Is my SO working for a pyramid scheme?
June 23, 2011 10:45 AM   Subscribe

Is my SO working for a pyramid scheme?

My SO is working for pingan (she is Chinese, and the company is Chinese). She is working for the pingan based in haikou, hainan china, pingan.com is the main site. She gets money for recruiting new salesman to sell life insurance, and the more she recruits the more money she makes. She says on top of recruiting people you also have to sell life insurance. But some of her bosses make up to 100,000 RMB a month, selling/recruiting others to sell life insurance. It all sounds very sketchy to me, and after googling I didn't find much other than their advertisement which claims they are 147 on forbes top 500 was accurate. I care about her and don't want her to get wrapped up in a pyramid scheme.
posted by crawltopslow to Work & Money (13 answers total)
 
Does she make money for each recruit or money based on how much her recruits sell?
posted by missmagenta at 10:50 AM on June 23, 2011


Sounds like Multi-Level Marketing (MLM) to me. See also: Amway.
posted by Mister Fabulous at 10:50 AM on June 23, 2011


Sounds like MLM to me too. Not necessarily bad for her if she's making money. The point at which I would be worried would be if she had to pay to stay involved or if most of their income was from new people rather than selling a product.
posted by ghharr at 10:53 AM on June 23, 2011


There is a similar company in North America (whose name I don't recall). They've been around for years and years. They operate in essentially the same manner. Technically, it's not a pyramid scheme but, rather, multi-level marketing. It's not illegal, though it sometimes borders on it.

Often, the highest income earners in these companies don't actually sell much product; they devote most of their time to recruiting new salespeople.

They've attempted to recruit me a few times over the years (I have my resume on a few job sites), despite the fact that I very clearly have no experience in sales or insurance. To me, this is very suspect. If I approached them for a job it'd be one thing for them to say, "Well, you don't have any experience but we're willing to train you." It's quite another for them to approach me, an unskilled person, and say: "Hey, do you want to sell insurance for us?"

TL;DR - No, she is (probably) not working for a pyramid scheme, but it sounds like the company is ethically dubious.
posted by asnider at 10:56 AM on June 23, 2011


Legally? No, this is multilevel marketing.

Effectively? Yeah. They use the same strategies and just tone it down a wee bit to comply with whatever regulations exist to keep this kind of stuff from getting out of hand. Of course, there's room for argument -- plenty of people can thrive in this environment -- but if she's not getting in at the top in whatever district they want her to sell in, she's going to get screwed. There's no difference between MLM and a pyramid scheme in a saturated market.
posted by griphus at 11:08 AM on June 23, 2011


Does she ever sell actual insurance to real people and/or businesses?
posted by dgeiser13 at 11:10 AM on June 23, 2011


What state do you live in? The quickest way would be to pick up the phone and call the department of insurance to see if Ping An is licensed to sell in your state. If not, then you are on to something...

It is not uncommon for career agents to earn a bonus if they bring onboard a fresh recruit, but in no way does the recruiting agent get paid based on what the new recruit does (same principal other companies have where they will pay an employee a bonus if they refer a good employee to the company).

This company may just hide under the appearance of life insurance.

I did a quick search on AM Best's website, a rating agency for life insurance companies, and it does appear they are a legit company.

A search on California's DOI turns up nothing.
posted by yoyoceramic at 11:41 AM on June 23, 2011


Primerica is probably the company asnider is thinking of. My dad has worked for them on and off for years - there's definitely an MLM component and that's where the good money is, but it's a real company that sells real products. That doesn't mean that the one the OP is talking about is also legit, but it's not inherently illegal.

(I think Primerica's recruiting practices are by necessity sketchy and there's a real degree of deliberate deception about how much money you can expect to make - my dad was always wowed by how much money his superiors were supposedly bringing in - but I don't think there's anything specifically wrong with them.)
posted by restless_nomad at 11:54 AM on June 23, 2011


It certainly sounds like there's certainly an MLM component; the question to ask is whether she can make a reasonable living without unrealistic recruitment quotas.

Inter-personal relationships are very important in Chinese business culture, more so than in the West. The idea of selling products to friends and family is less weird, and things that are glaring red flags to Americans ("recruit your friends!") are not necessarily so to the Chinese.

My SO is Chinese (we are in the US), and she regularly gets invited to "investment seminars" put on by friends and spouses of friends that have been sucked into the World Financial MLM scam.

Related: There's a wonderful Chinese-American movie called Children of Invention (Netflix streaming) about a couple of kids whose mother gets caught up in one of these.
posted by qxntpqbbbqxl at 2:01 PM on June 23, 2011


We live in China, Hainan China to be exact.

Yes she actually sells direct insurance to people sometimes.
Also part of her specific job is training the new customers on how to sell insurance.

She is making 2300 RMB a month, which in Haikou is average for a fresh out of college grad.

I can try to get more specifics and post them on here.

Can anyone tell me some specific questions I can ask to find out?

I am concerned about legality, sustainability of her job, and the possibility that she will be forced to keep on recruiting to have a decent income.

They pose their company as "look we're helping you, life insurance is great for your family! don't you want to protect them" which I kind of find insulting to begin with but whatever.
posted by crawltopslow at 6:26 PM on June 23, 2011


So it turns out my SO doesn't actually recruit or sell life insurance. She said she is a trainer, she trains the new-found recruits to sell the life insurance, and also trains them to go recruit others. Her wage is not based at all on recruiting or selling, her wage is based on the retention rate of the new recruits, she said, it's based on how many stay after 3 months, 6 months 9 months and 1 year intervals. But she says this only accounts for about 10 to 15% of her pay, she has a floor of 2000 RMB and a ceiling of 3000 RMB (for the 1st year). And the more years you stay at the job, your floor and ceiling rises.

I guess at this point I also just want to understand this company better, and decide for myself how "bad" they are in my eyes. Of course it's not black and white, but I want to know what shade of gray it is for me.

Thanks in advance for any more help.
posted by crawltopslow at 7:28 AM on June 24, 2011


It sounds like your SO is working on commission, which is typical for life insurance. But I haven't heard of that recruitment scheme before, so it may be some new kind of MLM. Please make sure she isn't forgetting about any fees that the agency may be charging her.
posted by shii at 9:15 AM on June 24, 2011


That incentive package sounds a little weird to my American ears, but not unethical or anything. I haven't personally worked in a sales-driven environment like that, so it may not even be unusual here.

Are you asking if life insurance in general is shady? It's not, really, (assuming they actually pay out on death and honor the contracts to the letter) although you can get into the nitty-gritty of the exact claims they're making and whether they're using some misleading advertising tactics. Some things to investigate would be whether they're selling term life vs. whole life (I've never done the research, but my general impression is that term life is often sold as an "investment" because if you don't actually die you get your money back plus some interest or something, but again, you'll want to do your homework.) Those are almost certainly not the relevant terms in China, but it might give you a platform to start investigating if you're curious as to how the business works.
posted by restless_nomad at 10:44 AM on June 24, 2011


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