MLM / Chain Money
Amending Prize Chits Act

Who is behind this strange rush to legitimise MLMs?

 

At one end of the spectrum, we have lots of action against shady money collection schemes—whether in the guise of chit funds or recurring deposits. Subrata Roy of the Sahara Pariwar remains in jail since March. Pramatha Nath Manna, chairman of the MPS group, a shady chit fund operation, was arrested after years of defiance against SEBI’s action and being asked to shut down his operations in 2012. The investigation into Sharada scam has picked up speed and another major West Bengal operation, the Rose Valley group, is also facing regulatory action. 

 
At the other end of the spectrum are multinational multi-level marketing (MLM) companies like Amway, Herbalife, QNet and others, whose operations also fall foul of the Prize Chits and Money Circulation Schemes (Banning) Act (PCMC Act). They are lobbying hard to get the BJP-led government to amend the PCMC Act and legitimise their operations by granting specific ‘exemptions’ to some. These powerful, but always controversial, MLMs want the same status they enjoy in the US, although there is plenty of evidence, in India and abroad, that only a tiny sliver of distributors at the very top of the pyramid make money. 
 
Moneylife has taken the lead in exposing MLMs which make exaggerated claims to lure people. We have also pointed out that, far from dilution, the PCMC Act needs to be amended to empower the police, or other investigation agencies, to act before more shady MLMs siphon off the money collected from gullible consumers. 
 
Under the UPA government, it was the ministry of corporate affairs that was looking into dubious MLM companies, such as SpeakAsia, Qnet and dozens of others that had cheated investors. Sachin Pilot, as MCA minister, answered parliamentary queries on the subject. However, in the BJP dispensation, it is the department of banking and financial services which is apparently leading the effort to legitimise select MLMs. 
 
At a time when the finance minister was away on a long medical break and when the department of banking ought to be concerned about issues such as burgeoning bad loans and the urgent need to appoint chairmen of six nationalised banks, it is, indeed, surprising that amending the Act to legitimise MLMs seems a greater priority. It certainly raises questions about the transparency and probity that was promised by the prime minister in his election campaign.  

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COMMENTS

Agyat Vyakti

9 months ago

Off the topic. This is just for awareness.. Qnet and MLM are using friends and relatives to dupe you... You may like to read Qnet modus operandi with screen shots and facts and how to avoid them here ... Please share for public interest.. Qnet Scam in delhi by Ashwin Baluja and Prithvi Raj Grover http://qnetindiascam.blogspot.in/

Sushant Roy

2 years ago

http://www.DSA.org & http://www.wada.org & http://www.idea.co.in represent all direct selling companies. ICICI also supports direct selling and the law in India will give a clear cut understanding of what is a scam like sharda scam and what is business if direct selling.

REPLY

Agyat Vyakti

In Reply to Sushant Roy 9 months ago

Off the topic. This is just for awareness.. Qnet and MLM are using friends and relatives to dupe you... You may like to read Qnet modus operandi with screen shots and facts and how to avoid them here ... Please share for public interest.. Qnet Scam in delhi by Ashwin Baluja and Prithvi Raj Grover http://qnetindiascam.blogspot.in/

Scott Johnson

In Reply to Sushant Roy 2 years ago

These organizations are MLM lobbyists and MLM sycophants.

Sushant Roy

2 years ago

There are regular product buyers of Amway without being interested in selling them. You seem to have no understanding of economics and you also dont understand what the word scam stands for. If Amway is a scam then in that case all corporates and capitalism is also a big scam.

REPLY

Scott Johnson

In Reply to Sushant Roy 2 years ago

If there are little to no retail sales to non-distributors, the MLM is a scam. Amway is a scam, and it also has a RICO fraud tool scam. Sushant Roy seems to have no understanding of economics and he also doesntt understand what the word scam stands for. Amway is a scam, which does NOT make all corporations and capitalism a big scam.

