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How multi-level marketing cheats at all levels
Published on Tue, Feb 26, 2008 at 10:57, Updated on Tue, Feb 26, 2008 at 15:48 in Business section
Tags: 30 Minutes, Multi-level Marketing
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Is it possible that network marketing firms are flocking to India because they are just not wanted elsewhere? CNN-IBN found that the British Government has sued Amway for unethical practices., China banned all forms network marketing in 1998, Sri Lanka, Nepal, and Australia have also tightened the noose.
But in India, MLMs have managed to skirt between the legal loopholes.
While ads promise exaggerated incomes make claims in magazines and newspapers, not everybody’s dreams come true.
Case Study 1: Santoshamma
Santoshamma is one of them. She ploughed her dead husband's monthly pension of Rs 2,000 into an MLM dream floated by Quantum International Pvt Ltd, even paying the enrolment fees for those she recruited.
“I lined up 15 members, I persuaded them. I even paid on their behalf. But nothing came of it. I lost Rs 40,000 rupees, I got nothing. I am a Christian. I have these Sri Yantras. I bought four Sri Yantras. They cost Rs 8,000,” she says.
She bought a 'Spatika Mala' instead of soap as Quantum assigns these beads greater Commission Value (CV).
Says Santoshamma, “They told me, I was one point short of travel to Malaysia. That’s why I should enroll two or three more persons, so I made another two persons join.”
Editor, Pelli Patrika, Krishna Mohan says it’s looting the poor. “A lot of indigenous Amway likes are emerging on a day-to-day basis and are looting the poor, gullible, innocent people,” he says.
CNN-IBN Investigation approached a police officer who bust an MLM outfit-the mattress selling Japan Life India. The officer explained how MLM operations in India are in fact, illegal.
Says IPS, Vishwanath Sajjanar, “Way back in 1978, the Central Government has banned all money circulation schemes by whatever names they may be called, whether you call network marketing or multi level marketing or direct marketing. The very running of money circulation scheme is illegal in India.”
Multi-Level Marketing was banned in 1978. The Prize Chits and Money Circulation Schemes (Banning) Act bans “money circulation schemes” in all forms - Multi Level Marketing, Network Marketing and Direct Marketing
A recent Andhra Pradesh High Court judgment in a case involving Amway has held that its business is illegal, calling it a Prize Chits and Money Circulation Scheme that have been banned since 1978
In response, Amway continues to maintain that. "It is a legal and ethical company doing business in public interest,” says in a statement. (Source: andhranews.net July 2007)
Says Sajjanar, “Even in Supreme Court, an SLP has been dismissed of Amway company where it was clearly held that Amyway is nothing but money circulation scheme, falling into the mischief of this act.”
In 2003 and 2004, the Madras High Court also declared such networking schemes illegal.
Says Sajjanar, “Copying them many Indian companies have started, saying this model is accepted. When there is no action against them they can also do.”
On ground, consumer activists are trying to do their bit
Says Secretary, Public Alert Sewa Society, Manda Bhiksham Raju, “High authorities from firms involved in this business are forcing me (my society) to withdraw complaints.”
Raju's job is tough. MLM firms know the allure of quick money is hard to resist.
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URBANEYE
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Counting others mistake doesn't justify yours!!! This is a typical MLM trick.
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Regulate this industry and add to prosperity of this country .
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This is absolutely true article, the reason why it was happened is the "business Model". does any body worry about
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No, we cannot forgo a visit to a departmental store till all the products ( good quality ) we require
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Dear Priya ,
Answering to your question that "who asked Amway to sign up the poorest of poor in Andhra ?"
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