Unmasking Ponzi Schemes and Money Games in Multi-Level Marketing (MLM) (Case Studies in Indonesia)

This research aims to empirically reinforce the relationship between Ponzi schemes, money games, and MLM in Indonesia, and analyze their relationship empirically through primary data. Data was obtained by distributing questionnaires to victims of Ponzi schemes, money games, and multi-level marketing in the Central Java and Yogyakarta regions during 2020-2023. A total of 150 returned questionnaires were evaluated as sample data. The data analysis for this study employed structural equation modeling. The first test concluded that elements of Ponzi schemes are found in the recruitment structure and hierarchy-based incentives of some MLM practices in Indonesia. Even the third test concluded that some practices in money games also resemble elements of illegal MLM, such as the collection of initial funds and the promise of quick profits. Low financial literacy proved to be a weak controlling factor in the relationship between Ponzi schemes, money games, and MLM, suggesting the need for improved public financial education (fourth hypothesis test finding). Overall, the findings of this study underscore the need for a re-evaluation of existing policies in Indonesia and the need for strategic measures to combat today's increasingly sophisticated financial fraud activities.