Sushant Roy

2 years ago

Pricing is relative. There are products expensive than Amway in the same category. Same food in various restaurants are priced differently. You clearly dont understand market it shows.

REPLY

Scott Johnson

In Reply to Sushant Roy 2 years ago

Pricing is relative, retail sales to non-distributor customers are measurable. Amway's retail sales are close to zero, which makes Amway an illegal pyramid. The added tool scam makes Amway a RICO fraud as well: http://www.StopTheAmwayToolScam.wordpress.com

Sushant Roy

2 years ago

So dude you buy a coke today and then drink it half and your friend says that it has ph level so acidic with which you can clean your toilet and the amount of sugar is too much and the real manufacturing cost of the 200 ml drink is less than a rupee and you decide to return the bottle to thr shopkeeper and he refuses to take it is a real scam where in good direct selling companies take your concern im consideration and pay back your money as per law!

REPLY

Scott Johnson

In Reply to Sushant Roy 2 years ago

Comparing Amway to coke is nonsense, the problems are overpriced products which lead to little to no retail sales (illegal pyramid) and tool scams (RICO fraud): http://www.StopTheAmwayToolScam.wordpress.com

Sushant Roy

2 years ago

Neither binary nor generation plans are illegitimate; technically the problem is poor products or services without a guarantee. It is like a buy a product and also get a chance to do business but then the products are of poor quality and i dont want to promote then and the company refuses to pay my money back.

REPLY

Scott Johnson

In Reply to Sushant Roy 2 years ago

They are if there is little to no retail sales to non-distributors.

Rogier van Vlissingen

In Reply to Sushant Roy 2 years ago

If there is any form of MLM that is not illegal, it should be. see: https://http://www.imf.org/external/pubs/ft/fandd/2000/... and also http://timesofindia.indiatimes.com/busin... http://www.entrepreneur.com/article/2427... and http://www.arabianbusiness.com/bahrain-o...

Scott Johnson

In Reply to Sushant Roy 2 years ago

The problem is lack of customer sales and tool scams: http://www.StopTheAmwayToolScam.wordpress.com

Sushant Roy

2 years ago

I agree that companies like speakasia or companies which offer
huge interest rates are really fraud and fly by night companies and are scam artists.

REPLY

Scott Johnson

In Reply to Sushant Roy 2 years ago

Amway is also a scam, they just use slightly different techniques: http://www.StopTheAmwayToolScam.wordpress.com

Sushant Roy

2 years ago

Amway doesn't promise any readymade money without any hardwork and business turnover. Neither Qnet or Amway pays you without any turnover of goods or services.

Scam is only when you promise to pay and dont pay!

REPLY

Agyat Vyakti

In Reply to Sushant Roy 9 months ago

Off the topic. This is just for awareness.. Qnet and MLM are using friends and relatives to dupe you... You may like to read Qnet modus operandi with screen shots and facts and how to avoid them here ... Please share for public interest.. Qnet Scam in delhi by Ashwin Baluja and Prithvi Raj Grover http://qnetindiascam.blogspot.in/

Scott Johnson

In Reply to Sushant Roy 2 years ago

Amway lies, pure and simple. Scam is when you have overpriced products that can't be sold to external customers, and misrepresent business model/rip off people with tool scam: http://www.StopTheAmwayToolScam.wordpress.com

Sushant Roy

2 years ago

What about a job scam where you work for 40 years and the credit is taken away by the company owners? Isn't that a real scam?

You then live on your PPF pension which is peanuts.

In Amway or such companies you can pass your business legacy to your future generations. Where in a corporate job you seldom get a chance to be a ceo. In Amway or other such companies all distributors have equal chance to grow their own organisation.

The argument that only top few distributors make money is a lame argument comes from a communist mind set. In capitalism only top few get rich. The entrepreneurs become rich, those who work like jobber or salesman in network marketing company do not grow.

