The Junior Entrepreneurship Marketing Association (JEMA) of La Salle has adopted and institutionalized this anti-pyramiding project as a continuing social marketing project.Effort will continue to be done to get rid of pyramiding companies disguising as network marketing companies. These wolves in sheep clothing are not a welcome element in the direct selling industry. There are plans and programs continuously being set up whether via media or education where the DSAP will definitely be more proactive in formulating a common stand to eradicate pyramiding. In the end, the DSAP and other concerned groups will continue to fight pyramiding because self regulation will always be better than government regulation.
Now, I turn to my second topic on proselytizing, which is a problem every direct selling company faces almost every year.III. Proselytizing
Proselytizing is the act of recruiting co-distributors to join other companies to the detriment of the upline and the network marketing company. In short, it's about a distributor or distributors raiding a company's sales force for
another company for personal gain. The distributor can either be connected to or have departed from the original company.
Why is proselytizing unethical?
1. There are over 75 million Filipinos, the market is so big out there, there is no need to get people from somebody else's group. In a way, it's like looking for a spouse, find someone single and not from among those who are already married.
2. The raiding distributors have somehow been benefited when they were still connected with their original company, it is unthinkable that they now turn their backs and attack the company that enabled them to once support their families then.
3. The upline spent so much time and effort to train and develop their own downlines. In the case of the raiding sales leaders, the predictable outcome is that downlines will most likely follow the uplines, therefore, a group reaction designed to affect the uplines as well as the company would naturally happen.
4. There are universal laws against unfair competition. Would you like other people not only to raid your downlines but also to tell them to stop selling for your company?
5. The downlines recruited will now be junkies. History has never been on the side of junkies who are affiliated with several direct selling companies. They will become mediocre in their career.
Why do some distributors do it despite having a big market for recruits?
* They are usually disgruntled. They may have been disqualified for a major promo and expect management to exempt them from the rule. They may not like management policy. They have grown sick of being number 2 or 3 to someone for a long time, or they have been terminated for cause.* They believe that there exists a free market and they can do anything to improve their own interest, even if they will resort to short-cuts.* They believe that they "own" their downlines (actually no one is owner, not even the company, the downlines own themselves).* To the narrow minded, they actually believe that their market for downlines is limited.
How Can Companies Fight Proselytizing?
1. There must be moral authority by the company of not encouraging their distributors to do so. Otherwise, a culture of proselytizing may unconsciously be developed.
2. Institute a clear policy vs. proselytizing in your distributors business manuals. Proselytizing is not only detrimental to the company, it is also detrimental to the uplines. All distributors are entitled to protection of their recruits as they spent countless time and effort in helping their recruits start-up their business and become successful. Therefore, if the proselytizing issue is well defined in the distributors business manual, the uplines affected can file a complaint for violation against established ethical norm.
3. Enforce confidentiality in using print-outs of genealogy report in recruiting. Make sure your business policy explicitly include a provision that family tree reports are a trade secret, also ensure that the actual printout indicate the same provision. You can then consider legal remedies if the case warrants it assuming the raiding distributors cannot get the report elsewhere easily.
4. Balance everything, inaction or slow action on the part of management may not only position the company as easy target for future raiding, but may affect trust and confidence of uplines towards their company.
5. Decide all issues based on facts, and not hearsay. Emotions always run quite high in direct selling companies, this is natural, as direct sales involves direct ego involvement. Sometimes however, facts get distorted when too much emotions come into the picture. Management should talk directly on those solicited and not to those saying their downlines have been solicited. When done properly, management may soon realize that there may be a big gap between what was claimed and what really happened.
6. Lastly and most importantly, have periodic evaluation of the attractiveness of the company's business opportunity. Impartiality is of course the key in assessing whether a company still provides in a competitive manner the 3 elements that are expected by any distributors: quality of their product value, quality of their company (training, management support, customer service, etc.) and quality of their compensation plan. If there is a need to redirect towards greater effectiveness, the company should not hesitate to move towards that direction, otherwise, it will not be able to solve the root cause of proselytizing.
