The group, which claims to be a multilevel marketing firm, reiterated this point after it was accused of being a pyramid scheme by various financial regulators around the world, including the Bank of Namibia on February 21.

Locally, the South African Reserve Bank’s Prudential Authority is investigating the company to see if it’s acting like a bank, while the National Consumer Commission said a few weeks ago that it is looking into whether it is a pyramid scheme.

A pyramid scheme is where most of the revenue comes from signing up new customers rather than the sale of a product.

Crowd1, which is run by Swedes, says the release of its digital products demonstrates that it is a serious business that will be around for a while.

“We are here for the long term,” said Johan Staël von Holstein, CEO of parent company Impact Crowd Technology SL, at a launch event on July 4. “We need to take away the suspicion this industry has. We need to be transparent and compliant.”

The event was a showcase of six companies it had signed up as partners as well as the launch of its own publication, Crowd magazine.

But wait, there’s more …

A closer look at some of the companies it has signed up, however, raises more questions than answers.

MyGritHub, which is based in the United Arab Emirates, for example, sells real estate training packages from between €99 and €2 499. Its website does not spell out many details about the specifics of these packages and questions such as ‘Are the products region-specific?’ and ‘What is the price difference between buying your products directly or through a Crowd1 affiliate?’ could not be asked as technical issues on its site did allow emails to be posted through it.

There are also questions around its e-sport partner Miggster, which provides no contact details and doesn’t offer any description of the service or product it provides.

There is a similar story with gambling service AffilGo; while it does give a description of its service, no contact details are provided.

LifeTrnds, a US-based multilevel marketing travel service, is also lined up as a partner but is also yet to deliver a product.

Discounts and ‘commission’

Though there are questions around the actual products of these companies, Crowd1’s other partners – Nigerian-based luxurious skincare products, fragrances and jewellery group Tribute Lifestyle, and South African security app SAfer – do provide tangible products and services.

Tribute Lifestyle’s can be bought through its Facebook page, but Crowd1 says not only will its members be able to make purchases at unspecified discounts, they will also get a cut from any “network commission”.

For its part, the SAfer app can be downloaded through various app stores and the service paid for directly.

SAfer’s normal offer in SA is R49.99 per month but Crowd1 members can get it for R44.99 per month.

Chicken and egg

At the launch, Von Holstein asked global regulatory authorities to give the group a chance to prove itself. He said Crowd1 had solved the “chicken and egg” problem multilevel marketing firms face when trying to figure out whether to focus on growing the sales network versus finding the right products to sell through this network.

With a sales network of about seven million people, Von Holstein said the group’s “chicken” is in place and now it is just a matter of sorting out the “eggs” (the products).

From the group’s promotional videos at the launch, however, it looks like South Africans do not need the eggs these companies are developing in order to derive an income from Crowd1.

Members spoke of how they paid off debt or bought a Mini Cooper for a daughter – despite the group still being in the process of defining (and switching) products in the year or so in which it has been operating.

Moneyweb