Ponzis Continue To Rule the Roost

Sucheta Dalal 22 July 2014

Chain marketing schemes are still having a nice time, despite SEBI’s enhanced powers

The Direct Selling Association of India and the high-profile, multinational multi-level marketing (MLM) companies have stepped up the pressure on the National Democratic Alliance (NDA) government to frame new rules to give them legal cover. After the arrest and long incarceration of the chairman & CEO of Amway India (since 27th May), and the virtual crackdown on QNet, promoted by a Malaysian national, the industry is in serious disarray.

The MLM industry’s argument is: frame tough rules but remove the ambiguity about the legitimacy and legality of MLM companies operating in India. They also insist that they do not fall under the purview of the Prize Chits & Money Circulation Act, 1954. However, Moneylife has held the view that all MLMs lure people with the promise of high returns and their very structure requires them to entice people to become agents or distributors.

While powerful foreign companies in the MLM business are lobbying the government, the Securities & Exchange Board of India (SEBI) is struggling to initiate action against hundreds of ponzis and ‘collective investment schemes’ that are destroying lives and savings. Consider just one example. KBC Multi Trade, a Nashik-based company, seems to be a repeat of West Bengal’s Saradha scam. It is reported to have collected Rs2,000 crore from unsuspecting victims and the promoters are now absconding. Two of its agents have committed suicide under pressure. The scheme promised to triple the investment in 30 months on an investment of Rs1 lakh each.

Unfortunately, the greed for high returns is so pervasive that these schemes manage to garner a few thousand crore rupees each. It is important for the government to keep this in mind before it allows itself to be influenced by those who are lobbying for legal protection for MLMs and chain schemes.

Comments

User

naveenlobo281

6 years ago

Trading plan change system work plan

Vaddi Venkata Dorayya

1 decade ago

How the all mlm's will be defined as fraud,is it correct that the concept or idea of MLM is classified as fraud practise.

gurupreet

1 decade ago

Today QNET advocates scored a second self goal in court :)

Ever Since my fight started against QNET SCAM I have faced the following lawyers in court by appearing in person:

1. Nitin Pradhan
2. Mahesh Jhetmalani
3. Abad Ponda
4. Haresh Mohan Jagtiani
5. Divya Bahl
6. Rajendra Mokashi
7. Kuldip Patil
8. Sandeep Karnik
9. Sudatta Patil etcâ€¦

All these are senior advocates with teams of juniors below them but till date QNET did not get any single favorable order from any court.

The FIGHT enters a “new phase” nowâ€¦.Ganpati Bappa Morya :)

Shashi Sridhar

1 decade ago

These disclosures are shocking,more so to know that the RBI instead of protecting the common man is protecting the rich.Money Life is doing a great job,making all these public,the common man ought to know how he is being taken for a ride.

Amit Kumar

1 decade ago

I read few of you replies. And like to clarify one thing that I have not discussed anything about Amway. Though I have not used any of the amway proucts as well as I have not joined this company. The products are however very costly. Though I once fell prey to Qnet from Which I got my refund and leave it. One of the most interesting thing which the member of this MLM companies say that they had removed the middle man or distributor and they themselve became the distributor of the the company and thus cutting the rates. But when I check any item whether from Amway or any other company they are very much expensive sometimes even 5-6 times as compare to products by other normal companies offer. Then how this is useful. This is only a networking business and product is beint used of circulating money. None of the MLM company has any ethics nor their Representatives or members. They are all greedy people who try to irritate you and force you to join this chain system. Just Avoid this cheap mind set and do some real work to earn money. Because only the upliner will make good money in this chain system who are their for some time now. Newbies are only working hard to make them rich enough not themselves. So don't waste Time.

Koyalgeet

1 decade ago

Amit you need to step back and have a 'Rational View' of things. Amway just like Coke or Pepsi is a credible company delivering very high quality products to the world including India. when people dont understand something they belittle it, that is what is happening to Amway. There is more to it that meets the eye and Amway is not in the fault here.

MOHAN

Replied to Koyalgeet comment 1 decade ago

Amway is like coke and Pepsi?

I dont think coke and Pepsi are chain money companies.

Both coke and Pepsi are household names. But what about exorbitant Amway products?

Russ Stewart

1 decade ago

Why would your 'MLM companies operating in India' hyperlink be an affiliate link (Plus numerous other opportunity links on the link rotator).

You put down MLM then you promote it.

Why do so many business's have 2 faces?

MOHAN

1 decade ago

It is an oft repeated lies of chain money fraudsters that their company operates all over the world since the beginning of life on earth etc etc.

These are all misleading propaganda.

Don’t fall prey to the lure of chain money games.

Russ Stewart

1 decade ago

Whether it is MLM or a traditional business/franchise the scams are omnipresent.

Amway, if any; has the most creditable track record. As Amit mentioned in a comment that maybe India is not ready for MLM just yet, and I think he is right.