In essence, business and government entities need to get their acts together by defining clear rules and commit to proper implementation. The direct selling industry must take the lead towards self-governance to protect the distributors and consumers against illegitimate practices and low quality products. Together, we can help improve a lot of lives with good business opportunities for many Filipinos. Let us help improve people make an intelligent choice by educating them.
Note: The author is a former chairman of the Direct Selling Association of the Philippines and is the first professorial lecturer on network marketing in the Philippines and in Asia. He is recipient of The Outstanding Young Men (TOYM) award in 2001 for business education.
* Introduction* What is a Binary Plan?* Why is the Binary Plan Attractive?* What are Limitations of the Binary Plan?* What is the Problem with Binary Plans?* What are Remedies to Defective Binary Plans?* Conclusion
Introduction
Since the entry of several multinational network or multilevel marketing companies in the Philippines starting the mid 1990s, many local companies have also taken advantage of the popularity of network marketing schemes by adopting it as their preferred distribution method of their products or services. Unfortunately, many have also abused the relative newness of the concept by introducing schemes that not only deviates from the original intent of network marketing, i.e. legal distribution of products and services that are priced fairly, but also dangerously borders on illegal pyramiding schemes. Already, government agencies have filed cases against highly publicized companies promoting internet-based services charging exhorbitant fees.
Among the newer network marketing compensation plans being used (and abused) nowadays is the binary plan. An ordinary housewife or employee would most likely encounter people selling them anything from gold coins, web-based products, prepaid cards, training services, and lately pre-need plans from companies using binary plans. There is no law that states that a binary compensation plan is illegal or is a pyramiding scheme, however, binary plans, being one of the 5 more popular types of network or multilevel marketing compensation plans, operate under the same laws that govern other multilevel marketing schemes, specifically the provision that disallow the practice of pyramiding schemes. Article 53 of R.A. 7394 of the Consumer Code of the Philippines state "Chain distribution plans or pyramid sales schemes shall not be employed in the sale of consumer products." Network / multilevel marketing companies, including those using binary plans, must therefore clearly distinguish themselves from those operating pyramiding schemes.
What is a Binary Plan?
A binary plan is a network or multilevel marketing compensation plan, which allows distributors to have only two direct or first-level distributors. Any additional distributors sponsored have a "spillover" effect, meaning; they are placed at levels below the sponsoring distributors' first-level.
There are 3 common reasons why the binary plans are quite attractive to both distributors and companies:
* The "spillover" concept attracts new distributors because technically, they can receive commissions by sponsoring only two distributors and let uplines (those who signed up earlier) do the "spillover" for them.* Binary plans are quite simple to understand. This allows distributors to duplicate their effort easier, a necessary tool to succeed in network/multilevel marketing.* Binary plan offers fast-paced growth opportunities, which attract the segment of our population who wish to "get-rich-quick".
It is said that there are only two types of motivation -- greed or service to humanity. Binary offers a potentially quick way to make money while providing a "service" that allows recruits to earn from the same method. Given the above, it is understandable that more and more companies have adopted the binary compensation method to attract new distributors.
What are Limitations of the Binary Plan?
The primary limitation of the binary plan is that distributors must "balance" sales from their two first-level legs to receive commissions. This typically means that the number of sales from the right first-level leg (example: 5 pre-need plans) must balance with that of the left first-level leg (example: 5 pre-need plans too). In some companies, exact balancing of the two first-level legs is not required but sales from one leg must not be greater than a specified percentage of the distributor's total sales, for instance, one leg must at least account for 1/3 of the total sales.
What is the Problem with Binary Plans?
