Cabinet okays draft law
The Cabinet on Monday endorsed in principle the draft of the Multi-Level Marketing Control Bill 2012, stipulating provisions for a maximum of five years’ imprisonment and Tk 50 lakh fine for running such businesses without licence.
This was the government’s response to the mushrooming of MLM companies and more and more people being deceived by their controversial ‘pyramid schemes’ in the absence of any legal framework to control them.
‘The Cabinet wants the title of the draft to be something like Multi-Level Marketing Control Law instead of Direct Sale Law as proposed by the commerce ministry. The purpose of the law is to bring the MLM business under a legal framework and to protect the people from
being deceived,’ Cabinet secretary Mohammad Musharraf Hossain Bhuiyan told reporters after the meeting.
He said the Cabinet wanted the language of the draft to be simple so that common people might understand it easily
The Cabinet secretary said the maximum punishment for running the multi-level marketing business without licence would be
three to five years of imprisonment along with Tk 50 lakh in fine.
All those already operating will have to file applications for licences, he added.
The commerce ministry placed the draft at the weekly Cabinet meeting presided over by Prime Minister Sheikh Hasina in the secretariat.
If an MLM company cheats people through false advertisements, its owner/s will be punished with a maximum of five-year jail term and will also have to pay back double the amount to the persons deceived by such advertisements, said the draft.
MLM companies, such as the Destiny Group, are widely blamed for swindling people with their controversial marketing system.
The Cabinet secretary said any MLM company selling its products at exorbitant prices would face punitive measures from six months to one year in jail and fine of Tk 50,000.
The draft will again be placed at the Cabinet meeting for final approval after scrutiny by the law ministry, he added.
The law will deal with the so-called ‘pyramid structure’ marketing system widely used by MLM companies, Musharraf mentioned.
The pyramid scheme is a system of sales that is not concerned with the end-users of the product. Under the pyramid scheme, which is different from legitimate direct selling, profits are made from sales of various products to the company’s new recruits at exorbitant prices, who buy them to get into the network. The new recruit will have to get more clients from whom he will get some profit. Each of those new clients will have to get more clients to make some profit.
Sometimes no product is sold, and the new recruit is told to get more recruits for which he get money. This widens the network. The recruits are promised some money at regular intervals, which is not usually given to them.
Non-material and non-existent commodities and services saleable in the future will also be banned once the law is enacted.
Only commodities and services approved by the government can be sold through direct sale only, according to the draft.
The draft of the law contains a list of commodities and services which MLM companies can sell directly. They will no longer be able to recruit people by selling products.
The government or any firms authorised by the government can change the list of saleable commodities and services, said the Cabinet secretary.
Household utensils, electrical and electronic goods, home appliances, toiletries and herbal products are in the list approved for marketing, he told reporters in reply to a question. Most of the MLM companies are allegedly cheating people across the country by offering them double return on deposits in less than a year, high monthly returns and huge profits from product sales.
Around 70 MLM companies are operating in the country, according to official records. Nearly two-thirds of them are involved in banking in violation of the rules and regulations.
The Anti-Corruption Commission is now investigating the alleged embezzlement of money through illegal banking by the Destiny Multi-Purpose Cooperatives Society Ltd.
Courtesy of New Age
