The Department of Trade and Industry (DTI) has come out with an advisory that distinguished network marketing, a legitimate marketing approach, from pyramiding, an illegal recruitment technique designed to dupe and divest people of their hard-earned money.
Director Peter Mangabat of DTI-Pangasinan said networking is designed to generate business volume and income, while pyramiding is an illegal recruitment racket designed to con people.
He said compensation for members of network marketing force comes from the profit generated by the business of the organization.
"In pyramiding, earnings of participants do not come from the business profit. It is derived from the cash collection from the other subsequent participants," he said.
Mangabat said that a participant under the networking scheme generates earnings for himself by performing any or all of the following tasks: (a) as a direct marketer of product and services; (b) as a supervisor of the people directly recruited by him; and (c) as a marketing manager of his entire network of marketing people from the first level up to the last.
For pyramiding, the task is focused mainly on the recruitment of new participants by recruiters who can earn solely from the money invested by their recruits, he said.
Mangabat disclosed that networking marketing is based on an equitable business system where earnings are based on hard work, commitment and dedication.
“A person who registers ahead may be surpassed in terms of earnings by his recruit if the latter exerts more effort than he does,” he said.
In pyramid venture, the basis of earnings is by chance or luck.
“If you get into the venture first, you have a greater chance of earning more. Individual effort and performance is completely disregarded,” said Mangabat.
Source: http://news.pia.gov.ph/index.php?article=1941408009971
