Mumbai-based Emex Fundamental Tradez Marketing International Pvt Ltd (Emex FTM) is the new entrant in the world of money circulation schemes that promises exaggerated assured returns on increasing new recruits in binary mode. While Emex FTM's website shies away from providing any information about its activities, there are a number of videos and messages on social media that highlight how people behind this company are running a collective investment scheme (CIS) without obtaining any permission from the regulators, which can be seen from the fact that the Emex FTM website does not display any registration number or certificate obtained from Securities and Exchange Board of India (SEBI). Under the pretext of CIS, Emex FTM is actually running a money circulation scheme that will collapse the day when there are no investors joining as new members.
Emex FTM offers five different plans based on the amount invested ranging from Rs5,000 to Rs1 lakh and promises assured weekly returns on its Facebook page. For an investment of Rs5,000, it offers weekly returns of Rs375 over 40 weeks. This amounts to Rs15,000 or a return of three times over 9-10 months. In short, to those investors who remain invested for 40 weeks, Emex FTM is offering three times returns on the invested amount.
Returns of such a magnitude are not possible in regular or legally valid investments. For example, provident fund (PF) gives an interest of around 8.50%, which in other words mean an amount invested today would double only after more than 11 years.
In addition, it offers 10% additional income each for binary (recruiting new members as your sub-associates) and direct referral. Emex FTM also has a mobile app FTM International, which it claims provides updated information to members.
Several videos on Emex FTM scheme are available on YouTube. While a few have been deleted, there still are some that promote the scheme. Here is one such video posted by someone with a username The Rich Story...
Another user Bedra Media has posted several videos on Emex FTM schemes. This video below explains how the direct referral, binary system works and what is the ceiling in this money circulation scheme.
One member of the scheme, Sheikh Askan even made a video explaining how the mobile app of Emex FTM works, wherein he shows hyped claims of investment returns. In one screen, he shows invested amount as Rs1.60 lakh, return on investment (RoI) received at Rs23,630 and the credited amount of Rs9,73,130! There is no logical explanation for this type of extravagant earning given by Sheikh Askan.
Interestingly, on its portal, Emex FTM says it has a few businesses such as the e-commerce venture Emex India that sells gold, diamonds, homecare products, cosmetics and consumer electronics items. Another business listed on its website is real estate. It says, “Emex Builders and Developers is one of the fastest growing chains in the infrastructure building industry in the country."
FTM International, it says, deals in providing services to retailers. However, what service it provides is not clear. All it says is, "We help you take advantage of technology to get the best out of your retail businesses. Further, FTM practically proves that the best way to climb the echelons of profit is to buy and sell the shares of a brand rather than engaging in retail business of the same brand. This too we cover for you."
Lastly, Emex FTM claims to be operating a fleet of "India's first online taxi service". "...the speciality is that it runs on self-financed taxis as well. It also includes a wide variety of vehicles like cars, autos, bikes, etc. Giving customers a heads up in growth, Flykab offers cashless rides to them as well," it says.
However, for such a 'classy businesses' Emex FTM shies away from disclosing information or even names of its promoters and directors on its website, except for Ratheesh Raveendran, who is managing director.
In some of the messages shared by people who had 'invested' money in this scheme, Emex FTM is said to be earning money from stock market investment through Motilal Oswal Financial Services Ltd (MOFSL). However, the brokerage denied having any relationship with Emex FTM. MOFSL has initiated an enquiry in this matter, an officer from MOFSL told Moneylife.
Similarly, some agents of Emex FTM were found linking the company with Geojit Financial Services Ltd. But Emex FTM had to issue a clarification on its website as well as in a newspaper stating that it is not into any business relationship with Geojit.
Moneylife sent emails to senior officials of SEBI and Emex FTM. However, we have not received any reply from them till writing this story. We will update our readers as and when a response is received from them.
When promoting the business opportunity, multilevel marketing (MLM) companies and their distributors should generally avoid making any income claims. Why? Because most MLM distributors make little to no money, and touting the possibility of making bank is just plain deceptive.
