A month or two ago, some friends invited me to join this online networking program called Crowd1. I was given links to YouTube videos to see the benefits of becoming a part of the network and how I can earn great incomes. I did a quick Google search and realize it was not my cup of tea. And I had totally forgotten about it.
Well, a few days ago I wrote a blog “How I Made 600$ from Affiliates During the Lockdown” and shared it on my WhatsApp status. A good friend of mine replied to my status with a screenshot of her earnings from Crowd1. And it was an impressive 822 Euros, that’s like more than 70k in INR.
Oh Boy! Was I jealous!!! And in that tiny seconds of jealousy I asked myself, did I made a mistake not joining Crowd1?
However, I decided to further dig in about Crowd1 and to see what really it is about. And yes, I’m happy I was never a part of it. People may have earned from it, but it all comes down to these, Morality and Legality.
Anyway, I’m here to share my findings on Crowd1 and why I choose not to follow the crowd in joining Crowd1.
Crowd1 Business Model – Shady Business Model
Crowd1 follows a Pyramid Scheme Multi-Level Marketing structure. However, unlike other MLM, Crowd1 doesn’t seem to be selling anything. I asked my friends who are a part of Crowd1 what they sell, and their response, ‘we just have to find downline’. On the Crowd1 website, they did mention somewhere about selling educational packages, online gaming, online gambling, etc. But checking the app, there’s no option of selling anything except the option of buying Crowd1 magazine.
Every MLM business model I know, sells products, be it Amway, Oriflame, etc. Crowd1 doesn’t seem to be selling anything as of now. And here’s the thing, Pyramid Scheme without selling anything is Prohibited in India.
Ministry of Consumer Affairs, Food and Public Distribution define Pyramid Scheme as “A multi-layered network of subscribers to a scheme formed by subscribers enrolling one or more subscribers in order to receive any benefit, directly or indirectly,as a result of enrolment, action or performance of additional subscribers to the scheme. The subscribers enrolling further subscriber(s) occupy higher position and the enrolled subscriber(s) lower position, thus, with successive enrolments, they form multi-layered network of subscribers”
And Clause 8 of the Model Guidelines on Direct Selling prohibits it.
Clause8: Prohibition of Pyramid Scheme & Money Circulation Scheme
- No person or entity shall promote a Pyramid Scheme, as defined in Clause1(11)or enroll any person to such scheme or participate in such arrangement in any manner whatsoever in the garb of doing Direct Selling business.
- No person or entity will participate in Money Circulation Scheme, as defined in Clause1(12)in the garb of Direct Selling of Business Opportunities.
So technically speaking, if Crowd1 is not selling anything, it is than illegal in India.
You can view the Model Guidelines on Direct Selling from Ministry of Consumer Affairs, Food and Public Distribution’s Website
Govt Regulators Issues Red Alert on Crowd1
If you Google search Crowd1 reviews, or is Crowd1 legal, or is Crowd1 a scam, you will find mixed responses. Many websites will say its not a scam, and many websites will also say its a scam. How will one conclude in such a case? If you click on the websites or videos where it says it’s not a scam, they are mostly by Crowd1 or by individuals who try to create their downline through that review. And it adds only little value to the review as they are just trying to promote themself. What’s important is to see if there are negative/positive reviews from institutions, Govt agency, Govt regulators, etc.
