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Online and MLM fraud companies

Uncategorized November 25, 2014

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Direct selling has completed 18 years in India and about 8 million of our countrymen are engaged with the industry. The industry continues to grow at rapid speed despite of scams (using the multilevel marketing compensation plans) causing damage of thousands of crores every year.

Scams not only swindle the people but also create confusion about the business model since they impersonate as principled direct selling companies. This snowballs to become menace for ethical direct selling companies because of misunderstandings created, this coupled by general dislike works in favour of scams which stand to benefit in case of damage to ethical direct selling companies when more and more people in greed for easy money leave product based direct selling companies to join scams promising easy money.

Scams continue to exploit loopholes to circumvent law and are continue to be a threat to the country. Even countries like Bangladesh and Vietnam have learned their lessons before us and have regulated direct selling along with others like Japan, Germany, United States, United Kingdom, Korea, Thailand, Malaysia, Canada, Russia, France, Brazil, Mexico, Italy, China, Taiwan and Columbia.

The scams use MLM (Multilevel marketing) compensation plans:

* To avoid high cost of advertising and take advantage of the effectiveness of the word of mouth publicity which more effective to get bigger investments.

* To reduce risk of investor complaints if the founders abscond (since the investors approach and get initial investments from their friends and relatives who don’t want their friends in trouble).

* To effectively and speedily spread in the rural areas where information about these types of scams is not available to the common man and the police.

* To fly below the radar or to avoid the limelight and scrutiny by government and non-government agencies.

* To spread fast in areas with little or no access to media (electronic and print)

Some popular get rich schemes in India:

Type 1 (Non MLM): Teak plantations, car lease program, real estate (investing in under construction flats, townships etc), investment in gold/silver, time shares, gold/diamond jewellery etc.

Type 2 (MLM) – Forex trading, trading in stocks, trading in commodities, investing in real estate, timeshares, e-books, surveys, get paid to watch advertisements, get paid for blogging, pay per click, investing in IT sector, investing in infrastructure projects, club

membership, e-zines, goat farming, emu farming, poultry farming, cow and buffalo farming, rabbit farming, plots, trading in virtual currency, etc

Source: http://goo.gl/cjwdKG

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