The public side of Karatbars makes perfect sense. Buy gold, sell gold, get paid. That I have no problems with and it’s all perfectly legitimate (at least on the surface).
Dig deeper however and things get incredibly murky with the compensation plan and affiliate side of things.
The first major red-flag within the Karatbars International compensation plan is the overall pay-to-play aspect of the business.
The compensation plan material (and no doubt affiliates pitching it) stress that Karatbars is free to join. That much is true, however earnings in the binary (including commission qualification itself) and the ability to buy the Bronze Director rank are directly tied into the purchase of a package.
When you combine this with the package bonus paid out on the purchase of one of the packages, things get even more problematic as we start to enter pyramid scheme territory.
You sign up to Karatbars International, buy your package and then recruit others who do the same. This build your points and units and pays you out a direct commission per affiliate recruited.
Packages come with “cards” which offer a discount on the top-tier VIP package, which suggests the company itself encourages this practice (at the VIP package level at least).
It is entirely possible to earn via the selling of gold to retail customers in Karatbars International, however as a business opportunity it’s highly unlikely.
Prospective affiliates would be strong
advised to check with their potential upline as to how much gold they are selling to non-affiliates each month. I suspect in most cases one will find it to be negligible, if anything at all.
In summary, there’s nothing inherently wrong with investing in gold, or even building an MLM company around this idea (provided it’s being sold in substantial quantities to non-affiliates). Tack on a recruitment-driven pyramid scheme that incorporates pay-to-play commissions however (and the buying of affiliate rank, which directly affects commission rates), and it’s easy to see why the Canadian AMF issued their fraud alert a few months ago.
I honestly can’t see why anyone other than affiliates would bother purchasing gold through Karatbars, and that’s a problem