Mauritius, New Zealand, Namibia, Philippines, Paraguay issues alert regarding Crowd1
- The Financial Services Commission of Mauritius has issued an Alert to investors regarding Crowd1 on 14 May 2020. The Financial Services Commission is a regulatory authority responsible for the regulation, supervision, and inspection of all financial services other than banking institutions and global business in Mauritius. You can view the Investor Alert here (https://www.fscmauritius.org/media/84895/investor-alert-against-crowd1.pdf)
- The Bank of Namibia, the central bank of the Republic of Namibia, investigated the activities of Crowd1 and issued a notice on February 21, 2020, informing promoters and participants to immediately stop business operations. (https://www.bon.com.na/CMSTemplates/Bon/Files/bon.com.na/3a/3a8a9bd9-5dd1-4e21-a84c-70a3e77c186d.pdf)
- The Securities and Exchange Commission (SEC), the agency of the Government of the Philippines responsible for regulating the securities industry in the Philippines, issued an Advisory against Crowd1 on 28th April 2020 (http://www.sec.gov.ph/wp-content/uploads/2020/04/2020Advisory_Crowd1-Asia-Pacific-Inc.04282020.pdf). And subsequently issued Cease and Desist Order to CROWD1 on 12 May 2020. (http://www.sec.gov.ph/wp-content/uploads/2020/05/2020CDO_Case-No.-05-20-064-Crowd1-CDO.pdf)
- The Financial Markets Authority, New Zealand’s government agency responsible for financial regulation, also issued a cautionary note on 5th June 2020 based on the above cautions by different Govt regulators. (https://www.fma.govt.nz/news-and-resources/warnings-and-alerts/crowd1-and-impact-crowd-technology-s-l/)
- In Paraguay, the country’s financial supervisory authority has issued a warning regarding Crowd1. In addition, the company’s offer has been defined as an unregistered security, which means that people who market the company’s services can be fined or receive up to three years in prison.
The above websites are all Govt websites. And their cautionary note does provide a handful of insight on the way Crowd1 operates and why Govt regulators are putting a red flag. It is also worth noticing that these cautionary messages are from February 2020 to June 2020. And I’m sure more Govt regulators will come out with cautionary note in the days or weeks to come. I wouldn’t be surprised if RBI also comes out with cautionary notes too.
Where’s The Money!
I have been talking to some few friends and families who are a part of Crowd1. They are all excited about their earnings from Crowd1. And when I asked them, where’s the money, they all said it’s in the Crowd1 account. I’m still unable to find any friend or family who has withdrawn the earnings in their Indian bank account.
As per the information gathered, one can withdraw the residual income after every 3 months. Maybe that’s the reason why no one has ever withdrawn into their bank accounts yet. Well, I hope that they be able to successfully withdraw it. And if you are planning to withdraw to your bank account, get the SWIFT code ready.
To receive funds in foreign currency (Since Crowd1 is dealing in Euros) one needs to provide their bank branch/bank SWIFT code. Unlike the IFSC code, not every bank branch has a SWIFT. Only those dealing with Forex will have a SWIFT Code.
There are also reports of delays in paying out as stated on this website. It also states that payments are being made only in Bitcoins. Well, if you get paid out in Bitcoins, all the best converting that to INR. Bitcoin is something that even the Indian Banks are not well equipped with. And I’m sure laymen like us will have totally no idea how to convert it into currencies or deal with it.
So how are some people making money from Crowd1?
Apparently, the smart ones are earning real cash from it. Though they can’t withdraw the money from the app, the accumulated earnings are converted into gift cards which are used to register their downline, and they in turn get the registration money in cash from their downlines.
A Ponzi Scheme
Even if you can earn from it, don’t get tempted by such easy money networking schemes. Networking/MLM/Pyramid Scheme is not everyone’s cup of tea. Most of my friends and families whom I have chatted in the past few days are struggling to find their downline. They are stuck after investing and not knowing what to do.
And to those who have recruited a lot of their downlines, I hope you get rich real quick. But also know that your bottom-most downline will probably be the poorest of the poor. And when this so-called Ponzi Scheme crashes, it will be the poorest who suffers the most. And knowing that its a Ponzi scheme and still recruiting downlines and earning from it is not morally right.
And for all these above reasons, I choose not to be a part of Crowd1. People may earn from it, but it all comes down to this, Morality and Legality. And I decided to do what’s morally and legally right and not to be a part of schemes that will one day destroy someone’s life.
PS: The above views are my observations after researching in a personal capacity.