Moneylife » Life » Public Interest » QNet, the MLM has resurfaced in India; will people be duped again?
QNet, the MLM has resurfaced in India; will people be duped again?
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| 15/11/2012 05:47 PM |
QuestNet and GoldQuest, which all but closed down in 2009, have emerged bigger and stronger as QNet. But the hype and hard-sell by this MLM company to ensnare people into enrolling distributors and hawking lifestyle products such as watches, gold coins, bio-discs, herbal products and travel packages is worrying. Will it also go the SpeakAsia, Stockguru and NMart way while regulators do nothing?
QuestNet and GoldQuest, multi-level marketing (MLM) companies that had shut shop in 2009 following police action are back with a bigger bang. They now calls themselves QNet and is thriving in an environment where tens of thousands of Ponzis and MLM companies are able to lure people into believing that they have the formula to instant riches and a high growth career.
While QuestNet and GoldQuest, which mainly sold numismatic gold coins (they claimed they were limited edition coins that whose value would increase over time) in 2009 were forced to shut shop in India, their new avatar QNet offers a broader range of lifestyle ‘enhancing’ products (holiday packages, diamond watches, bio-discs, Chi-Pendants and herbal products for anything between Rs30,000 to Rs7 lakh), which promise fabulously high returns so long as new distributors are enrolled rapidly. Its product brochure says, “With 8 ways to earn and up to 50% of the sales paid out in commissions, QNET offers the most dynamic and innovative compensation plan in the direct selling profession.”
Like SpeakAsia, QNet is also registered in Singapore and has been banned in many countries, including Iran. It has a Hong Kong-based founder Dato’ Vijay Eswaran, a Malaysian by birth and an Indian by ethnicity, who is photographed hobnobbing with the Prince of Saudi Arabia, in order to enhance its credibility in the Gulf.
The last time around, QNet was being evangelised by former World Billiards champ Michael Ferriera, as well as some former national cricketers. This time, it is being hard-sold by senior corporate executives, including heads of multinational companies, who have been forced to quit in the 40s and 50s, having fallen off the career ladder. Moneylife has received emails from several worried readers asking us to bring the “QNet scam” to the attention of regulators before it dupes their friends and relatives already ensnared by the hard-sell.
One reader says, “QNet dealers are now targeting call centre employees, IT professionals and housewives on the promise of helping them earn extra income.” “QNet,” he says, “has small office, which it refers to as a “Grooming Centre” at Bandra in Mumbai. Its dealers and agents, however, rent out conference facilities for their rousing hard-sell which, like the Amway meetings, usually happens on a Sunday morning. To become member, you have to buy products—exquisite watches, holiday package, Chi-Pendants, gold and diamond jewellery—which are in the range of Rs1 lakh to Rs2.5 lakh and then to start earning commission; you have to make six other people to buy products”. But this is the simple option. The ‘packages’ go up to Rs6 lakh or more too. Also, there are apparently different schemes and packages being sold to different investors, rather than one clear product or service.
For instance, Anil Mehta (name changed) a certified financial planner has this to say. “QNet is projecting that it can create over lakh billionaires through its Ponzi scheme. All you have to do is to invest once—say Rs5lakh and you will get back Rs 5lakh every week for the rest of your life. I know you will laugh, but this is exactly what they are projecting”. He says, since they claim to be a global company, they have managed to get bank managers, software professionals and insurance agents to get involved and evangelise this scheme.
Manoj Arora (name changed), a chartered accountant and management consultant tells us how he decided to string along a QNet ‘operative’ to understand its modus operandi which promises to make you a millionaire in two or three years.
He was scandalized at what he discovered and says, “QNet is just not about Amway-esque MLM but a Stockguru-type pyramid scheme. The premise is to get more and more people to invest Rs1 lakh to Rs6 lakh in an 'e-commerce' venture. They make you owners of QI group by selling three shares for every Rs1 lakh. How does that generate returns? The victims who are enrolled into the scheme, in turn hunt for newer victims to buy into the Ponzi. They are entitled to get 14% of share capital they or their victims raise. The scam is proliferating through social media like Linked-in to find newer targets. This reader had stored names and screenshots of people canvassing QNet from their profiles on Linked-in.
Amrit (name changed), yet another reader wrote to say, “I was very recently approached by an ex-colleague with one wonderful scheme by QNet and he explained the products and plans of the company. I signed up for it on the basis of my trust in this friend. However, after joining I observed that the company is promoting its money-making plan by targeting the near and dear ones of those who has enrolled. I am now a suspicious about the activities of QNet and its functioning and skeptical about the manner in which they approach people. Can you tell me more about QNet?”