REPLY

Scott Johnson

In Reply to Sushant Roy 2 years ago

This is a common tactic, trying to change the focus off of MLM scams and compare to jobs. 40 year jobs make money for the employee, almost all in MLMs at any given time are operating at a net loss. The "legacy" and "CEO" claims are mere emotional hooks, not based on facts. The lame argument is that MLM is legitimate. LOL

Scott Johnson

2 years ago

I guess the Amway India CEO isn't the only scam artist on the radar. Most MLMs operate similar to Amway, the largest MLM scam on the planet: http://www.StopTheAmwayToolScam.wordpress.com

jitu moni

2 years ago

Lets spread it friends

http://www.business-standard.com/article...

Two top representatives of QNet, a Hong Kong-based multi-level marketing company allegedly involved in a Rs 425-crore fraud here, were arrested today after being picked up from Delhi international airport, police said.

The controversial company's senior independent representatives, identified as Sandeep Kalra and Hitesh Miglani, were intercepted by immigration authorities at the Indira Gandhi International Airport at Delhi last night, said an officer with Mumbai Police Economic Offence Wing (EOW).

The duo, who arrived from Dubai in separate flights, was stopped at the airport as Look Out Circulars (LOC) were issued against them by the EOW probing the case.

The two suspects, who were suspected to have had pocketed lakhs of rupees through the scheme and organised several training camps to lure investors, have been subsequently brought to the metropolis and placed under arrest this evening, police said.

The LOCs have been issued against those whose statements have been necessitated in the probe but did not appear before the investigators despite summons.

Kalra hails from Delhi while Miglani is from Bangalore, police said adding that this is the first arrest of those against whom LOCs had been issued.

The EOW had earlier arrested 15 persons for allegedly duping investors by selling QNet products, including magnetic disks, herbal products and holiday schemes, through allegedly fraudulent means.

The EOW has invoked the stringent Maharashtra Protection of Interest of Depositors (MPID) against the company which has denied any wrongdoing on its part.

QNet has also been accused of using the banned binary pyramid business model. An FIR in the case was registered in August in 2013.

The accused had been charged with cheating and forgery under relevant sections of the Prize, Chits and Money Circulation Schemes (Banning) Act, 1978.

Siksha

2 years ago

thanks for taking the action quickly.. I hope it stops soon to save hard earned money of middle class families.. why donn you announce like a head line in popular news paper(TOI) or local news papers like mumbai samachar & gujarat samachar to not to indulge any of such businesses.. people are not aware enough about Qnet

gurupreet

2 years ago

no government will ever legitimize PYRAMID schemes like QNET :)

Ashish

2 years ago

Multi Level Marketing or Network Marketing is a beautiful Industry which provides livelihood to millions across the world. Although the popular perception is that only a few people earn money. the same is not true in a genuine legitimate MLM Company where everyone who sells the products of the Company earns money. Yes, some make more money and some less but it does not matter in a genuine MLM if you are the first person to join or join later, everyone has an equal opportunity to earn. Everything around you is a pyramid, be it the Government, or the Company you work for. Only few people are at the top. Does that structure make something illegal.

Yes, MLM has garnered a bad name but only due to the acts of certain crooks who use the guise of MLM to cheat people like Speakasia etc.

REPLY

Siksha

In Reply to Ashish 2 years ago

So some one has cheated you. so you are trying to cheat others to recover your loss by writing such beautiful lines.. shame on you all who are desperate to trap their own relatives & friends..

MOHAN

In Reply to Ashish 2 years ago



Kindly let me know the "beutiful" "legal" MLM you belong to

Tex

2 years ago

There is cause for some optimism. India slams Amway and the DSA, AGAIN! See http://indianexpress.com/article/india/i..., which states, in part, “…the Intelligence Bureau reported in 2012 that “fresh” illegal financial activities of chit fund companies were cheating lower middle class and poor people, especially in rural and semi urban areas. The proposed changes, prepared by Department of Financial Services (DFS), also drags in “pyramid marketing schemes” within the act with some safeguards to exclude selling of goods and services, but not those sales where there is no economic activity or addition of economic value save for creating a chain of new participants and distribution of economic benefits to the existing ones. The department has also turned down request of Indian Direct Selling Association (IDSA) – comprising biggies like Amway, Tupperware and Hindustan Unilever Network – to include direct selling schemes as an exempted category under Section 11 of the Act.”

