Combating pyramid schemes aimed at youth
Christine Carrillo
Despite having the age-old saying, “if it sounds too good to be
true, it probably is,” booming in their ears, college students
continue to fall victim to the appealing advertisements of
commission-based employment, particularly multilevel marketing
employment.
Selling goods or services through distributors and receiving
commissions for both sales and distributor recruitment, students
become enamored with the idea of working on their own schedules and
at their own pace with the promise of earning big bucks, fast.
While there are many legitimate businesses that follow multilevel
marketing plans, the overall practice raises many ethical questions
among professional business men and woman. Multilevel marketing
organizations often use their tiered structure to sell products and
services that otherwise would not get sold. In addition, they often
encourage their distributors to exploit personal friendships and
relationships via networking leading them to loose the majority of
their credibility, experts say.
“I think they target college students ... because students are
pretty much lured into making a quick return,” said Dennis Morgan,
assistant professor of marketing at Orange Coast College in Costa
Mesa. “There’s often a misrepresentation of the product they’re
offering and an overemphasis on signing people up for the network.”
Even though many of these businesses, while promoting ethically
questionable practices, are legitimate, the basic structure and idea
of a multilevel marketing organization lends itself to becoming the
inspiration for illegal schemes.
Under such schemes, usually referred to as pyramid schemes,
commissions are based entirely on the recruitment of other
distributors and not the sales of products to consumers. In fact, in
many cases the underlying products and services only exist to make
the schemes appear legitimate.
“I teach them not to accept anything on face value and that every
claim should be substantiated,” said Morgan, who admits to receiving
inquiries from students every semester in relation to such
employment. “One of the things I always ask them to do is look for
the red flags ... the No. 1, frontloading.”
Frontloading is when an organization requires the student to pay a
certain amount of money up front.
“If the company can’t provide 30 to 40 references by the drop of a
hat they’re not worth it,” Morgan said.
After experiencing the impact multilevel marketing was having on
his students, Morgan decided to incorporate pertinent information in
his curriculum that would aid his students in deciphering the
legitimacy of the business and the return they would receive by
participating in it.
Unable to regulate every job posting on campus or in their career
centers, both OCC and UC Irvine have made individual attempts to
protect students from getting caught in illegitimate marketing
businesses.
“I hate to see our students getting taken advantage of,” said
MaryAnn Profeta, assistant director of employer relations at UCI.
“We’ve had some problems ... so even though it’s a public university
every posting needs to be sponsored through one of the university’s
departments.”
OCC, on the other hand, has placed most of the responsibility of
getting involved with such commission-based jobs on the students
themselves.
“I don’t think I would ever restrict those job postings; I just
don’t see the need to,” said Debbie Wisner, the job placement
coordinator at OCC. “We do list any jobs and the only time we would
pull it is if we have a legitimate complaint from students.”
While OCC and UCI are unable to monitor every job listing or
employment opportunity posted on campus, they are able to restrict
those same employment company recruiters from having a physical
presence on campus.
The executive board of the associated students at OCC recently
voted to not allow any job recruiters on campus because of the
numerous complaints of students feeling constantly harassed.
“It should be up to the students and it is up to them, but they
shouldn’t be harassed here at school,” Wisner said. “When they’re
here, they’re here for school. When they’re inquiring about listings
on the job board, they’re choosing it. That’s their choice.”
While OCC leaves the choice of whether or not to get involved with
multilevel marketing employment, Vanguard University in Costa Mesa
has decided to protect students from having to make that choice.
“I’ve really eliminated any jobs that are commission-based ...
anything that’s multitiered marketing, they’re just not suitable for
our students,” said Rosanne Freilich, director of career planning and
placement at Vanguard. “As a private university and a faith-based
university, things like that are pretty much screened out.”
But every now and then, even the private universities can’t
isolate their students from the endless bombardment of multilevel
marketing seekers.
“We do occasionally have people that do get involved with that ...
but it hasn’t gotten to a point that we’ve needed a campus-wide
policy,” said Ed Westbrook, a business professor at Vanguard. “We
tend to do a little bit more of an individualized approach. We try to
utilize our broad network of alums and relationships with
[businesses] and we get a lot of referrals.”
For those students wanting to enter the entrepreneurial or
marketing world, the experts agree that there’s no better route to
take than hard work.
“It all starts with trying to find a need in the market that’s not
being met,” Morgan said. “Find out what people want, do research to
find the demand and then come up with a product that will meet that
need.”
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