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CIMAPRO19-P03-1 Exam - Topic 3 Question 47 Discussion

H manufactures and sellshealthy dietary supplements. The companyrecruits individuals as part-timeagents to sellitsproductstofriends and colleagues. These agents are required to buy H's products and to resell them at asmall mark-up.For a fee, H will provideagents withtrainingin persuasive selling techniques. Agents who pass exams at the conclusion of this training can become distributors. Distributors buy bulk quantities of H's products at a discount and can recruit their own sales agents. Those agents can also take training and can recruit agents of their own.At what stage does H stop being a legitimate business and become apyramidsellingfraud?
B) Whenit offers returns on its agents' investments that seem remarkable. and C) When it offers its agents more reward for recruiting other agents than for selling its product.
A) When it asks its agents to buy product and marketing material up front.
D) When its training programmes promise to unlock the secret of selling its product.

CIMAPRO19-P03-1 Exam - Topic 3 Question 47 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 47
Topic #: 3
[All CIMAPRO19-P03-1 Questions]

H manufactures and sellshealthy dietary supplements. The companyrecruits individuals as part-timeagents to sellitsproductstofriends and colleagues. These agents are required to buy H's products and to resell them at asmall mark-up.

For a fee, H will provideagents withtrainingin persuasive selling techniques. Agents who pass exams at the conclusion of this training can become distributors. Distributors buy bulk quantities of H's products at a discount and can recruit their own sales agents. Those agents can also take training and can recruit agents of their own.

At what stage does H stop being a legitimate business and become apyramidsellingfraud?

Show Suggested Answer Hide Answer
Suggested Answer: B, C

by Rhea at Mar 19, 2023, 08:39 PM

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Mignon
8 months ago
But what if the products are actually good? Does that change anything?
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Raina
9 months ago
Totally agree, C is the right answer!
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Arletta
9 months ago
Surprised that people still fall for these schemes!
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Jenelle
9 months ago
I think it becomes a pyramid when recruiting is prioritized over actual sales.
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Sheron
9 months ago
Agents have to buy products upfront, that's a red flag!
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Eleonore
9 months ago
I vaguely remember something about training programs being a factor, but I'm not sure how that fits in. I might need to think more about option D.
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Janessa
9 months ago
I think we practiced a similar question where the emphasis was on the rewards for recruiting versus selling. That makes me lean towards option C as well.
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Lemuel
9 months ago
I'm a bit unsure about this one. I feel like asking agents to buy products upfront could be a red flag, but I can't recall if that's the main issue.
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Annmarie
10 months ago
I remember discussing how the focus on recruitment over actual product sales can indicate a pyramid scheme. So, I think option C might be the right answer.
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Jacquline
10 months ago
Okay, I've got this. Negligent misrepresentation can give rise to a claim in the tort of negligence, as well as a claim under the Misrepresentation Act 1967. The tort of deceit is also a possibility, but that requires a higher standard of intent. I'll select the answer that covers all the relevant options.
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Della
10 months ago
Okay, let me walk through this step-by-step. A formal gate is used to represent an interaction point, but that's not quite the same as a connection point being used by another interaction. A usage point is more about how an element is used, not a connection point. I think the message port is the best fit here.
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Agustin
10 months ago
I think the right move could be to present the change to top management, but I'm not entirely sure if that's the best approach or if we should involve other departments first.
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Carin
1 year ago
You know, I heard a joke about a guy who joined a pyramid scheme and thought he was at the Louvre. He was really just in the Lourve.
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Elizabeth
1 year ago
B) When it offers returns on its agents' investments that seem remarkable.
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Stevie
1 year ago
C) When it offers its agents more reward for recruiting other agents than for selling its product.
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Raina
1 year ago
A) When it asks its agents to buy product and marketing material up front.
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Flo
1 year ago
Ah, the old 'pyramid scheme disguised as a business' trick. I bet the training programs are just glorified sales pitches. C is the way to go here.
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Octavio
1 year ago
C is the correct answer. Prioritizing recruitment over product sales is a major red flag for a pyramid scheme. H is exploiting its agents for profit, not helping them succeed.
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Glynda
1 year ago
Hmm, I'm not sure. The scenario seems like a legitimate multi-level marketing structure to me. I'll have to think this one through more carefully.
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Kimbery
1 year ago
C) When it offers its agents more reward for recruiting other agents than for selling its product.
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King
1 year ago
B) When it offers returns on its agents' investments that seem remarkable.
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Ria
1 year ago
C) When it offers its agents more reward for recruiting other agents than for selling its product.
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Pansy
1 year ago
B) Whenit offers returns on its agents' investments that seem remarkable.
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Viva
1 year ago
A) When it asks its agents to buy product and marketing material up front.
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Dyan
1 year ago
A) When it asks its agents to buy product and marketing material up front.
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Audry
1 year ago
This question is tricky, but I think the answer is C. Offering more reward for recruiting agents than selling the product is a classic sign of a pyramid scheme.
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Shalon
1 year ago
I believe that could also be a sign of a pyramid scheme, as it may lure agents in with false promises.
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Ahmad
1 year ago
True, that could indicate a pyramid scheme. What do you think about the training programmes promising to unlock selling secrets?
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Paz
1 year ago
I think it's also suspicious when they ask agents to buy product and marketing material up front.
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Karl
1 year ago
I agree, offering more reward for recruiting agents than selling the product is a red flag for a pyramid scheme.
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Diane
1 year ago
I believe it's a combination of all these factors that make it a pyramid scheme.
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Britt
1 year ago
That's true, promising remarkable returns on investments is also suspicious.
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Roosevelt
1 year ago
I think it's when they ask agents to buy product and marketing material up front.
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Demetra
1 year ago
I agree, offering more reward for recruiting agents is a red flag.
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Detra
1 year ago
I believe H crosses the line when it promises returns on investments that seem too good to be true. That's when it becomes a pyramid scheme in my opinion.
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Brunilda
1 year ago
I agree with you, Lavera. When the focus shifts to recruiting rather than selling the actual product, it's definitely a red flag.
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Lavera
1 year ago
I think H becomes a pyramid selling fraud when it offers more reward for recruiting agents than for selling the product.
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