Temporary brake on deceptive pyramid schemes

Usman Aashiq, a native of Ottapalam in Palakkad district, has been one of the top players in the Sevens football fields in Kerala and the Gulf countries for a number of years. Usman is one of the few Malayali players who shines with African players in sevens fields in spite of their invincibility. The youngster, who has pulsated Sevens galleries with his excellent ball handling and shooting skills, has donned the jerseys of Chirag United, Mohammedans Sporting and Gogulam FC. He was once part of the Kerala team for the Santosh Trophy too.

Weeks ago, he posted a video message on his Facebook page. Following COVID, two seasons of sevens matches were lost. His income plummeted and he invested the money he had in a business on the advice of a friend. When he did not receive any further information from the company that had promised him a large profit, he realized that he had been deceived. It was too late when he realized that his money had gone to QNet, a multilayer marketing company based in Hong Kong and Malaysia. When he asked for a refund, that was greeted with threats. Usman, who lost more than Rs 5 lakh, posted a detailed video on Facebook saying he did not want his fate to happen to another. By then, the company, which had appeared in various parts of Kerala under the names of QNet and QI, had swindled crores of rupees from the people.

This is not the first such scam in the name of network marketing in Kerala. The mafia has been deceiving the people of the country for long under various names like RMP, Amway, Bizarre, Tycoon, Nano Excel, Modicare, AjantaCare and Conibio. In our country, there were no precise or systematic laws to apprehend such companies and the criminals behind them. That lacuna has almost been rectified through a new notification from the Centre.

The Central Government is preparing to crack down on the multilevel-money chain mafia under the new Rules (Consumer Protection-Direct Sales Rules 2021) applicable to direct selling methods and firms. It is forbidden to engage people in different tiers under the guise of direct marketing. The Ministry of Consumer Affairs has stated that the 'pyramid' method of offering money as one brings in more under the scheme is not legal. Many of the above companies have been operating in the country at different times in this 'pyramid' model. Under the guise of products and services, this is a marketing ploy in which each supplier makes a profit from the sales of his subordinates. Profits are usually made from the sale of goods and services in a business. However, in network marketing, even after a person's transaction is completed, he or she will continue to make a profit from the sales that take place at the levels after him. With that, the business turns into recruitment rather than selling. At some point the business will shut down without being able to add more people. Naturally those who invest money in the lower echelons are deceived. Thus, every time, different companies come up with this deception. In 2017, central agencies found that Qnet had swindled more than Rs 7,000 crore from the country. The same company has looted tens of thousands again under the guise of the pandemic. This issue is often overlooked as many people are reluctant to file a complaint due to the inherent embarrassment. Rarely has anyone like Usman Aashiq dared to speak out in public.

In any case, it is to be hoped that with the new notification, these ponzi firms will come under some control. Legal experts generally agree that the law was drafted without significant loopholes. A notable feature of the Act is that the Centre has also introduced a new definition of direct selling as per the new notification. Direct selling is when an organization or company offers their products and services through direct sellers. The provisions governing these companies are also specified in the notification. Such companies should have at least one office in India; identification cards must be issued to all their sellers; the company secretary must have a written agreement with their sellers; if one decides to strictly enforce the rules mentioned in the notification, the paper companies that are currently committing fraud can be locked up. Still, it should be recognised that the rules have limitations. The fact is that man's excessive greed for wealth often drives people into such pitfalls. It is also important for everyone to be careful about the pitfalls under the guise of pyramid.