The law on income representations is really pretty simple: one cannot make an income claim that is not representative of what a typical distributor will earn. (Note: what the typical distributor earns is not the same as average earnings.) As a general matter, the typical distributor earns nothing – especially after taking expenses and costs into consideration – so most MLM income representations will violate FTC law.
In 2016, former FTC Chairwoman Edith Ramirez explained that:
multi-level marketers should stop presenting business opportunities as a way for individuals to quit their jobs, earn thousands of dollars a month, make career-level income, or get rich because in reality, very few participants … do have success of this type, testimonials from these rare individuals are likely to be misleading because participants generally do not realize similar incomes.
That means that even truthful testimonials from top-earning distributors are not acceptable. About three months after Ramirez’s statement, in January 2017, the FTC cautioned that (emphasis in original):
it’s unwise for MLMs to make earnings claims – expressly or by implication – that don’t reflect what typical participants achieve.
Since then, in January 2019, the Direct Selling Association (DSA) in conjunction with the BBB National Programs launched the Direct Selling Self-Regulatory Council (DSSRC), which primarily monitors the direct selling channel for inappropriate product and income claims. In July 2020, the DSSRC issued Guidance on Earnings Claims to “ensure all representations made by direct-selling companies or members of their salesforce comply with legal and self-regulatory standards.”
Further, since the COVID-19 pandemic the FTC has sent more than 10 warning letters to MLM companies concerning deceptive earnings representations. In those letters the FTC has noted that “claims about the potential to achieve a wealthy lifestyle, career-level income, or significant income are false or misleading if business opportunity participants generally do not achieve such results.”
Below is a compilation of misleading income claims derived from FTC letters, decisions, statements and guidelines, as well as DSSRC guidance and decisions. It is an authoritative list of unlawful income representations used to promote MLM businesses. While direct selling companies and their distributors should avoid making atypical income claims altogether, the following language and visual imagery is sure to get those using them in trouble:
While some income and lifestyle claims may be permissible if they are accompanied by a clear and conspicuous disclaimer indicating what the typical distributor earns, many of the examples above highlight wealth that is so extraordinary that they cannot be effectively qualified by a disclosure of generally expected results. Which brings us back to where we started:
MLMs and their distributors should generally not make income representations when promoting the business opportunity.
For more of TINA.org’s coverage of MLMs and income claims, click here.
Two persons have been arrested on the charge of cheating people out of approximately Rs 42,000 crore in different states on the pretext of good returns through a ponzi scheme 'Bike Boat', Delhi Police said on Friday.
The Economic Offence Wing arrested CMD Sanjay Bhati and Director Rajesh Bhardwaj of M/S Garvit Innovative Promoters Ltd, who induced their victims to invest Rs 62,000 for a two-wheeler for an assured return of Rs 9,500 per month, including the principal amount and rental income on the bike, for one year.
They duped a number of people who invested their hard-earned money in this scheme. In January 2019, the company also launched the e-bike scheme, wherein an investment of Rs 1.24 lakh for a motorcycle would get a return of Rs 17,000 per month for one year.
The accused initially paid the assured amount to the investors to win their trust, but later defaulted on payments and absconded.
Many cases stand registered in Uttar Pradesh and other states on the basis of complaints by their victims. A number of persons had filed police complaints against Bhati, whose company had a registered office at Plot No. 1, Chiti, Dadri, Gautam Buddh Nagar district, Uttar Pradesh.
"During the course of investigation, we found that approximately 8,000 complainants from Delhi were cheated out of around Rs 250 crore. The Reserve Bank of India had informed us that the said firm was not registered with the apex bank as a NBFC and thus not authorised to collect money from the public," said OP Mishra, Joint Commissioner of Police (EOW).
The EOW said that the number of properties worth hundreds of crores of rupees connected to the case were identified and a verification of the same was on. It further said that the Directorate of Enforcement, Lucknow Zonal office, was investigating this case.
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