Marketing Firms embracing KYC Services for Better service Delivery

Browsing through your Facebook newsfeed and you come across one of ‘Those’ friends – “Hey People, i am a ‘footforce’ in a company, selling some overpriced and overly bragged products”.

Next you see your friend, claiming the product to be the best that there is to ever buy. In most instances, the so called ‘friend’ referred above, would be a part of an MLM- Multi Level Marketing team in a company  We have now continuously seen this happening, through social media marketing or via tv commercials. Today, the thought of coming across an MLM firm not complying to KYC/AML regulations is frightening, when legal stakes are so high. Likewise, the lack of Know Your Customer procedures opens ways for potential malpractices and scams to occur with an MLM implementing company.

Understanding MLM | Multi Level Marketing – Operations

MLM is a marketing strategy for a product or service by independent representatives who sell goods to potential customers through a direct sales approach. An MLM company also mobilizes large amount of monetary funds, in the form of bank deposits from the public in exchange for high returns and promises.   

Multi level marketing is also referred to as network marketing, which consists of a pyramid tier hierarchy level. MLM is mostly referred to as when there are two or more hierarchy branches involved. Additionally in the concept, MLM involves the privilege of each representative to recruit and train additional representative under themselves and form a hierarchical chain of command in a way – referred to as a downline.  

Representatives within a downline earn a commission from the reps sales that they recruited. Additionally, Income earned in MLM comes from the commission earned on personal sales within a downline, as well as a percentage of the sales earned by other reps recruited by a distributor(representative) directly above you.

Where MLM Exhibits Vulnerabilities

As any other company, even an MLM one is not safe from all vulnerabilities. Each company has its own shortcomings and in the case of the MLM companies, it is – Distributor/End Sales People/Recruits.

A fundamental aspect of an MLM scheme is its state of regular hiring, done by distributors and sub-distributors – depending on the stages in MLM hierarchy. This aspect of hiring individuals on a consistent basis, opens a potential vacuum of exploitation by potential fraudsters. This threat is further extended as individuals recruited by MLM companies turn out to be fraud.
There are legit MLM companies operating as well. The nature of operation in direct sales is unforgiving and financially unsatisfying for distributors and lower tier sales person – who end up leaving and running away. This causes even higher losses to a company, while continuing the hiring cycle.

What’s important to realise is that a scheme such as an MLM does not offer long term value or consistency. Making money by signing up new members, who make money by signing up new members is not a business plan that offers job security.

MLM Companies – in Light of Identity Verification

MLM schemes and companies conducting MLM are filled with complexities of their own such as integrated hierarchy structures, direct sale payments, commissions and referral percentages. MLM’s can be and are chaotic, where an Identity Verification Service Provider can mitigate most, if not all problems.    

Companies tend to miss out on a crucial aspect when implementing an MLM scheme, KYC – ‘Know Your Customer’.

An Identity Verification company can help verify an Individual’s identity in a transparent manner and establish a better and improved customer identification program for the implementing company. The likelihood of hiring done through this process can ensure individuals are hired quickly and stay on board with a company longer, through improved customer profiling.

In addition to customer profiling, a dedicated KYC provider can also provide Risk Assessment through dedicated background checks in combination with Identity Verification. This creates an added score of judgement for companies to base their hirings on and predict, which potential people are likely to commit fraud through illicit activities.

This is where a third party service provider will facilitate a large MLM company, or any other firm implementing an MLM scheme.

How MLM Companies Benefit From KYC Services

Almost all MLM’s involve excessive marketing, field work and verbal marketing. The greatest risk involved, is the risk that it exposes itself to a regular hiring process. Most of the smaller salesperson and distributors are unknown to the scheme implementing company.

In order to validate an individual’s Identity and ensure security to not only the company but also to the lower tier salesperson and distributors, Shufti lends a dependable arm by being a reliable KYC and AML operator. Shufti can facilitate MLM implementing companies, by providing all identity and document verification services under a greater Identity Management Suite.

For either seasoned or new MLM implementing companies, a dedicated KYC platform like Shufti offers effective real-time processing for Identity verification. This helps save valuable time in the process with quicker distributor/recruiter on-boarding time. KYC services from a versatile system like Shufti would be an adequate fit, providing a scalable solution with maximum usability of the internet for enhanced customer facilitation. Shufti will verify identities by having the customers to face a camera and then show an ID documentation, focusing in on the Picture, DOB, Name and Proof of Address(if applicable).

The AI technology will identify any potential shortcomings in documents or facial mismatch and will display results accordingly. Thus, reducing the chances of fraud taking place inside MLM companies. 

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