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Monday, May 16, 2011

Speak Asia Online MLM scheme alert

Recently spotted a series of TV ads from SpeakAsia and was trying to figure out what it is. My first thought was it should be some English speaking course like Rapidex. But soon learnt that Speakasia is into a different kind of business. In this post, I’m sharing my person thoughts on the way SpeakAsisaOnline’s business is modeled.

Before I proceed, I’ve following disclaimer to make. Your reading this post further will be deemed as your acceptance of these statements.

Disclaimer: I’m not associated in any way with SpeakAsia/its promoters/partners or rivals. I’ve no commercial interest in its success/failure/existence. Opinions expressed in this post are very personal to me, based on the information I could gather from public domain. My family /friends/ employers/others are not associated with this. Readers are required to cross validate the information mentioned in this post with other reliable sources they can trust, before taking any decision which may have financial implications. Content in the post might be updated without prior notice if more credible information is to be found in future. Readers are required to read the content with open mind and take decisions at their sole discretion.

Ok, that’s enough of a disclaimer. To get back to the topic, Speak Asia claims to be a Singapore based company, which will pay its members (called Panellists) good amounts to take part in surveys commissioned by SpeakAsia’s customers. Panellists also get to earn referral income by enrolling other panellists under them.
That sounds decent. What’s wrong in it? Several bloggers have already dug deep into the company and have written how this can turn out to be a potential scam, looting unsuspecting people of their hard earned money  {Read some such blog posts here, here, here and here}. May be they are right, may be they’re wrong. I’ll share my bit of thought process, you take the decision.

What seems odd with SpeakAsia’s business Model:
I’m forced to think of few other businesses which had similar models:

mGinger: mGinger offered to pay its members to receive sponsored ads by SMS. All you’ve to do is receive promotional SMS and you get to earn decent sum every month. After initial euphoria, the business doesn’t seem to have taken off, as mGinger didn’t have enough inventory to satisfy its members. Not many companies came forward to spend heavily on this concept and eventually mGinger members received negligible amounts

GoldQuest/QuestNet: QuestNet members were called IRs (Independent Representatives),who paid about 35k in exchange for a fancy product and Questnet membership. Huge money was to be made by enrolling others under you. The scheme went on happily for several years, many who’d joined early did earn huge returns. Eventually the bubble burst, its Chennai officials were arrested, thousands filed complaints in police station and then no idea what happened. Questnet’s Singapore office disconnected itself from India unit- it was much easier for them to get rid of the company and start a new scheme elsewhere.

HomeTrade: This company hired Sachin, SRK and the likes, ran huge outdoor campaign without stating what it is selling, raised huge capitals from various sources and eventually vanished without selling a single product.

Coming back to SpeakAsia, its customer base who pay for the surveys remains undisclosed. May be they have a non disclosure agreement, but it is unlikely that any big corporate will spend 1000s of crores just to get survey feedbacks. Further, though the concept of paying for participation in surveys does exist, the payout is usually very small amount. Companies doing market research will have limited budget and if they’re paying 500 Rs per respondent, they can afford only few thousand and not lakhs. Quality of respondents also matter. Usually market research companies look for people who’re qualified to give a response (people who own their or similar products or people of certain income/age groups etc)- general respondents who respond just to earn some money, without owning/experiencing the product/service will be of very little value to a company.

SpeakAsia’s focus is more on enrolling others under you, than participating in more surveys. SpeakAsia’s website has a compensation plan, which limits your earning from surveys to about 20$ per week and explains how you can earn huge amount by having more n more members under you. Obviously the focus is on enrolling more members into the scheme, where each one pays 11k (220$). This clearly sounds like an MLM scheme. You pay a huge amount to signup, a part of it is used to payback your upline and rest goes to Company’s profit. You keep earning only as long as you keep adding more people under you. If the business is genuine, the revenue should not come from signups. People should be allowed to signup for free, money should be earned from external sources (by companies that need survey results) and given back to members after deducting company expenses. Clearly this doesn’t seem to be the case. Prime source of income is the amount paid by new agents (individuals who subscribe to SpeakAsia’s ezine in order to be called as a Panellist). This amount, in all probability is circulated among uplines and used to payback for taking surveys.