Nifty, Sensex likely to rally – Tuesday closing report

Nifty likely to move up sharply if it is able to sustain above 7,930

 

Indian market opened Tuesday higher than previous day’s closing but could not sustain itself in the green and soon plunged into the red. Immediately the benchmarks made a struggle to revive but it was pulled further lower. In Monday’s closing report, we had mentioned that NSE’s CNX Nifty will move higher as long as it closes above 7,895.


S&P BSE Sensex opened at 26,537 while Nifty opened at 7,923. Sensex moved in the range of 26,212 and 26,551 while Nifty moved between 7,825 and 7,928. Sensex closed at 26,349 (down 35 points or 0.13%) while Nifty closed at 7,864 (down 20 points or 0.26%). NSE recorded a volume of 82.77 crore shares. India VIX rose 0.64% to close at 14.5925.


Among the other indices on the NSE, the top five gainers were PSU Bank (1.42%), Bank Nifty (0.47%), Dividend Opportunities (0.33%), Nifty Junior (0.32%) and Infra (0.28%), while the top five losers were Realty (9.02%), IT (0.76%), Auto (0.39%), FMCG (0.38%) and Commodities (0.30%).


Of the 50 stocks on the Nifty, 23 ended in the green. The top five gainers were Bhel (3.87%), Axis Bank (2.80%), Bajaj Auto (2.67%), IndusInd Bank (2.50%) and State Bank of India (2.02%). The top five losers were DLF (27.98%), BPCL (2.34%), Cairn (1.95%), HCL Technologies (1.42%) and Tata Motors (1.41%).


Of the 1,577 companies on the NSE, 649 companies closed in the green, 876 companies closed in the red while 52 companies closed flat.


Data released by the union government after trading hours on Monday showed the annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 6.46% in September 2014, from 7.73% in August 2014. The rate of inflation based on the combined consumer food price indices (CFPI) for urban and rural India eased to 7.67% in September 2014, from 9.35% in August 2014. Core CPI inflation, which excludes food and energy prices, eased to 5.9% in September 2014, from 6.82% in August 2014.


After market hour on Monday, Reliance Industries came out with its September 2014 quarter result. The consolidated results for the September 2014 quarter showed net profit of Rs5,972 crore as compared to Rs5,873 crore for the quarter ended September 2013. Net sales decreased from Rs115,491 crore for the quarter ended September 2013 to Rs109,797 crore for the quarter ended September 2014. On the other hand, standalone results for the quarter showed net profit of Rs5,742 crore for the quarter ended September 2014 as compared to Rs5,490 crore for the quarter ended September 2013.

 

Net sales decreased from Rs103,758 crore for the quarter ended September 2013 to Rs96,486 crore same quarter a year ago.


The Wholesale Price Index (WPI) data was released on Tuesday. The continuing decline in food prices, including vegetables, pulled down the September wholesale price inflation to a five-year low of 2.38%. The WPI based inflation was at 3.74% in August and 7.05% in September 2013.As per data released by the government on Tuesday, the food inflation fell to a nearly two-and-half year low of 3.52%. Food inflation is on the decline since May.


Speaking at the state banquet hosted by King Harald V and Queen Sonja at the Royal Palace, Indian President Pranab Mukherjee, said, “We welcome foreign direct investments in our railways, roads and ports, power and communications sectors. We invite Norwegian companies to join Indian counterparts in the 'Make in India' initiative of the new government and we are presently simplifying the procedures to facilitate their participation in India's growth story.”


