Tuesday, May 24, 2011

Is QNET A Pyramid Scheme Or Not?

Trust Me: Frauds, Schemes, and Scams and How to Avoid Them"I am not sure about QNET. After looking at the business plan, i am worried that it resembles a pyramid scheme" is just one of the statements I encounter on a daily basis as i market QNET. It is quite understandable to get the two confused. QNET utilizes a binary compensation plan, which may look like a pyramid when it is filled up, but the similarity ends right there. Let me explain.

A binary plan is a compensation plan which allows distributors to have only two front-line distributors. The people joining such a compensation plan join to market a legitimate product or service, which they bought and own, to the market and not for the purpose of recruiting for payment. If a distributor sponsors more than two distributors, the excess are placed at levels below the sponsoring distributors front-line. This ‘spillover’ is one of the most attractive features to new distributors since they need only sponsor two distributors to participate in the compensation plan. The primary limitation is that distributors must ‘balance’ their two down-line legs to receive commissions as illustrated below.

Pyramid schemes however are programs similar to chain letters where people invest money based on the promise that other people will put in money that will filtrate back to them and somehow they will get rich. A pyramid scheme is strictly a money game and has no basis in real commerce. Modern day pyramids may have a product, but such products are not worth the money being paid. Normally, there’s no product involved, just money changing hands.

All businesses and institutions employ some kind of pyramid structure based model. The argument then is not really about the geometric nature of an organization, but the way the system is operated.

So now that you know the difference between the two, allow me to share with you the features or what some would call the benefits you gain from the binary compensation plan.

According to widely accepted statistics the average distributor sponsors 2.7 people. Clearly this fact alone has huge significance. In essence; it means the difference between success and failure for the majority of people who venture into this industry! In the Binary, you just build 2 legs or teams as the term “binary” means two. If distributors can just bring in two and teach those two to do the same, they can achieve success.

Another advantage to the Binary plan is the additional placements made by those who sponsor more than 2 distributors. After I’ve sponsored my first 2 distributors – all additional distributors I sponsor fall below my original 2 distributors – which in turn adds to their volume!

In the Binary plan there is a fairer dispersion of income. Since successful up-line distributors place new distributors in their down-line, Sales Volume is distributed to entire lines of people. This means that the commissions being paid on volume end up being spread out more evenly among entire groups of distributors.

A lot of other compensation plans require that you develop up to 5 or more team legs wide in order to earn from sales 5, 6 or 7 levels in depth. Most people would admit that building five teams requires significantly more work because you must splinter your focus, time, & energy among many teams rather than just two teams.

The Binary compensation plan is not Multi-Level Marketing. That's because MLM plans usually pay based on a limited number of levels (typically 5-10). A Binary plan does not pay you on levels; it pays you on total sales volume of everyone in your two teams up to a predetermined cap set by the company. Levels don’t matter, only sales volume does.

Another thing to note about a binary plan is that all the sales volume that is generated through any organization/team remains intact until you qualify to receive it. This is like money in the bank! This is a world different than every Multi-Level company I'm aware of which flushes that volume away at the end of each month.

Binary plans are great for fostering teamwork in an organization. It is beneficial for your up-line to assist your success, their success benefits you, and your down-lines success benefits everyone. This tends to build team unity and cooperative energy.

However some people believe that binary programs are just "money games" that don't last long. Others believe such plans are all about making money fast.

A mistake often made by some distributors is that after signing up, they sit back and expect their down-lines to be built through spillover from up-line. They believe (or have been told) that their down-line will grow by the recruiting efforts of their up-line. If you’re up-line is active, this is possible. But there is a problem...you are not the only person on your up-line's down-line.

As i mentioned above, you are in competition for the spillover with other distributors in your up-line's down-line. You’re up-line has more choices as to where to place new distributors. The tendency is for the up-line to place new distributors where they see some activity as a form of encouragement to the active down-line member.

Also with the binary plan, spillover always flows through to the outside leg - the power leg. Picture a glass full of water. If you keep pouring more water into the glass, any excess water will flow, or spill over to the outside of the glass. It will never flow to the inside. This means that you are 100% responsible for building you’re inside leg.

