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FDHs warned joining, recruiting for MLMs could be illegal

22 October 2020

By Vir B. Lumicao 

Pricey health supplements are among those sold by MLMs

Hong Kong authorities are calling on people who have been asked to put huge sums of money in a network marketing scheme to report to police, saying these could be classified as pyramiding, which are illegal in the city.

The advice came as a Filipina domestic helper complained in a social media site about how she was lured into the Wanchai offices of a networking group on false pretenses, before being offered help to take out a loan so she could pay their hefty joining fee.

Sources from Immigration and Customs departments said sec 3 of Cap 617 of the Crimes Ordinance provides that a networking scheme may be classified as a pyramid even if it involves, among other things, the marketing of goods or services or both; and if a participation payment that is not commensurate to the goods received in exchange is required of a new recruit.

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Moreover, art 5 of the same law provides that both the operators and investors in a pyramid network are criminally liable. A person who commits an offence under subsection (1) referring to operators; or (2) which pertains to investors, is liable on conviction to a fine of $1,000,000 and to imprisonment for 7 years.

It is often hard to distinguish between a straightforward multi-level marketing (MLM) company and one that is a pyramid scam, so it's best to avoid both.

The FDH related in a post on the Facebook group of DWC Help that the incident happened on Oct 17, when she asked an older woman for help in looking for a shop in Wanchai that sold mobile phones

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She said the woman whom she called “ate”, offered enthusiastically to take her to a phone vendor in the area. Instead, the older woman took her to the office of a Filipino networking company.

Although she did not name the company that was introduced to her, saying she did not lose money there anyway, some of those who commented identified it as UNO (Unlimited Network of Opportunities).

That prompted promoters from UNO to immediately come out in the open to defend the networking business.

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The complainant said the recruiter explained what the group was and promised her big weekly income if she paid a $9,600 joining fee. When she said she was broke due to obligations at home, the recruiter suggested she take out a loan from a lending company.

Ang gusto niyang mangyari ay maglo-loan ako ng $25,000. Tapos yung $15,000 daw ipadala ko sa amin at yung $10,000 ipang-member ko. May sukli akong $400,” she said.

(What she wanted me to do was to take out a loan for $25,000. From that, I was supposed to send $15,000 to my family in the Philippines, while $10,000 should go to my membership fee. I get to keep the $400 change).

Tunghayan ang isa na namang Kwentong Dream Love

The recruiter reportedly told her she could earn up to $2.8 million because there was already a “downline” for her, that is, a member that would go under her in the networking ladder.

But the worker said she refused as she had already felt victimized because she lost precious time listening to the sales spiel.

Sana kung gusto nyong tumulong sa kapwa OFW, huwag kayong magsulsol na mangutang yung mga tao. Kasi lalo nyo silang ibinabaon para lang mag-member sa inyo,” she said.

(I hope that if you really want to help your fellow OFWs you wouldn’t push them to borrow money (to put in your network). You’re forcing the person to get mired in debt just to join you).

The worker said the multilevel networking scheme looked good, but she disliked the “kidnap-style” tactic used by some of its members to recruit others. “Sa Pinas, kidnap-style na nga, ganun pa rin dito,” she said.

(They already do it kidnap-style in the Philippines, they shouldn’t do the same thing here).

Many readers came to her side, alleging similar experiences with the group.

They decried how they were lured to the firm’s office by inviting them in for coffee or offering them part-time work. Once inside, they were all promised help in getting a loan if they didn’t have money to invest in the scheme.

Some of those who posted comments claimed they were not allowed to leave until the recruiter had finished their talk.

Many of those who came out in support of the whistle-blower said they had lost money through the same group or by joining other pyramid-style networking operations and regretted their mistake.

One worker said the recruiters would ask, “Matagal ka na dito sa Hong Kong? May pamilya ka ba sa Pinas. May utang ka ba? Gusto mong mabayaran kaagad?”

(Have you been in Hong Kong for a long time? Do you have a family in the Philippines? Do you owe money? Do you want to pay it back quickly).

It turned out the recruiter just wanted her to take out a loan so she could repay her debt in the Philippines, and use the rest of the money to invest in the networking scheme.

The network promoters were quick to respond, saying they were just offering the helpers a way out of their tight financial situation. They claimed the business they offered was legitimate and had made millionaires out of hard-working members.

They also invited the whistle-blower to their office and identify who the recruiter was.

But their spirited defense of the networking scheme failed to convince their detractors, who insisted it was a scam as only those at the top of the pyramid got rich. They accused the group of driving the workers deeper into debt.

One critic backed this up, saying she had lost money from one such scheme.

Mga downline abutin man ng dekada downline pa rin sila at never na maging millionaire circle po ayon sa payo ng ng mga upliners na magre-recuit po. 100% tama ang mga linya ko kasi galing na ako diyan sa networking ng mga yan. Huwag pauuto sa mga freebies kuno nila,” she said.

(Those downlines will remain downlines even after a decade, and will never become a millionaire as promised by the upliners that recruited them. I am 100% sure because I used to be with those networking groups. Don’t get fooled by their promises of freebies)

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