Pyramid Selling Schemes in Papua New Guinea

If fast money scams are an informal (and deceptive) enactment of popular ideas of personal investment, then pyramid selling schemes, such as Amway, can been seen as an enactment of popular ideas about entrepreneurialism and small business. Pyramid selling is not an investment scam but a way of selling actual goods. Pyramid selling schemes are also known as ‘multi-level marketing schemes’ or ‘direct marketing schemes’ because the vendor sells directly to their social networks. Each vendor recruits new ‘downliners’, who then contribute a percentage of their sales back to the vendor (hence the pyramid analogy).

This type of scheme is fairly new to Melanesia but appeals to many as an option for supplementing household income. An example of one such pyramid selling scheme is Pro-Ma Systems — an Australian company that sells cosmetics and health products. For a time, it was fashionable for young women in Port Moresby to buy and sell Pro-Ma beauty products from/to each other. However, the demand for these costly cosmetics is low and it is unlikely that anyone could sustain a livelihood from this type of business alone. Like fast money scams, multi-level marketing utilises personal networks, and promises great wealth without the burden of paid employment or subordination to an employer.

Multi-level marketing schemes are not inherently illegal or even fraudulent. They can simply be a form of informal selling but one that tends to saturate the local market, exceeding demand. These schemes promise benefits well in excess of their capacity to deliver, and also target economically pre-carious people as those most likely to be recruited as marketers. Gewertz and Errington (1999) conclude that multi-level marketing schemes perform a ‘sleight of hand’ — transforming the ‘less fortunate’ into entrepreneurial subjects who can be blamed for their business failures. Bainton (2011) makes a similar case about the self-help course Personal Viability.

Sometimes, scams adopt the methods of pyramid selling schemes. Questnet — a global scam operating in PNG and other Pacific islands countries — uses multi-level marketing techniques and internet merchandising to sell the ‘Bio Disc’ — a transparent disc claimed to have healing powers. Bio Disc allegedly purifies water, imparting it with properties that will cure almost any ailment. Questnet infiltrated the Lae Local Level Government, where officials were investigated for promoting the scam. In neighbouring Solomon Islands, a senior medical specialist has been using his professional standing to promote Bio Disc, selling the disc itself and bottles of the supposedly purified water. In Madang, the scheme seems also to have targeted health professionals, and several employees of Modillon Hospital there have also purchased the disc as downliners. The involvement of these salaried professional health workers again reflects the common working-class hope of supplementing formal but inadequate wages with informal ‘business’ activities.

One thought on “Pyramid Selling Schemes in Papua New Guinea”

  1. The ANZ Bank had to shut down its Solomon Island branch 15 odd years ago when a mob rioted, angry that the bank had declined to lend money for a pyramid scheme.

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