Legitimate network/multilevel marketing companies have been grouped together with the bad eggs of the industry. The worst scenario in the late 1990s was the realization that China banned all direct selling or network marketing operations because of the presence of many unscrupulous individuals and companies that gypped consumers of their money into investing in pyramiding operations. Government of other countries have also been more vigilant in protecting consumer interest.Since binary plans are quite new and do not have any precedent in the Philippines, a look at the abuses of binary plans in the United States reveals potential huge penalties not only to the companies operating binary schemes wrongly but also to the independent distributors promoting them, to wit (source: Spenser Reese, 1997):
1. On February 4, 1997 the Arizona Attorney General entered into a settlement agreement with Tele-Sales, Inc. wherein the company was required to pay a $25,000 settlement fee. More importantly, however, the Arizona Attorney General also sent letters to the company's top distributors in the state, accusing them of violating the state's pyramid
law. The letters demanded that the distributors enter into a settlement agreement and that each individual distributor pay a $25,000.00 fine, otherwise, the Attorney General would sue them individually.
2. On February 28, 1997, the Alameda County Prosecutor and the California Attorney General entered the offices of Destiny Telecom and seized business records to be used in actions against the company. The same day, they filed a $20,000,000.00 civil suit against the company, alleging it was promoting an illegal pyramid. Two weeks after the suit was filed, Destiny settled the case for $1.6 million.
3. In 1996, Strategic Telecom Systems, Inc. was investigated by the states of Pennsylvania and Florida, which resulted in fines against the company, and the imposition of sales requirements, which required the company to dramatically change the way it conducted and promoted its business.
So why have government regulators in other countries been increasingly paying attention to companies utilizing binary plans than the more traditional compensation plans like stair step/breakaway plans adopted by the most members of the Direct Selling Association?
1. The stair step/breakaway plans popularized by Amway have been ruled legal in a landmark decision by the U.S. Federal Trade Commission in 1978.
2. The legal principles governing the network marketing industry have not been adhered to in many binary plans, leading to the belief that they are pyramiding schemes. These includes:
1. Emphasis on recruitment
Companies paying its distributors based on the recruitment of other distributors rather than for legitimate sales to end consumers are guilty of pyramiding. In this day and age, no company in their right mind would of course expose themselves to outright pyramiding. Most would sell some products or services to hide the scam but their products or services have no real world value and/or are overpriced such that only those interested to participate in the compensation will buy these products just to comply with their company's requirements.
A good test is to ask, "Is there a direct one-to-one correlation between recruiting and distributors' commissions?" If the answer is yes, it is a pyramiding case. An investigation of the many binary plans reveal that many companies classify the enrollment of a business centers as a sale, hence the problem.
Another good test is to ask is "If recruitment were to be stopped today, will distributors still make money?" if the answer is no, isn't the principal source of commissions coming from recruiting and not from retail sales? hence, a pyramiding.
A 3rd test is to ask is "Will people buy without joining the compensation plans?" If the answer is no, the products being sold have no real world value and/or is overpriced, hence, a pyramiding. If a product is priced so high that no reasonable person would buy it, it is obvious that the main motivation for distributors to buy the product is to join in the company's compensation plan, a pyramiding scam (profiting from recruiting) disguising as a legitimate network marketing operation.
2. Buying of multiple business centers
When a distributor enrolls, he is automatically assigned his first business center or a position within his own personal sales organization (PSO). To maximize earnings, the distributor are then strongly encouraged to purchase additional business centers and place as much as seven business centers at strategic locations within his PSO with each business center costing a few thousand pesos each for a total of a few hundred thousand pesos. Each of these business centers must independently meet their two recruits requirements with their corresponding purchase. However, the probability that a distributor will be able to use or resell these inventories is dubious.
Three important questions must be asked as far as purchasing multiple business centers are concerned:
1. Isn't the intent to sell "positions" more than to sell products to end consumers?2. Isn't there existence of significant investment and inventory loading?3. Isn't the focus to gain from recruiting rather than sale of products since upline distributors get commissions on the purchase of these business centers?3. Unregistered Investment
The Securities and Exchange Commission (SEC) regulates selling of investment instruments. The relatively big amount of investment required for buying multiple business centers may constitute selling an unregistered investment contract, a serious offense where both criminal and civil penalties can be imposed to the offender. Since binary plans are known for their "spillover" effect, the distributor-investor is led to anticipate profits primarily from the efforts of the others, constituting a passive investment.The above are some of the more obvious violations of binary plans. Unfortunately, when pride and emotions get in the way, logic is seldom followed and the companies, as well as the plan originator, defend their defective binary plans instead of listening to potential remedies.