Even in the UK they have very strict guidelines as to the entry level when joining an MLM/direct sales company.

Unfortunately, whether a company has been around a long time or not this does not necessarily mean the consumer is protected.

EG. Herbalife is undergoing extreme scrutiny in the USA at present. People losing money and a CEO who, 2 years back was the highest paid CEO in the country $89.5 Million.

The basic MLM model is good, just like the model for a community for example, but it is human greed that unfortunately takes over and spoils the essential element of fairness.

MANOJ MOHANTY

1 decade ago

11.8 Bn dollar global company Amway operates in the following countries since last 56 years, but what is the problem in India?

##Anguilla
##Antiqua
##Argentina
##Australia
##Austria
##Azores
##Bahamas
##Barbados
##Barbuda
##Belgium
##Bermuda
##Brazil
##British Virgin Islands
##Brunei
##Bulgaria
##Canada
##Canary Islands
##Cayman Islands
##Channel Islands
##Chile
##Colombia
##Costa Rica
##Croatia
##Czech Republic
##Denmark
##Dominica
##Dominican Republic
##El Salvador
##Estonia
##Faroe Islands
##Finland
##France
##French Antilles
##French Guiana
##Germany
##Grenada
##Greece
##Guam
##Guatemala
##Guernsey
##Haiti
##Honduras
##Hong Kong
##Hungary
##Ireland
##Russia
##India
##Indonesia
##Italy
##Japan
##Jersey Island
##Korea
##La Reunion
##Macau
##Madeira
##Malaysia
##Mexico
##Monserrat
##Namibia
##Netherlands
##Netherlands Antilles (Aruba, Bonaire, Curacao, Dutch St. Martin, Saba, St. Eustatius)
##New Zealand
##Norway
##Palau Islands
##Panama
##People's Republic of China
##Philippines
##Poland
##Portugal
##Puerto Rico
##Romania
##Russia
##Singapore
##The Slovak Republic
##Slovenia
##South Africa
##Spain
##St. Kitts and Nevis
##St. Lucia
##St. Vincent
##Sweden
##Switzerland
##Taiwan (Republic of China)
##Thailand
##Trinidad and Tobago
##Trust Territories of the Pacific (Mariana, Marshall, and Caroline Islands)
##Turkey
##Turks and Caicos Islands
##Ukraine
##United Kingdom
##United States of America
##US Virgin Islands
##Uruguay
##Venezuela
##Vietnam
##Wake Islands

gurupreet

Replied to MANOJ MOHANTY comment 1 decade ago

The problem with India is that it has a anti money circulation act called PCMB act in place well in advance...so all these illegal money circulation schemes fall into its ambit...that is the problem dear :)

MOHAN

Replied to MANOJ MOHANTY comment 1 decade ago

.

Oh my dear ! now you have reduced the list to 96?

okay!

It really funny that Wake Islands, US Virgin Islands etc etc are finding place in this "great" list of 96 countries!!!!

Many of the countries you have mentioned are Caribbean islands !!!

Dear, you are so clever and you have mentioned Antigua and Barbuda separately !

Dear, are you comparing Turks and Caicos Islands with a country like India? !!

Dear, you can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time !!!!!!!!!!!!

MANOJ MOHANTY

Replied to MOHAN comment 1 decade ago

Most Indians are always busy in all substandard activities like corruption, manipulation,murder, rape, back biting, leg pulling and they understand those better. It is difficult for them to understand that the secret of living is giving. The secret of success is helping others to be successful. So Mr Mohan, you need to just grow up in healthy and positive manner. All the very best.

MOHAN

Replied to MANOJ MOHANTY comment 1 decade ago

Oh dear this is how Chain money fraudsters are helping their colleagues, by giving a list of Caribbean islands where MLM Ponzi fraudsters can hide and avoid arrest after defrauding innocent Indians. In India the Money chain/ MLM fraudsters are very busy in all kinds of activities like corruption, manipulation,murder, rape, back biting, leg pulling.

Amit Kumar

1 decade ago

Qnet is the worst in the list. Their IR's are forcing their own near and dears to fall in this trap. MLM business should be banned in India. Our country is not ready for this yet. Also those who are falling into the prey should check their greed and do some hard work to earn money inspite of wasting their energy in MLM Schemes.

malcolm

Replied to Amit Kumar comment 1 decade ago

@Amit Kumar - Hi Amit, You said India is not ready for NM yet? Are you really sure about making an opinion for the country? I am not into Amway or such other MLM companies though I have been offered. I believe the NM business model is a powerful one and has produced results for more than 60 years. There is no industry where fraud has not happened.

MOHAN

Replied to malcolm comment 1 decade ago

@ malcolm,

It is great to know that you have been doing "research" for the last 60 years on Chain Money / MLM (you call it NM ? )

Please do a India specific "research" on chain money schemes. Then you will understand the real "powerful business model" of chain money schemes.