#5 MLM is a SCAM?
5. PYRAMID MATRIX SYSTEM (KUTU)
The next one is the pyramid matrix system or the kutu system.
Kutu involve a predetermined number of members. For example, if 6 members play kutu, the introducer to the 6 members will get all the money invested. The 6 members will then have to find another 6 new members each for them to be qualified to get their turn to receive the kutu. If they are unable to do so, then their investment previously will just vanish.
This is the initial pyramid system where buying position on the earliest basis is the better. “The earlier you come in, the better and the more you gain”.
These are working purely on the basis that the members who come in later pay the members who came in earlier, and there will always be an end where the last groups of people to join will lose all their money. This is also known as a Ponzi scheme. (A Ponzi scheme is where a company uses money invested by new members to pay to members who joined earlier)
Summary points:
- The emphasis is to come in as early as possible.
- Able to buy more than one accounts, have multiple accounts.
#4 MLM is a SCAM?
4. GAMBLING CHARACTERISTIC (HEADHUNTING)
Another characteristic is the gambling characteristic or headhunting.
The gambling characteristic is related to the binary scheme which is now heavily used in the market.
Why do we call it gambling? It’s because there’s a tendency that if the plan is utilized by members to perfection, the company will be over paying in excess of above 100% over sales revenue. For example, imagine if the sales revenue is RM1 million, but the bonus payout is RM1.3 million.
That is if the binary matrix placement is in perfection. Therefore the company gambles with the members on this program that the percentage of perfection is at the minimum.
If the members work on a very low percentage, the payout can be as low as 15 – 30%. This is when the members lose out, therefore losing interest and they quit the company.
However, if the members are able to work it out in such a way that the payout is anything above 70 – 80% and beyond, this is when the company may have to close shop and again, when the company disappears, members loses out on their investment.
Such program is popular because their presentation entices members with the fact that you usually only need to work on 2 lines (or legs), and any extra lines will be thrown down to the down-lines to also benefit the down-lines.
Therefore, this program further entices both up-lines and down-lines that they recruit members by saying, “You only need to build one line (or leg) where your up-lines will throw down lines for you on the other line (or leg).”
Throughout the history of companies practicing such program, most companies do not last more than a year or two. Many of them closed the companies just before payout reach their breaking point and keep whatever profits they have made earlier.
Companies who last beyond 2 years are companies who came up with variation to cap their payout. Tactics such as “flushing”, “applying point system” and “applying maximum payout limitations” are used to cap payouts. Some companies even change their plans every 6 months to reprogram the system and apply limitations.
Of course, some company may also terminate top members with the slightest excuse to eliminate some major payouts.
A clear example here is the binary system where the bonus is given on pairing and sponsorship only. Usually, one has to buy lot(s) / business center(s) where the amount (RM) for the lot is fixed. It is also a one time purchase and the bonus is life long (if the company can survive). Products do not play a role and they are usually ridiculously overpriced. However, companies involved in this marketing plan usually will have plan B, which is a conventional plan in order to disguise their scheme.
Summary points:
- A binary plan is always revealed by having to recruit one leg or two legs to qualify before you can earn on the other leg or both. Words used like ‘pairing’, ‘anchor leg’ or ‘qualifying leg’ reveal that this is binary.
Testimonials: 74 and Still Tough To Beat

Good News ! We are very excited to inform you that our FE Member and downline, Mr Ng Chow Seng (age 74) has won the Silver medal for the weight lifting event for age group 70 to 74 years old at the 2009 World Masters Games held in Sydney, Australia on 12th Oct 2009.
Mr Ng started using FE products (Quantum Pendant, Quantum Bracelet, Quantum Flask and RVT) one year ago and he feels very confident and more energised during his training since using the products. Before entering for the competition, he told us that he is very confident of getting a medal for the event.
He did it and won the Silver Medal ! That is a great achievement for our nation, having to compete with the best in the world! He would like to take this opportunity to thank FE for sponsoring him to attend and compete in this event.
Thank you to all FE Leaders who supported him. He looks forward to winning the Gold Medal at next year's competition !
CLICK HERE FOR MORE TESTIMONIALS