What are Remedies to Defective Binary Plans?
Binary plans can be designed to operate and be implemented legally as follows:
1. Balance must be done between recruiting and retail sales of products, as evidenced by a significant number of non-plan participants who purchase products without signing up as a distributor. This can be done by allowing
distributors to qualify for commissions or subsequent commission phases after they have complied with personal retail volume.
2. Consumers must have a compelling reason to buy from a network marketing company. For example, given the wide availability of phone card retail store outlets nationwide, there is no compelling reason for a consumer to buy a phone card through a binary plan. The likelihood is to simply participate in a compensation plan.
3. Retail prices must be fair to encourage retail sales opportunities. Fair market value means price determined in an open market system where consumers are willing to buy a product at its quoted price even without participating in the compensation plan.
4. To avoid a direct one-on-one relationship between enrollment and commissions, payment of commissions must not be based on balancing the number of enrollments in each leg but in the sales volume in each of their legs.
5. Income must not be primarily dependent on the efforts of others. Companies must require personal involvement by distributors. This they show by training and motivating their downlines continuously, as well as do personal retail sales.
6. Never use the line "get 2 people and let the system work for you!"
7. Limit the number of business center a distributor can buy to 3 instead of 7, and
8. Initiate a buy-back of unwanted inventories program. This policy will at least discourage inventory loading which is disapproved by all members of the Direct Selling Association of the Philippines.
9. Buying of additional business centers must be based on qualification, not investment. This can be done via removing all mandatory purchase requirements from the multiple business center program of binary plans. Qualification can be awarded after a distributor has shown personal involvement in downline management. For example, attaining a specific group sales volume (not number of people) in a specific number of months.
Conclusion
Binary plans are not illegal per se. It becomes illegal if the design is abused to create wealth from recruiting. Government regulators will take an increasing role in reviewing binary plans. Based on U.S. experience, a negative publicity alone from a government investigation is enough to make distributors and prospects of a binary company nervous, seriously impairing its ability to be a continuing concern.
To existing binary companies violating certain practices, there is still time to correct these deficiencies before government regulators catch up and force these changes through regulatory actions.
To prospective binary companies, the "Law of Foolish Fellowship" must be avoided -- just because a competitor or many companies are joining the bandwagon does not mean you should jump into it quickly without reviewing the elements that make up a legitimate network/multilevel marketing operation.
A final warning -- Beware of too much emphasis on speed. It may eventually cost you more!
Department Administrative Order No. 8
DEPARTMENT ADMINISTRATIVE ORDER NO. _8_Series of 2002
SUBJECT: Rules and Regulations Implementing Article 53 of the Consumer Act of the Philippines (R.A. 7394) in Relation to Section 8 Rule II, Chapter I, Title III of Department Administrative Order No. 2, Series of 1993 Prohibiting Chain Distribution Plans or Pyramid Sales Schemes in the Sale of Consumer Products.
WHEREAS, Republic Act No. 7394 otherwise known as Consumer Act of the Philippines states that it is the policy of the State to protect the interests of the consumer, promote his general welfare and to establish standards of conduct for business and industry;
WHEREAS, the Act provides that the State shall implement measures to achieve the objective of protecting consumers against deceptive, unfair sales and unconscionable sales acts and practices;
WHEREAS, the Act further provides that chain distribution plans or pyramid sales schemes shall not be employed in the sale of consumer products;
WHEREAS, the DTI has received numerous complaints and queries regarding sale of products using pyramid sales scheme and such sales scheme have been used in the guise of legitimate multi level marketing, thus depriving consumers of their savings and hard-earned money;
WHEREAS, it becomes imperative to define the instances constituting chain distribution or pyramid sales scheme practices to prevent the public from being victimized;
WHEREAS, the Act provides the procedures under which a consumer, a natural person, may file his complaint;
WHEREAS, Executive Order No. 913 as amended by Ministry Order No. 69 strengthens the rule-making and adjudicatory powers of the Minister (Secretary) of DTI by providing the procedures under which juridical person and DTI initiated complaint may be availed of;
NOW, THEREFORE, the following rules and regulations are hereby prescribed for the information, guidance and compliance of all concerned:
Section 1. Scope
This Order shall apply to any person, natural or juridical, who shall establish, operate, advertise or promote a chain distribution plan or pyramid sales scheme as defined under the Consumer Act and reiterated in Section 2.1 of the Order.