Den Networks (20%) was the top gainer in ‘A’ group on the BSE. The stock which crashed by nearly 15% in the three days following the news of its CEO resigning on 29 September 2014, has gone up by 46% since then.


DLF (28.46%) was the top loser in ‘A’ group on the BSE. The stock hit its 52-week low today. The company was in the news for Sebi barring DLF and six of its top executives including chairman KP Singh from accessing stock markets for a period of three years.


Ahead of September 2014 quarter results to be given by Bajaj Auto, the stock was among top three gainers (2.50%) in the Sensex 30 pack. Bank of America-Merrill Lynch has upgraded the stock to "buy" from "underperform".


Tata Motors (1.64%) was the top loser in the Sensex 30 stock. It has received another order to supply 928 Tata Marcopolo built buses to the State Transport Authorities in South India. The order comprises 487 units bagged from Karnataka (Karnataka State Road Transport Corporation), 40 units from Puducherry (Pondicherry Road Transport Corporation), 97 from Kerala (Kerala State Road Transport Corporation) and 304 from North East Karnataka region (North Eastern Karnataka Road Transport Corporation).

 

These are part of the 2,700 orders bagged by Tata Motors, for Tata 'URBAN' buses under JnNURM - II scheme.


US indices closed in the red on Monday. US Federal Reserve Bank of Chicago President Charles Evans reportedly said on Monday the "biggest risk" to the economy right now is that the central bank would raise interest rates sooner than it should.


Except for Jakarta Composite (0.19%), Seoul Composite (0.11%) and Taiwan Weighted (0.65%) all the other trading Asian indices closed in the red. Nikkei 225 (2.38%) was the top loser.


China's central bank cut the interest rate it pays lenders for 14-day repurchase agreements for the second time in a month.


European indices were trading in the red while US Futures were trading marginally in the green.


French consumer prices fell further than expected in September, adding to concerns over persistently low inflation in the eurozone. Consumer prices in the eurozone's second-largest economy fell 0.4% in September from August and were 0.3% higher than in September last year.

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Glaxo fined Rs25 lakh over delay in disclosures

SEBI said disclosures were admittedly made by the Glaxo group with an aggregate delay of 60 days

 

Market regulator Securities and Exchange Board of India (SEBI), on Tuesday slapped a fine of Rs25 lakh on Glaxo Group Ltd, a promoter entity of drug maker Glaxo SmithKline Pharmaceuticals, for failing to make timely disclosures about its aggregate shareholding to the company and the stock exchanges.

 

In its order, SEBI said, Glaxo Group neglected the duty of making timely disclosures to the stock exchanges the BSE and the NSE, on various occasions.

 

SEBI came across the violations by Glaxo Group while examining the draft letter of offer filed by Glaxo SmithKline Pharmaceuticals along with UK-based Glaxo SmithKline Plc and Glaxo Group, to acquire 24.33% stake in the India-listed group entity.

 

As on quarter ending September 2014, Glaxo Group held 35.99% stake in Glaxo SmithKline Pharmaceuticals as the largest promoter shareholder.

 

Penalties, totalling to Rs25 lakh which needs to be paid within 45 days, have been imposed by the capital market regulator for violating various provisions of SEBI's Takeover Regulations.

 

Under these norms, a promoter of a listed company has to, disclose, together with persons acting in concert with him, their aggregate shareholding and voting rights as on 31st March, in the firm, within a prescribed time period, to the relevant stock exchanges as well as the company.

 

SEBI found that Glaxo Group, as a promoter group entity, was under an obligation to disclose the aggregate shareholdings to the BSE and NSE as well as to Glaxo SmithKline Pharmaceuticals India for the year 2007.

 

However, the said disclosures were admittedly made by the entity with an aggregate delay of 60 days.

 

The market watchdog also noted that Glaxo Group was required to disclose its shareholdings for the year 2012 and 2013, but made the same with an aggregate delay of 158 days.

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