Lessons of Life: 7-ton Elephant
On a recent trip, I took my family to the Chiang Mai region in Northern Thailand, where mountains, jungle and amazing rivers combine to create a fantastic backdrop of colours, sights and sounds. A true feast for the senses!
While we were there, we took an elephant jungle trek tour that allowed us an ‘elephants’ eye view of the jungle as we waded rivers, climbed hills and descended into deep valleys and gullies.
It was an amazing experience to see my children first fearful, then a little more relaxed and then outright excited and thrilled to be privileged enough to share this experience with the largest land mammal on the planet.
During one of our short stops to feed and reward the elephants with a handful of bananas and sugar cane, I noticed that the Mahout(elephant handler) simply popped a small rope on a stick into the ground and tied the elephant to it and walked off, leaving us on the elephant alone.
As I looked at the stick I wondered what foolishness must be going through this little man’s mind. I mean, here we were, sitting on this huge mountain of muscle and raw power and the little fellow had hitched the thing to a really thin piece of rope that was tied to a stick no thicker than my thumb!
I fully expected the elephant to (in elephant-speak) laugh at this puny little thing, pull it out of the ground and walk off with my son Connor and I into the jungle never to be seen again. But that didn’t happen. The elephant didn’t walk off. It didn’t even TRY to pull the stick from the ground. It stayed exactly where it was waiting to be ‘released’ from its bondage.
When I got back to the camp, I asked the mahout about this and he explained a concept that had totally blown me away at the time, and still does to this day.
He told me “We train the elephants when they are very young by using thicker ropes and heavy beams or tree trunks. When the young elephant pulls, it is pulling against an immovable object and so soon tires and gives up. Eventually, over a short time (and several smaller trees and sticks), the elephant stops pulling altogether, believing that the attempt is futile and will always end in failure. It merely gives up.”
As a performance coach I couldn’t help thinking of many clients I’d worked with who were doing exactly the same thing in their lives.
People who were trained when young about what was possible and what was not when they were too weak to pull against these ideas and release themselves to being successful. Now they’re all grown up, they’re like the elephant, unwilling to try because they’re so sure it’ll end in failure that they don’t even bother. It made me think about about all the times I’d quit in the past and all of the people who write in to tell me of their own decision to do the same.
Everyone’s got goals, dreams and aspirations that they’ve have left by the wayside because some well-meaning friend or loved one told them ‘would only end in heartache and failure, so why bother?’ Right? Dreams that someone said were 'silly’ or ‘childish’ or ‘unrealistic’. But what if they’re not any of these things? What if, just like this big, beautiful yet dumb creature we’ve have been conditioned to believe something that is totally and utterly untrue?
What if, just like the elephant, we could literally rip up the chains that are holding us down and walk off into our own jungle of success and happiness…if only we had the courage to pull, and keep on pulling in order to bring about the things we want?
We can you know!
Many, many people who once led lives of total and utter desperation now live lives that most of us would consider pure fantasy with houses, planes, boats, cars, money and above all, happiness that would never have been theirs if they hadn’t ‘pulled against the rope’ that was telling them they couldn’t possibly win.
You CAN, but will you?
Will you write that book that the small voice inside of you tells you that no-one will ever read?
Will you take that trip to those places you always dreamed of but that your wallet tells you that you can’t afford?
Will you finally lose that weight or shift that body fat that your ’slow metabolism’ insists won’t go?
Will you buy that house, start that business, learn that language…..?
I could go on all day, but in the end, when all’s said and done, it’s you and ONLY you who can pull the stick from the ground and break free.
No-one is going to do it for you.
No-one CAN do it for you.
You, and only you have the power to do this.
Start TODAY!
By Dax Moy
#3 MLM is a SCAM?

Bernie Madoff
3. INVESTMENT SCHEME (PONZI SCHEME)
The next characteristics would be an Investment Scheme (or a Ponzi Scheme) rather than a working program.
This is usually an investment scheme where one is promised a high interest payout, for example, 10% (or more) per month of the invested sum. However, the payment actually comes from the member’s own invested money or from the other members (or victims) whom had invested after him. This scheme looks promising in the initial stage but will soon collapse when there is no more investment coming in to manage the high interest payout.
The investment scheme is not a question of how much a member can work (sell, recruit or train) but rather more a question of how much money a member can “invest” or put into this program.
This scheme is such that you can easily identify from their presentation that they always use these words “You don’t need to sell” or “Just put in money and you can make money”. The presentation is always in relation to the amount of money that members put in. The more money that is put in, the bigger the returns are. Many of these companies don't even have products but a program or a project that invite you to invest and share returns to you beyond normal market range.
Normally, their presentation on their plans is that a member’s returns are 3 times or more of the initial investment within a year or two, using the investment capital as a measure instead of using the sales volume that a member can bring in.
Both the inventory and investment based program will have the characteristic which will be presented now, that is:
”You Buy Now or Invest Now, But Take The Products Later!”
This is one very clear sign of characteristic of a company that uses both the inventory loading and investment scheme where they ask you to put in a huge sum of money that the volume of purchase is so high that you may not have enough room in your house to stock your products, so the company stock your products for you.
Or worse still, the company may not even have enough stock at all to give you the products.
Some companies just give you a piece of paper of value yet to be seen.