Binary plans also have an upper limit payout caps called a payout cap. Each business center has a limited earning potential which maxes out to ensure that both distributors and the company earn a profit. Some distributors don’t realize this.

Which perspective is really true about binary compensation plan?

It’s important to note that not all binary plans are created equal. However, all binary compensation plans have all of the above characteristics, good and bad, to some degree. Some of the above characteristics are very desirable. It is also important to note that although there may be disadvantages to this kind of compensation plan, to the right person with the proper mindset, these disadvantages can be viewed as an opportunity. I for one have figured out how to use the same disadvantages to benefit me in my business and if you really want to be successful in your business, I bet you will too. You can't just join, sit back, relax and expect the big buck checks to come rolling in just because of your up-line's efforts because the bottom line is this, you have to work the plan, get people to join with you, place them on the appropriate side of your business organization, and get them recruiting, duplicating, and generating sales volume.

In the end, it’s your business so you have to work to make it successful. QNET has been around for the last twelve years so they must have figured out how to make this plan work for their two million plus distributors. And if it can work for them, surly it can work for you too.

NOTE: Due to the introduction of the new QNET Infinite compensation plan, I have had to add on more information to this blog and to read all about it, click here

If you are interested in starting your own business right now, register yourself by visiting the QNET website.

Take ACTION Today


  1. Great article.....but some say that Qnet has a bad effect on the national economy of the country...what is your opinion on that?

    Thanks in advance.

  2. Thanks for the comment. Qnet does have an impact on any economy, but if its necessarily bad is anyone's guess. For more on my opinion on the matter please read my latest blog post entitled "Qnet bad for the economy: True or False?".

  3. i think the current number of distributors worldwide is now hovering at 7.5 million, much more than 2 million...

    on the whole, great work! very informative. thanks for sharing!

    we are one!

  4. If you get more than 5000 distributors under you will they pay you all those millions of money

  5. My dear Anonymous,

    Yes, if you manage to get 5000 people under you, expect to earn commissions for your efforts. now let me ask you a question, will you be able to convince 5000 people by yourself to partner with you in a business venture? I think not! I think you will manage to convince a few 100, and those 100 will convince others and so on. Am getting off topic.

    What i was trying to explain is that QNET pays commissions based on a balanced table(3000BV on the left and right). Once a table is balanced, QNET pays a maximum step commission cap based on your rank, with the balance of your money pushed forward to the follwing week. You will get paid ALL your money, its just paid out weekly over a period of time.

    Another question for you, with your 5000 people in your network, do you think they will sit by and watch you earn money? NOPE, they will go out and duplicate your efforts because they see that your efforts do work. They will in turn earn money and so will you, so your QNET "commission bank" will always be growing.

    As long as you are a QNET IR, you will always, ALWAYS, earn a commission for referring others to buy products or join the your business and then buy products.

  6. Everything is veгy оpen ωith a rеаlly сlear
    clаrification of the issues. Ιt wаs tгuly informative.
    Your website is extremely helpful. Thanks fοr sharing!
    My homepage ; You can check here

  7. You are welcome Anonymous and thanks for taking the time off your day to read the post.

  8. "Pyramid schemes however are programs similar to chain letters where people invest money based on the promise that other people will put in money that will filtrate back to them and somehow they will get rich."

    HOW ON EARTH does this not apply to QNET????

    Yes, there are products involved, but how many people actually buy QNET products without becoming IRs? How many people are merely interested in the products and not in the "financial freedom"? I'm sure that at least 90% of QNET's so-called customers are interested in getting involved with the company, which makes them people who "invest money based on the promise that other people will put in money that will filtrate back to them and somehow they will get rich."

    The extent to which you guys delude yourselves into thinking it's not a pyramid scheme is just unbelievable.

  9. Hello Mohamed O, thanks for sharing your views.

    Chain letter, pyramid schemes,...you want to know why these do not apply to QNET, go to http://biggerviews.blogspot.com/2012/09/insight-qnet-scam-fact-or-fiction.html

    As for people who join QNET for a chance to own a business, am guessing they are more than those who just want to to buy a product. Those who do join QNET are not promised anything...and if you or anyone you know was promised success, my apologies to you all. You were lied to. Success comes to those who work at it...so if you join and sit back waiting for others to sign up under you, it will not happen.

