New law allows govt to take over errant cos
President Abdul Hamid has proclaimed the Multi-Level Marketing Activities (Control) Ordinance 2013 with provisions for a maximum 10-year imprisonment and Tk 50 lakh in fine for operating MLM business without licence. The law ministry on September 3 issued a gazette notification on the ordinance, the copy of which was made available on Thursday.The law has been enacted through the presidential proclamation for immediate action to protect the interest of the clients as parliament is not in session, said the gazette.
The new law allows the government to take over management of an MLM company in case it is found involved in fraudulent practices.
Deputy commissioners and upazila nirbahi officer have been made responsible for monitoring the MLM activities under their jurisdictions respectively in districts and upazilas.
The move came in the wake of mushrooming of MLM companies with more and more people being deceived reportedly by their controversial ‘pyramid schemes’ in the absence of any legal framework to control the multi-level
marketing businesses growing across the country.
MLM companies, such as the Destiny Group, are widely blamed for swindling money out of innocent people through their controversial marketing system.
The cabinet on August 19 approved the draft of Multi-Level Marketing Activities (Control) Bill 2013 and the commerce ministry proposal for making the law through an ordinance since parliament was not in session. The bill would be placed in parliament session scheduled to begin next week for passage.
The law is also aimed at regulating the increasing number of MLM companies involved in ‘pushing sales’ by creating a network.
Cabinet secretary Mohammad Musharraf Hossain Bhuiyan earlier said that the new law would bring the MLM companies under a legal framework and protect clients from being deceived.
He said that the new law would allow the government to take over management of any MLM companies and appoint one or more administrators to run their businesses in case they were found involved in irregularities.
The existing companies would be given 90 days to obtain licences after the law comes into effect. The minimum punishment for doing MLM business without licence would be five-year imprisonment.
The punishment would be double for repetition of the offence. One would be punished with five years in jail and Tk five lakh in fine for selling sub-standard products while one-year jail and Tk one lakh fine would be awarded for ‘pushing sales’.
The offences under the ordiance would be cognisable, that means police would be allowed to arrest the offenders under the law without warrant orders, according to officials.
The MLM companies selling its products at exorbitant prices would face one-year imprisonment and Tk three lakh in fine.
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 cycle.
Non-material and non-existent commodities and commodities and services saleable in future are also now banned as the law comes into effect.
Only commodities and services approved by the government can be sold through direct sales only.
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.
The government or any firms authorised by the government can change the list of saleable commodities and services, according to the draft.
Household utensils, electrical appliances and electronics, home appliances, toiletries, and herbal products are on the list approved for marketing, the cabinet secretary mentioned.
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 flouting the rules and regulations.
Anti-Corruption Commission is investigating the alleged embezzlement of money through illegal banking by Destiny Multi-Purpose Cooperatives Society Limited.
-With New Age input