Well, the company had a chequered past. In 2008-09 it was making waves like it is today. At that time, it flaunted powerful political connections (at that time a GoldQuest executive, K Preetha had said that Nalini Chidambaram was a legal advisor. This was after we pointed out that that the connection was highlighted at its meetings to recruit/ensnare new agents). However, QuestNet virtually folded-up after the Chennai police arrested several employees and the business was in completely disarray.
At that time, QNet’s Singapore-based Director of Corporate Affairs, Zaheer K Merchant had attempted to convince us that the business model was fair and in line with the activities of other direct marketing and MLM companies such as Amway, Tupperware and other multinationals which were members of the Indian Direct Selling Association. He also tried to explain the problems at Chennai.
Interestingly, QNet’s response was to organise a junket for journalists to Hong Kong to show that the company was not running a ‘scam’. This writer also received an invite, which we DID NOT accept. J Mayer, the Managing Director of QI Group had then written to say, “I believe that you are familiar with the names QuestNet and GoldQuest which have been in the media spotlight in Tamil Nadu and other areas of India for about a year or so. Unfortunately, I am aware that the names QuestNet and GoldQuest do not have a positive image in the minds of either the media or the general public at this present moment.
Due to the legal challenges that both the companies have been facing, in India for over a year now it has unfortunately led to both companies being forced to halt their operations and temporarily close down their offices. However, the companies are by no means non-existent. Thus the MD of QuestNet India, Ms Pushpam Appalanaidu has not been in any position to make media statements or invite the media to an open forum to answer questions about the two entities.
As we continue to defend our case in the court of law to prove our legitimacy, we would like to take the opportunity to show you that QuestNet and/or GoldQuest are not a ‘scam’ or a ‘gold coin fraud’ company as it has often been portrayed in the press this past year.
QuestNet Ltd, the international company with which QuestNet India is affiliated is headquartered in Hong Kong and through representative and agent offices, has a presence in over 30 countries worldwide. The international company has been in the multi-level marketing business for about 11 years and caters to the needs of over 4 million customers in more than 100 countries worldwide who have taken advantage of the business opportunity provided by QuestNet to be a direct sales professional.
In order for us to show you the real face of QuestNet and share with you the story of the company that has changed millions of lives worldwide, we would like to invite you to visit our corporate headquarters in Hong Kong, where you can see for yourself our global infrastructure, meet with our multinational customer support team, go on a tour of our facilities including our warehouse from where thousands of products are shipped worldwide on a daily basis, meet with the senior management of QuestNet International and learn about the investments the company has made in India with a view of long term commitment to the country”.
This time too, we reached out to QNet and Mr Merchant has agreed to answer all out queries. Accordingly, Moneylife has emailed several questions to QNet and we are awaiting answers which will be appended to this report.
Since then, Moneylife has done extensive work on all MLMs and come to the conclusion that all of them fall foul of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. We have also made representations to the Prime Minister’s office to ban MLMs altogether or allow them to operate under a clear regulatory framework under a designated regulator.
Today, while tens of thousand MLMs and Ponzis are cheating people no ministry or regulator is in charge. The ministry of corporate affairs (MCA) does not even require these companies to be incorporated in India. This ludicrous situation persists at a time when there is such heated debate about legitimate foreign direct investment in retail and insurance.
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Comment
Sandeep Patel 2 weeks ago
ALERT : The V Con Malaysia -
http://vmalaysia2013.the-v.net/
is about to start ... May 8- May 12
Sucheta: Request your good offices to alert the MEA via MCA and MOF esp for travelers to KL from India for the above... At least we could start tracking the IR's now ...
Kingslayer 2 weeks ago
This video proves beyond all doubt that qnet is nothing but a pyramid scheme.
http://youtu.be/AJxTtOIWQM4?t=1m47s
Sandeep Patel 2 weeks ago in reply to Kingslayer
ooh la la ! this is a great video .... now link this with the money circulation banning rules 2012 ... all IR's should be arrested at least once ...
Sandeep Patel 2 weeks ago
One friend who is still an IR explained the works to me - when I asked him what really happens to the money that is collected from from any new IR who joins Q Net....
53% distributed within the pyramid as commission
26% retained as R&D fees
21% donated as charity ??
Which actually points out that whatever Qnet sells approx 25-26% is the actual cost of the product - including all overheads global and local ....and the net cost may be as low as 5% of the total value or even lower ... no one knows ...
....and do we really know where the money trail ends ?
Is It legal 2 weeks ago in reply to Sandeep Patel
You would be surprised to know that many IRs themselves accept that do not evaluate the product in terms of its cost value and the intended use.