Section 2. Definition of Terms
2.1 "Chain Distribution Plans or Pyramid Sales Scheme" means sales devices whereby a person, upon condition that he makes an investment, is granted by the manufacturer or his representative a right to recruit for profit one or more additional persons who will also be granted such right to recruit upon condition of making similar investments: Provided, That, the profits of the person employing such a plan are derived primarily from the recruitment of other persons into the plan rather than from the sale of consumer products, services and credit: Provided further, That limitation on the number of participants does not change the nature of the plan.
2.2 Other Forms of Chain Distribution Plan/Pyramid Sales Scheme. - Without limiting the coverage of the term "chain distribution plan or pyramid sales scheme" above, business, sales or marketing plan or scheme is considered as Chain Distribution Plan or Pyramid Sales Scheme if:
a) A promoter persuades recruits to purchase products, services, credit, title or rank whereby the recruits can receive income primarily from the mere introduction, recruitment or sponsorship of other participants into the scheme rather than from the marketing and sale of products; or
b) Where the profits of the person employing such are derived primarily from the recruitment of the other persons into the plan or scheme rather than from the sale of consumer products, services and credit and said plan/scheme includes, but not limited to, one or more of the following attributes:
b.1. revenues or income are derived from participants' entry fees;
b.2. in order to earn income, participants must sponsor a fixed number of other participants, each of whom must in turn sponsor a fixed number of participants as in a plan compensating participants balancing number of recruits than number of sales volumes;
b.3. a participant's income is dependent primarily upon the participant's slot or position within the organization as determined by the time, date and order of participation;
b.4. participants are not allowed to return marketable and unused products for refund within a reasonable period of time or the conditions for such product return are contrary to the provisions of the Consumer Act and/or its Implementing Rules and Regulation (DAO No. 2, s. of 1993).
b.5. there is no fair market value for the goods received (Fair market value is a price determined an open market system. An indicator would be that consumers would still be willing to buy a product at its quoted price even without participating in the compensation plan). Section 3. Administrative Proceedings
There are two Administrative procedures whereby complainants may seek to avail for themselves, to wit;
R.A. 7394 otherwise known as the Consumer Act provides the procedures whereby a consumer, a natural person, may seek redress.
E.O. 913 as amended by M.O. 69 provides the procedures whereby juridical persons and DTI initiated complaint may be adjudicated accordingly.
3.1 Administrative Proceedings under R.A. 7394
3.1.1 Who May File a complaint
"Consumer" is defined by the Consumer Act as a natural person who is a purchaser, lessee, recipient or prospective buyer, lessee or recipient of consumer products, services or credit.3.1.2 When to file complaint
The complaint shall be filed within two (2) years from the time the consumer transaction was consummated or the
deceptive or unfair and unconscionable act or practice was committed and in case of hidden defects, from disarray thereof. (sec. 169, Consumer Act)3.1.3 Venue of Actions
Pursuant to Department Order No. 4, s. of 1997 the complainant may file the complaint in duplicate with the Provincial Offices, or in an area where there is no Provincial Office, with the Regional Offices, in any of these places, at his option:
a.) place where the offense was committed wholly or partially;b.) place where an essential ingredient of the offense was committed;c.) place specified by the parties by means of a written agreement;d.) place where transaction was consummated;e.) place of the execution of the contract sued upon as appears therefrom;f.) place of residence of the complainant; g.) place of the residence of the respondent.
