The issue of mandatory auto-ship continues to be a hot-button topic in MLM.

On one hand you have those that believe affiliates buying products does not equal getting paid to recruit. People like me argue that it is, because it comes at the cost of retail. Affiliates being the only purchaser of products is indicative of a product-based pyramid scheme.

It stems from the outdated thinking that attaching products to affiliate recruitment somehow legitimizes it. In the US the concept is widely known as “pay to play”, with regulators slowly making inroads towards stamping the practice out.

Elsewhere in the world, particularly in Asia, the practice of pay to play remains rife within the MLM industry.

Today we take a look at once such scheme, recently collapsed in Vietnam.

Lien Ket Viet coupled “detox machines, different types of dietary supplements, and others” with what was otherwise a chain-recruitment scheme.

The company claimed to be “under the management of the Ministry of National Defense” and that it had “received awards from the (Vietnamese) prime minister”.

Lien Ket Viet affiliates were “granted a business code” for $384.85, which included a selection of Lien Ket Viet products.

This purchase qualified Lien Ket Viet affiliates for commissions upon recruiting others who also bought in, with the company representing an average $20,093 in earnings after five years.

Lien Ket Viet was founded in 2010 but only launched its MLM opportunity in 2014, after obtaining a multi-level marketing license from the Ministry of Industry and Trade.

Since 2014 around 45,000 Lien Ket Viet affiliates have purportedly pumped $85 million dollars into the scheme.

When those who signed up early with Lien Ket Viet didn’t earn anywhere near $20,093 as represented, it all came crashing down.

Since late 2015, several reports have been submitted to the Ministry of Public Security referring to the fact that the leaders of the company and many of its branches had failed to pay commissions to their clients in accordance with their agreements.

Following complaints from affiliates, Vietnamese authorities launched an investigation into the scheme.

Last Friday Vietnamese authorities arrested Le Xuan Giang, chair of the board of directors, and Nguyen Thi Thuy, deputy general director along with five other accomplices.

Giang, Thuy and their accomplices have been charged with fraud and appropriation of assets.

One day after the company’s leaders were nabbed by police, its headquarters, which cover hundreds of square meters in area, were closed, with furniture and employees nowhere to be found.

Police have seized around $2 million from a Lien Ket Viet account in Giang’s name. The remaining $83 million dollars affiliates bought into the scheme with remains unaccounted for.

Investigators said the company’s leaders managed to expand their network by using deposits from new sales agents to old ones and repeating that cycle.

Authorities dismissed Lien Ket Viet’s claims of being run by the Ministry of National Defense and having received any awards as “erroneus”. They also claimed the company’s dietary supplements “may be counterfeit”.

The company’s products, mostly fake, were sold at high costs compared to real products.

Police also found the company had forged many documents including certifications for outstanding services.

The high-pricing of attached products is typical in pay to play schemes, further highlighting the implausibility of retail sales.

Unfortunately, the demographic Lien Ket Viet targeted were probably MLM first-timers.

Giang and his group had tried to develop his company throughout the country focusing on rural areas where they were easily to dupe poor people into investing and becoming a member of the company.

The average monthly wage in Vietnam is about $145, so $20,093 after five years must have sounded like a dream come true to Vietnam’s poor.

In the end though nobody was selling products to retail customers, recruitment dried up and the scheme went belly up.

They always do.