A MLM scheme

Hi Mr Tan,

I came across a few website that claims that a person can earn thousands of dollars in a few month by just working from home. Somehow I managed to find a website that is Singapore based that claimed to do that. The website shows a lot of success stories, comments by Singaporeans and also proof of payment etc. Out of curiosity, I went to try out the offer. The website offer a few packages ranging from Free account to SGD$250 a year. I signed up for the SGD$100 2 years package as it seems to be the popular package for starters.

Basically how this thing works is that when you sign up under a specific person, the person will earn commission. The higher the package the referral signed up with, the higher commission they will earn. After which, the person start sending email on tips to get more people sign up i.e. through advertising, words of mouth etc. I tried online advertising and somehow manage to get quite a number of users sign up under me. Most of them sign up the free package (which I suppose will take a lot of years to earn and also I won't earn any commission for that) and also somehow I got 3 person who sign up paid package under me. 

During that period of time, users under this program need to reach SGD$100 in order to cash out. Once, I reach SGD$100+, I requested for cash out as I'm afraid that this might not last long. It took quite long for the cash out to process but they did pay me. Although my package still left with 1 more + year. I have stop participate in this program though my account still active. The reason is because I just wanted to know more about how this things work and also I have already got back my money (though I earn a few dollars). Most importantly, I'm afraid that this program might cause some people like students who are not working and fork out their savings. They might lose their money if they cannot find people to sign up under them or they may even pester their friend to sign up under them resulting in lose friendship (see the link below on Push MLM and lose a friend). Moreover, I don't think this kind of program will last long and the person who earn the most is the creator of this program.

I am just wondering what kind of scheme is this called and is this legal? I do have friends who are in MLM who sell health products that also requires to fork out money for products and additional money for training. When they approach me to attend a talk, I will try to avoid. Friendship starts to become drift apart because of this. I frequent read newspaper also found out there are advertisement on "Earn millions dollar a month/year" by attending their seminar to learn more. I never attend such seminar before so I wonder is this similar to one of the above-mentioned story?

It would be glad if you could share your views on the above-mentioned story, Ponzi Scheme, MLM, newspaper ads and related stuff.

Best Regards

Ray

Links

The package that I signed up under (she is the one I keep contact with and I believe she has a lot of people sign up under her)

http://www.richestsg.com/ which links to http://www.whenyouhost.com/member/register.aspx

Push MLM and lose a friend                                   

http://www.asiaone.com/News/AsiaOne%2BNews/Asian%2BOpinions/Story/A1Story20100308-203169.html