They themselves show stats mentioning that those IRs who just promote products are the ones who are not successful.
They claim that the business proposition is the USP and not the products.
pawan 2 weeks ago
I put forth 7 questions. I believe if we test any business on the basis of below 7 questions, and if even 1 or 2 questions have negative answers, then it is nothing but bogus MLM, whatever the company may claim.
1. Does the company has products to deal in or is it operating purely in money terms without any revenue source?
2. Are the products intended to satisfy human needs or are they forced?
3. Will the person buy these products otherwise if he was not part of this company with intention to make money?
4. Does the product deliver the promised value? How authentic the claim?
5. Is there a minimum value/nos. to be achieved to earn income?
6. Are effort/investment v/s returns exorbitant?
7. Is product more important or business plan?
northpolestar 2 weeks ago in reply to pawan
1. All manufacturing companies have products such as Bata, TATA, Ashok layland etc.
2. yes.
3. yes.
4.yes
5. All distributors/shop keepers/dealers make money by selling the shoes, car, bus etc.
6. yes if you buy a car the dealer makes lot of money.
7. Yes the car is more important to for the business plan of the dealer.
It is a free democratic country. You buy the product to use it. If the product such as car / watch / shoes is not important for you than do not buy it.
When you buy a product from a nice showroom or big market plaza there is lot of costs associated with it. And you the dealer will not give you any referral fee if you pointed someone to purchase from same shop/showroom.
You can order on ebay or some other ecommerce business and pay less for same.
If the company pays you back for marketing their products so that others buy from same ecommerce site is that good or bad?
MDT 2 weeks ago in reply to northpolestar
Pyramid schemes are illegal. They are illegal because they are exploitative and dishonest. They exploit the most vulnerable of people: the desperate, the out-of-work, the ignorant. Those who start and practice such fraud, should, and increasingly are, being punished for their crimes.
But add a product for cover, and call it an MLM, and people are willing to swallow its legality. Is this true? Really? Who says so?
It is a fact that a few large MLMs have survived against the best efforts of law enforcement officials to shut them down, spending millions of dollars to protect, lobby, and insulate themselves. But the same could be said for any organized crime. It is difficult to stop once it becomes so large.
And MLMs look so legitimate to the public, so decent. So many nice people are involved. Surely, it can't be illegal! The people lower down may even defend the very organization that is robbing them, hoping that they might get their chance to make "the big money" later.
But if it looks like a duck, walks like a duck, and quacks like a duck, it probably is a duck. Unless it is an MLM, and then it is NOT a pyramid.
Talk to a mobster, and he will tell you that he is "merely misunderstood in his benevolent intentions." "We are just trying to 'build our business.'" "It's all a conspiracy to make us look bad." "The Feds are out to get us because they are jealous or afraid of our new way of life." "Why, look at all the good we do!" "We are looking more legitimate every day." "Here's a statement from a famous DA that the Mob is really a good organization and no harm ever comes from it." "We've even got a minister to endorse us now!"
If money is needed that badly, why not simply ask friends and family for help rather than taking money from them under false pretenses--and also selling them a bill of goods? By "sponsoring" them, you have not only conned them and profited at their expense, you have made them feel like losers, since they are not able to make a success of the hopeless MLM concept.
Once seen, only the morally blind, or consciously criminal, could continue in such a "business."
pawan 2 weeks ago in reply to northpolestar
I hope you got the point here. since the answers to these 7 questions is positive, it means these businesses are not MLMs.
Whereever there is MLM involved, people buy products not because they need it but becoz they are made to believe that if they buy the same, they will also be part of huge network which will make them rich.
If any ecommerce site give you commission for referral it is fine. but if it asks you to tell people that they can make good money by buying from that site(products which they may not buy otherwise) and then telling to others further, then it is MLM.
Is It legal 2 weeks ago
All QNet IRs are now claiming Amir Khan has joined their business. He is now an IR and selling QNets products!!!! Wow !!!
One of my friend invited me for a Party treat he threw at CCD to celebrate; mentioning that now he is a business partner with Amir Khan!!!
SCAM BUSTER 4 days ago in reply to Is It legal
Hi:
I have gone through this experience. If you have lost any money with QI/Qnet or have been scammed (or know someone who has), try filing a complaint with the Economic Offences Wing of the Mumbai Police. They may get your money back or atleast save others from getting trapped in this scam. Their address is:
Additional Commissioner of Police
Economic Offences Wing
Crime Branch, Mumbai Police
Police Commissioner's Office
Opposite Crawford Market
D N Road, Fort
Mumbai 400 001
Let us make an effort to stop others from being taken for a ride