MLM Swindle
Govt moves to lay down rules
Draft bill goes to cabinet today
The government will enact a law to clamp down on multi-level marketing (MLM) companies, such as the Destiny Group, which are blamed for swindling people out of their money with their controversial marketing system. The law will ban the so-called pyramid schemes widely used by MLM companies.
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 on sales to the company’s new recruits, who buy the products to get into the network.
The Direct Sales Act, 2012, will be placed at a cabinet meeting today after a two-year period of dithering due to pressure from groups with vested interests.
The draft proposal for the law says after it comes into effect, pyramid-like sales, whichever name it may have, will be considered illegal.
Non-material and non-existent commodities and commodities and services saleable in future will also be banned.
Only commodities and services approved by the government can be sold through direct sale only. The government or firms authorised by the government can change the list of saleable commodities and services.
The draft law contains a list of commodities and services which MLM companies can sell directly. They will not be able to recruit people by selling products.
Household utensils, electrical and electronics, home appliances, toiletries, and herbal products are on the list attached to the draft law.
Any sub-standard goods without wrappers cannot be sold, and if the rule is violated, fines and jail terms of different tenures have been proposed.
Shady MLM companies are 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.
These companies hire fancy offices and create eye-catching websites to lure people into their traps and then disappear after swindling people out of crores of taka.
According to the Joint Stock Companies and Firms registrar, some 70 MLM companies are operating in the country. Nearly two-thirds of them are involved in banking, which is illegal. The rest offer very few products.
Both concepts charge between Tk 1,000 and Tk 10,000 for membership.
The home ministry in May sent a report to the finance ministry, Bangladesh Bank and other ministries concerned.
The report mentioned the pyramid-like and circle-like methods MLM companies use in Bangladesh and said such methods had been banned elsewhere in the world.
The report said the existing MLM companies were creating obstacles to enacting the law by using their influence.
The home ministry report said the MLM companies sponsored different sports events and cultural functions like Bangladesh Premier League T20 in the name of social responsibility. They invite politically influential people to their events, including ministers and advisers to attract people and cheat them.
Several companies of Destiny Group allegedly embezzled a huge amount of money but only Tk 190.04 crore was found in its frozen bank accounts, according to a central bank report.
Last week, Bangladesh Bank sent a report on Destiny Group to the finance ministry.
Of the 37 firms of the group, the central bank found Tk 5,132.46 crore was deposited in 282 bank accounts of three firms–Destiny 2000 Ltd, Destiny Multipurpose Cooperative Society Ltd and Destiny Tree Plantation.
Later Tk 5,113.95 crore was withdrawn.
Courtesy of The Daily Star