There’re questions about SpeakAsia’s legality in India. I’m not an expert in this, so won’t comment much. Even questnet had its base in Singapore, where it is very easy to open companies. Should be noted that both Questnet and SpeakAsia do not have business is countries like US/UK etc where laws are very strict.

Virtual wallet and payout rules: Remember PayPal India's recent mandate that its members should withdraw money within 7 days? This is because of RBI regulations. If paypal is to hold funds for longer duration, it will have to comply with much more regulations, at par with banking institutions. Easy way out for paypal was to ask its Indian users not to leave money in the account for longer duration. I suspect similar regulations should be applicable to SpeakAsia, if RBI takes strong action. Having to withdraw every week and having high withdrawal fee of 7.5$ will eat into most of your earnings.

Lot of people put their personal credibility at stake to defend MLM companies, saying they’ve made huge profit and company is indeed genuine. This is also a desperate measure to try winning new down lines. Everything appears great in the beginning- companies payout ontime to win trust and confidence, since idea is new, finding new members will be easy and those who jump the bandwagon early, might make some decent money out of it. Over a period of time, either the bubble will burst or not many will be left to enrol or the promoters chose to do the vanishing act. A legitimate business should give either a trial period or buy back/refund scheme or some sort of insurance. No such options will be available in MLM schemes- everything runs as dictated by the company and enforced by its early members who make others blindly trust the scheme- either on personal guarantee of their upline or due to mass euphoria.

If you’re tempted to join or are forced by close friends to join such schemes, ask them to let you enrol for free, stating that they can recover the fee from your initial 3-4 months earning. This won’t be entertained usually, because the whole system will collapse if there’s no cash inflow from new joinees.

Hope SpeakAsia will not be another MLM disaster. Not much info is available about its promoters, investors etc and if something goes wrong, you’ll have no one but your up-line to reach out to, who’ll be equally helpless, while promoters will be coolly enjoying their new found wealth and conceptualizing more such schemes and companies.

Watch below: Star News expose of SpeakAsia


Please be alert
Similar: Amway inside story * Typical characteristics of MLM Companies * 12 reasons why MLM companies fail *

10 comments :

Team G Square said...

We were discussing about this thing after of course the watching to many TV ads , my wife reaction was this looks fraud scheme , how can somebody ask for such big amount for nothing . I think this message has to spread as a wild fire to prevent people from getting cheated . Great work .

Shrinidhi Hande said...

Thanks. I was little late to notice this. other bloggers have already created enough alert on the net. Hope less people get fooled...

Deguide said...

Hande good info, any MLM is bound to fail eventually, last time i was called for a seminar to invest in GOLD TRADING, they promised double the return in 9 months, this also seems to be PONZI scheme. I just walked out of the 3star hotel where buffet lunch was arranged. Just imagine their office was based behind CBI office in Bangalore and HQ at Singapore

Deguide said...

I would have been trapped by GOLDQUEST luckily i escaped one guy based in dubai was after me finally i decided to take him head on and told him i am not interested at all.

joey said...

theres alot of hype sorrounding SA,the media shas taken a backstand,and until now no one is actually claiming they are fraudsters

Shrinidhi Hande said...

Thanks Umesh and Joey for your comments.. Recent updates suggest that lot of investigations have been trigged on SpeakAsia by various agencies

Mayank said...

Great post Mr. Hande. MLM business has a serious impact on relationships, you push your friends and family into the pyramid and often their loss leads to bitterness as well. Best avoided i agree.

Shrinidhi Hande said...

Thanks Mayank

harjeet said...

well you know Nidhi that even we thought this way but ur clarification and R&D have heighlighted those points also which we have never thought of...Nice research and thoughts.

Harjeet

Shrinidhi Hande said...

Thanks Harjeet