    I keep hearing and reading about how people have been "promised" success and I weep. This problem, I believe, stems from new IR's who have not yet been properly trained. In their excited state, they tend to make outlandish claims in the hopes that people join. This is a topic for another day, but what am trying to say is I sort of understand why some people think that there is a "promise" that other people will join under them.

    What you call delusion, we call believe. We believe in QNET and their products because we have first hand knowledge that the system works. Check out my Achievers Club page on http://biggerviews.blogspot.com/p/qnet-achievers-club.html for some of the proof. Apart from the system, we also know that the products are real and do as they are advertised. You can read tesimonies from the aspIRe magazines on http://biggerviews.blogspot.com/p/aspire-magazine.html

    What is the basis for all your "QNET is a chain letter" beliefs? Have you tried purchasing a product from the company? If you did, did you not like your product? Did you join QNET and not make money from your efforts, or where you one of the unlucky few who were "promised" success so you just sat back and waited for commissions?

    These are my questions to you as they will give me a clearer understanding of "where your coming from", so to speak.

  10. Hi Kabajjo, you were just what i needed... i'm a 3 week 'young' IR, going though the awesome training sessions, but something today just hit me & shook me to the core! I'm glad i came across your page & went thru it... its given me a lot of confidence.... & yes, for others who may some day read the reply of mine, all i wana say is, "Either i can believe the one who shook my confidence or the one who took me into confidence"... choice is mine! Get aware, don't be blind... understand properly & then enjoy!! I wana thank the guy who challenged my belief, it is because of him that i'm more confident & aware today! Love, Tarun, Mumbai.

  11. If the QNET IRs are so confident about the success of the business model and are convinced this is not a scam. Why don't you sponsor your dependent distributors so that they don't have to pay anything? In return you get to own the product they buy and the dependent will pay you the commissions he earns until he pays off his debt. Why not go one better, if you've paid $300 for your dependent, you can convince him to pay you back $600 from the commission he earns.

    This way the dependent is not at risk, he gets the confidence in the business and gets more IRs for your binary tree and sponsors them with the commission he earns.

    "Risk" free for everyone and everyone wins.

    1. WOW! You really do have an interesting business ethic Anonymous! What you have just described is the inner workings of a pyramid scheme and if someone wanted to join QNET with that mentality, i wouldn't want them on my team.

      If the distributor in question wanted to join the business i don't understand why they aren't willing to pay the price for admission. It's much easier to pay the initial price and start working towards earning profits than having them join for "free" and work to pay off the debt. Am sorry but your concept sounds silly to me!

      You talk of risk. I would like to know any business venture out there today that is truly risk free. If such a business exists, chances are it is a scam. The QNET business understandably comes with some risk, but it's risk is much lower compared to most other start up business ventures out there today.

      This is a referral business...If distributors don't own a product, exactly what would they be referring to others? There is always a price to pay for success and in QNET that price is buying a product that satisfies a particular need. There are no shortcuts to success in any business and i don't understand why you would think there is one in QNET!

  12. Dear Patrick,

    I saw your blog on the internet,http://starudyawar.wix.com/qigroup#!contact/c1d94

    I'm interested in Qnet and I would like to ask you a question.

    In your blog you mention that spillover can only go to the outside legs of your tree.
    I've been told by a Qnet member who recently gave me a presentation, that your upline can actually put a new referred IR underneath any member in his tree structure if he wishes so, even if it was INSIDE the tree, without the conscent of that member... As long as the member is in his downline, he can choose to put him anywhere! Can you please confirm that spillover goes ONLY to the outside legs.

    The reason I'm asking is I don't want just anyone above me spilling random members underneath my tree structure, since I would like to control my downline more or less...I hope I get an answer and a confirmation to my question.

    I thank you in advance


    1. As regards spillover on the QNET business legs is concerned, its true that an upline can decide to place his new prospects on both legs of downlines he favors most. That being said, it is not a good business practice because it makes those people they are "helping" lazy and those they arent left out which breeds contempt. If you don't need their help, all you need do is inform them.


Do you have any questions or feedback pertaining to what you have read here today?