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Yoliswa Dube-Moyo

“Do you want to be paid for shopping?” was a pick-up line used by an Elamant member looking to recruit members to join the world-wide membership benefits club and consumer insights company recently.
Of course that would seem like an easy way to make money.

“If your answer is yes, hit my inbox and I’ll tell you how,” the tagline continued.

The US$200 you’re set to benefit every month after joining is not only tempting but sounds like a simple enough way to make money.

Elamant apparently collects Point-of-Sale data from shoppers and generates revenue by providing target advertising to merchants and marketing partners from around the world.

One only has to collect shopping receipts and be paid for them. However, in order to be eligible to be paid for the receipts you collect, you must pay them a US$100 subscription fee every month. If you manage to recruit the desired number of people, the subscription fee is waived and you get paid US$200 every month.

The receipts have to be from selected retail outlets.

Elamant has been steadily growing in popularity in Bulawayo with more people seeking to earn an extra dollar signing up.

The Covid-19 pandemic has made it all the more urgent for people to pursue several streams of income.

The pandemic has affected cash inflows of many businesses resulting in network marketing becoming more appealing.

Apart from Elamant, there is also Longrich, which operates on the multi-level marketing (MLM) strategy where the sales force is compensated for both the sales they personally generate and those of the people they recruit into the plan.

Longrich manufactures health and daily used products like toothpaste, body wash and sanitary napkins among others.

Other networks include DreamTrips, Money In Crew, Avon — the list is endless.

MLM businesses, which allow you to earn money in two ways; through selling products or by recruiting members have seen a significant number of people, women particularly, pouring in money with the promise of reaping huge rewards.

“My name is Sabelo Ncube. I’m based in Gwanda. I’m a senior manager at Elamant earning US$1 200 weekly and US$200 from receipts monthly. I heard about Elamant from Tracy Moyo, my leader, last year but I was not interested as I had lost a significant amount of my hard earned USD to other networks,” said Ms Ncube in a testimonial to encourage other people to join Elamant.

She continued: “I was added on a certain Elamant presentation in March this year and honestly, at that time, I just thought it was a waste of my time, little did I know that on the 14th of April 2020 when I said yes to Elamant, it was going to change my life.”

“I was registered as a member on the 14th of April and within five days, I had three people under me. I pushed and pushed and in less than two weeks, I had smashed the consultant rank and here I am now holding the senior manager rank,” said Ms Ncube.

MLM, also called pyramid selling, network marketing, and referral marketing, 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.

Although each MLM company dictates its own specific financial compensation plan for the pay-out of any earnings to their respective participants, the common feature that is found across all MLMs is that the compensation plans theoretically pay out to participants only from two potential revenue streams.

The first is paid out from commissions of sales made by the participants directly to their own retail customers. The second is paid out from commissions based on the wholesale purchases made by other distributors below the participant who have recruited those other participants into the MLM; in the organisational hierarchy of MLMs, these participants are referred to as one’s downliners.

Ms Caroline Dube who has been benefitting from Money In Crew, another MLM network said, “Money In Crew is real. It’s not a pyramid scheme but a club-like situation where no one person stays on top always. It goes in rotation and once you achieve the highest level which is US$468, the system chucks you out and you can start afresh.”

To join Money In Crew, one needs US$13 and two people to recruit. The US$13 can “grow” to as much as US$468.

For some, however, MLM networks are a big red flag. They believe they are Ponzi schemes out to milk people of their hard earned cash with no real benefits.

A few years ago, hundreds of people invested in Geozing Pawn­brokers, run by George Zingane who was later acquitted for $4,2 million fraud after the pyramid scheme collapsed before investments yielded the promised 35 percent return.

Geozing Pawnbrokers had become so popular that clients were taking loans from banks and selling their cars and properties to invest.

Despite the risk that their money might not be sown on fertile ground, people still go as far as borrowing money to join MLM networks.

The promise of financial freedom prompts most to join in light of recruiters who give testimonies of having built houses and bought cars using proceeds from the networks.

“I’ve benefitted so much from Elamant although people think it’s a scam. I get paid for the receipts I submit and I’m very happy with my investment. I’m not formally employed so this money goes a long way in taking care of my everyday needs,” said Mrs Sandra Moyo who has achieved consultant level in the network.

MLM salespeople are expected to sell products directly to end-user retail consumers by means of relationship referrals and word of mouth marketing, but most importantly they are incentivised to recruit others to join the company’s distribution chain as fellow salespeople so that these can become down-line distributors.

There is however some stigma attached to the networking marketing business, especially those with multiple tiers, which can be characterised as pyramid schemes.

“I don’t do pyramid schemes. Anything that requires me to pay money and get people to join is a scam,” charged Mr Mduduzi Ndlovu.
The appeal of network marketing is that an individual with a lot of energy and good sales skills can create a profitable business with a modest investment.

The Common Market for Eastern and Southern Africa (Comesa) recently warned consumers in the trading bloc to be warry of pyramid schemes that are defrauding people of their hard-earned cash.

In a statement, the Comesa Competition Commission (CCC) said its attention had been drawn to the activities of a scheme known as ‘Crowd1’, which markets itself as a digital multi-level firm and whose operations are being investigated in some jurisdictions.

“The Comesa Competition Commission (CCC) advises consumers in the region to be on the lookout for pyramid schemes whereby people are encouraged to join and recruit others at a fee to make money,” said the bloc.

“Consumers are, therefore, advised to exercise caution when dealing with Crowd1 and also conduct research about companies they wish to invest in to avoid losing their hard-earned money.”

The CCC said the commission had noted that authorities in the Philippines and Namibia found that Crowd1 members made money by recruiting others and the organisation had since been banned in Namibia. In the Philippines, authorities are said to have issued a cease and desist order to Crowd1 for operating without a license.

A good rule of thumb, according to the US Federal Trade Commission (FCC), is that single-tier network marketing operations tend to be more reputable than multi-tier schemes, in which people make money based on the number of distributors they recruit.

Some reputable examples of single-tier network marketing operations include Avon Products, Mary Kay, and Excel Communications.

Last month police and the Reserve Bank of Zimbabwe cracked a pyramid scheme that operated in Harare saying they were offering financial services without the required licence in violation of the Banking Act Chapter 24:20. They raided the offices of KWD Digital Marketing and arrested dozens. KWD was promising people that they would double their investments within a month if they deposited money with them.

Speaking at the time, National police spokesperson Assistant Commissioner Paul Nyathi said the schemes were operating in Bulawayo, Gweru, Kwekwe, Mutare, Masvingo and other urban centres.

“These are fraudulent investment schemes under which existing investors are paid returns, not from genuine market investment of their funds, but from contributions made by new investors, until a point when the scheme can no longer attract new investors and collapses,” said Asst Comm Nyathi.

“When someone promises you unrealistically lucrative financial returns within a short period of time, it is likely to be a fraudulent scheme and further due diligence is always advisable, including checking with the authorities. Such entities are carrying out banking activities (taking deposits from the public) in breach of the Banking Act (Chapter 24:20). Section 5 of the Banking Act prohibits any person from conducting banking business unless such person is licensed as a banking institution in terms of the Act.”

Anyone considering joining a network marketing operation should do their research before making a decision and consider the questions: Was it pitched as a chance to make money by selling products or by recruiting others? What is the track record of the company’s founders?

Are you personally enthusiastic about the products? Are people you know enthusiastic about the products? Is the product being promoted effectively? Do you foresee a relatively fast pathway to profits or a long time treading water? — @Yolisswa