The option of the complainant shall be limited to the venues as enumerated. The choice however shall not be such as to restrict the speedy resolution of the case.
By written agreement of the parties, the venue of an action may be changed or transferred from one province to another
3.1.4 Procedure.A.) Commencement of Actiona.1. An action under the Consumer Act is commenced only by thefiling of a complaint by a "consumer" (as this term is defined in Section 3.1.1 hereof) in any of the places listed in Section 3.1.3 hereof. In those instances where there is a violation of the Consumer Act but there is no consumer complainant, the action may be commenced motu proprio by the proper DTI office, but the procedure that shall govern is M.O. No. 69, S. 1983. B.) Mediation Stage:b.1. The Arbitration Officer (AO) schedules a date (anytime within 15 working days from the time a complaint is filed) for a mediation conference where concerned parties are ordered to attend. The purpose of this is to provide opportunity to settle the case amicably.b.2. If the parties agree on an amicable settlement of the complaint, they shall sign an agreement indicating the terms and conditions thereof. The agreement shall not be contrary to law, morals, good customs, public order and policy. The Arbitration Officer shall render a decision based on the compromise agreement.C.) Pre-Hearing Stage (No Compromise/Amicable Settlement has been reached by the parties):c.1 Summons and schedule of Hearing are sent to the respondent who is required to file his Answer to the complaint. Complainant is also notified of such summons and schedule. c.2 If respondent fails to file an Answer within 10 days from receipt of summons, he is declared in default. Such declaration will enable Arbitration Officer to receive the evidence of the complainant . D.) Hearing Stage
d.1 The Arbitration Officer shall have the discretion to conduct a Preliminary Conference on the first day of hearing in which the AO will clarify the issues, allow stipulation of facts, and/or provide a last opportunity for amicable settlement of the case.d.2 If the complainant fails to appear, the case shall be dismissed for failure to prosecute.If respondent fails to appear, he shall be declared in default. d.3. Hearing Proper - presentation of witness and documentary evidences E.) Rendition of Decision Within fifteen (15) days after the end of hearing or upon submission of required document/memoranda.F.) Decision on Appeal - The Secretary shall decide the appeal within thirty (30) days from receipt thereof. The decision becomes final after fifteen (15) days from receipt thereof unless a petition for certiorari is filed with the Court of Appeals under Section 4, Rule 65 of the Rules of Court. 3.1.5 Administrative Penalties. - After formal hearing, the Consumer Arbitration Officer may impose one or more of the following administrative sanctions/penalties, even if not prayed for in the complaint, when warranted:a) the issuance of a cease and desist order;b) the acceptance of a voluntary assurance of compliance or discontinuance from the respondent which may include terms and conditions set forth in Article 164 of RA 7394;c) the restitution or rescission of the contract without damages;d) condemnation and seizure of the consumer product found to be hazardous to health and safety unless the respondent files a bond to answer for any damage or injury arising from the continued use of the product; ande) the imposition of administrative fine in an amount which shall in no case be less than Five hundred pesos (P500.00) nor more than Three hundred thousand pesos (P300,000.00) depending on the gravity of the offense and an additional fine of not more than One thousand pesos (P1,000.00) for each day of continuing violation.A schedule of fines contained in Annex "A" which is made an integral part of this Order shall be the basis in the imposition of administrative fine for the violation of the Consumer Act involving provisions on chain distribution plans and pyramid sales scheme.The filing of an administrative case does not bar the complainant from filing a criminal case under Section 60 of the Consumer Act or under other applicable laws. The procedure provided in this Section 3 shall be supplemented by DTI-DOH-DA Joint Administrative Order No. 1, Series of 1993 and other existing rules. Section 4. Administrative Proceedings under E.O. 913 and M.O. 69 a) Who May File a Complaint1) DTI on its own initiative (motu propio) 2) juridical person b) When to file a Complaint.The Complaint shall be filed within three (3) years from the day of the commission of the offense or if such date is unknown at the time, from the discovery thereof. After the