Big money on campus 2010/04/18 By Chai Mei Ling cmeiling@nst.com.my

Big money on campus 2010/04/18 By Chai Mei Ling cmeiling@nst.com.my

KUALA LUMPUR: Direct-selling firms are infiltrating many institutions of higher learning, luring students to act as agents by promising big and quick returns. It is believed that many public university students have joined these schemes, with thousands more being targeted. The students start off by paying fees totalling a few hundred ringgit. Students from a university in Perak told the New Sunday Times that multi-level marketing agents “told us to invest using our study loans and taught us how to cover it up by lying to our parents”. It is learnt that some final-year students in Pahang extended their semesters so they could remain on campus and continue making sales. Some undergraduates were so taken up by the business that their academic performance suffered. The companies spread the news of money-making opportunities through flyers and word of mouth. The students recruited then encouraged more students to attend briefings, held in shoplots near the universities. The briefings enticed students with promises of an easy life and a potential monthly income of at least RM5,000 The agents, who drive around in classy cars and dress in smart office wear, present themselves as success stories. Some say their projects are helmed by entrepreneurs or have the support of political bigwigs. The catch? As in all multi-level marketing (MLM) endeavours, people have to pay a fee upfront of between RM200 and more than RM1,500. Only then will they qualify as members and stock up on the products they are supposed to sell. They make money selling crystals, perfumes, jewellery, health supplements, online spaces for web education and from getting more people to join. For every pair of new recruits, they are paid RM100. This binary system requires members to continuously develop their n e t wo r k s. Farid, 20, a first-year electrical student in Pahang, said: “The agents said this is fair because only those who work get paid. But it’s one way to limit the payment of commissions.” He attended two talks by a company selling online advertising space, but decided against joining because he didn’t see a clear business model. Students who pay RM549 for the cheapest or “bronze package” are entitled to five spaces on a website, through which they can advertise anything — clothes, books, electronic gadgets, holiday packages and beauty products — for sale. The “silver package” c o st s RM1,549, the “go ld” more than RM2,000 and “p l at i n u m ” RM5,000 . Tertiary students in Kuala Lumpur, Selangor, Pahang, Terengganu, Perak and Penang said they first noticed the presence of MLM activities on their campuses two to three years ago, but the companies intensified their operations late last ye a r. Recruitment has become so competitive that members engage in rows over “fresh” s t u d e n t s. A tactic used by members to attract newcomers is to get them to attend talks on or outside campus, where agents “worked on their emotions”. Farid said: “They asked us things like, ‘Aren’t you ashamed of using your parents’ money? Don’t you want to be independent and respected?’ They were very convincing.” Marketing student Alvin, 21, of Perak likened such events to “brain – wa s h i n g ”. “The agents told us to forget about our studies and concentrate on making money. They asked us to use our National Higher Education Fund Corporation or PTPTN loans to invest in their schemes. “They also said we should not fear if our parents found out, because they would be proud of us once we earned a lot of money.” He did not join the scheme, but a few friends did, investing some RM2,000 each. To date, they have yet to recover their capital. “In our group, we don’t bring this topic up anymore, because my friends still feel bitter over it.” Anisa, 22, who had attended a briefing in Selangor by a company selling web education tools, spoke of an emotionally rousing experience. “The agents prepared a timeline to show us that we could retire at an age younger than 55. We were told that the world’s most successful entrepreneurs started their businesses in their late teens. “They asked us what we wanted to achieve in five years, and said that with a little investment, we could do it. “A member, who had a cast on his leg, told us that he had met with an accident and couldn’t work for a week, but his income kept pouring in because he was paid commissions for the sales his downlines (members under him) made. He said he earned up to RM20,000 a month.” When the promoters showed Anisa a video of a minister commending the programme and newspaper clippings promoting it, she was more than convinced. She borrowed RM600 from her mother to seal the deal, but did not proceed as her boyfriend warned her against it. An isa’s friend, Wany, however, signed up with a company marketing perfumed oils and bodycare products. She is getting good returns. She forked out RM1,500 in late 2008 and another RM1,000 shortly after. Within half a year, she pocketed some RM9,000. Wany, however, said it was not easy money. She worked hard to expand her network by convincing people to buy her products. When she slowed down a few months later to concentrate on her studies, the money stopped coming in. The IT student moved on to another venture after her MLM company withdrew its support. “I think the MLM business is positive for students. They get networking experience and make contacts. But they should join licensed companies and not be distracted from their studies.” Farid said an acquaintance in university, who drives a Nissan Fairlady sports car, claimed to make a minimum of RM7,000 a month. Some of his coursemates who joined the MLM scheme also claimed they earned RM2,000 monthly. However, these students did not fare well academically, having skipped classes to focus on the business, said Farid. He said these students did not pull their weight in group assignments. They also did not have many friends as other students were put off by their sales pitches, he added. “They have become materialistic, saying that they don’t mind a CGPA of 2.0, a mere pass, if they can continue to line their pockets.” nNote: All names have been changed

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