said period of three years, the filing thereof shall be barred.Procedure - The following procedures shall be undertaken in the enforcement of this Order.DTI Provincial Directors shall undertake to do and perform the following acts, for and on behalf of the Secretary of DTI:c.1. To file and institute a formal charge against any person, company or entity who is found, upon verified complaint/reports supported with documents and other papers committing any act or activity in violation of trade and industry laws. c.2. To designate any employee, under his/her supervision or control to act as the investigation/mediation/prosecution officer where the services of said officers are necessary.c.3. If during mediation, respondent admits the violation, the Provincial Director shall issue the decision and impose
such administrative penalties as may be provided under E.O. 913. If respondent does not admit the violation, the Provincial Director shall file statement of violation with the Regional Office concerned.c.4. The Regional Director shall conduct a formal investigation and render a decision in accordance with E.O. 913.c.5. Formal Hearing - The Provincial Director who instituted the formal charge/statement of violation shall prosecute the case himself or through his duly authorized representative.c.6. Decision - Within fifteen (15) days from the termination of the administrative proceedings, a written decision shall be served on the complainant and the respondent either by mail or personal servicec.7. Execution - Unless a motion for reconsideration is filed within fifteen (15) days from receipt of the decision by the party adversely affected or an appeal is made to the undersigned within said period, the decision shall become final and executory after fifteen (15) days from receipt of such decision.d) Administrative Penalties. After formal hearing, the proper DTI Office may impose one or more of the following administrative penalties, even if not prayed for in the complaint, when warranted: (M.O. 69 , E.O. 913)d.1. the issuance of a cease and desist order; d.2. the acceptance of a voluntary assurance of compliance or discontinuance under such terms and conditions may be imposed.d.3. the condemnation or seizure of products which are the subject of the offense;d.4. the forfeiture of the products subject of the offense, the paraphernalia and all properties, real or personal, which have been used in the commission of the offense;d.5. the imposition of administrative fines in such amount as deemed reasonable by the proper DTI office which shall in no case be less than five hundred pesos nor more than one hundred fifty thousand pesos plus not more than one thousand pesos for each day of continuing violation. The fine imposed under this Section shall be regardless of the limits of the criminal fine fixed in the "trade and industry law" violated;d.6. the cancellation of any permit, license, authority, or registration which may have been granted by the Department, or the suspension of the validity thereof for such period of time as the proper DTI office may deem reasonable which shall not, however, exceed one year;d.7. the withholding of any permit, license, authority or registration which was obtained by the respondent from the Department;d.8. the assessment of damages; d.9. censure; and d.10. other analogous penalties or sanctions, such as closure for a period not exceeding one (1) yeare. The procedure provided in this Section shall be supplemented by M.O. No. 69, S. 1983 as amended.Section 5 A schedule of fines contained in Annex "A" which is made an integral part of this Order shall be the basis in the imposition of administrative fine for the violation of the Consumer Act involving provisions on chain distribution plans or pyramid sales schemes. The circumstances such as mitigating, aggravating, alternative, set forth in DAO No. 7, s. 1999, shall be taken into account to arrive at an appropriate fine.Section 6 The filing of an administrative case does not bar the complainant from filing a criminal case under Section 60 of the Consumer Act or under applicable law.Section 7. Separability Clause. - If for any reason these rules and regulations or any of this provision or provisions or the application of such provision or provisions or portions thereof is declared invalid, all other provisions unaffected thereby shall continue to remain in full force and effect. Section 8. Effectivity. This Order shall take effect 15 days after publication in two newspapers of general circulation.
Done in Makati City, this ____day of ________ 2002.
MAR ROXASSecretary
Recommending Approval by: JESUS L. MOTOOMULL . Caretaker, BTRCP ADRIAN S. CRISTOBAL, JR.Undersecretary, DTI-CWTRG
