Thursday, 15 July 2010

Supreme Court of India confirmed MLM is cheating

Generally people believe that multilevel marketing is a very good business opportunity. Let us look at what is multilevel marketing or network marketing or referral marketing. All one has to do is join in as a member and introduce his friends and relatives to join as members.
Referring to this type of marketing, the Supreme Court of India in the case of Kuriachan Chackko and others vs. State of Kerala (2008) 8 SCC, stated that "the promoters of the scheme very well knew that it is certain that the Scheme was impracticable and unworkable making tall promises which the makers of the promises knew fully well that it could not work successfully. It could work for some time in that "Paul can be robbed to pay Peter" but ultimately when there is a large mass of Peters they will be left in the lurch without any remedy as they would by then have been deceived and deprived of their money. If it is so, it could be said to be a case for application of Section 420 (Cheating) with Section 34 (Joint Liability) of the Indian Penal Code, of course, at this stage."
Apart from this, the Supreme Court also confirmed that the Scheme falls under the mischief of Prize Chits & Money Circulation Schemes (Banning) Act, 1978.
In spite of these confirmations, many believe, rather wrongly, that multilevel marketing is a wonderful business opportunity.

17 comments:

懿綺懿綺 said...

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Legal Scan said...

Why MLM supporters are silent over this post?

Tex said...

So India should be shutting down every single MLM across the country any day now, right? LOL

Legal Scan said...

The trouble is the dearth of complainants. If there are complaints, yes, they would be closed down.

Tex said...

Complaining isn't enough. You also need facts. You don't have many. LOL

Legal Scan said...

I am sorry to say that you are wrong. Just a complaint is enough to nab the culprits. It has been proved in the case of Amway India and it is now facing the criminal case. So would be the case of umpteen companies which are indulging in MLM business.

Tex said...

You can't read for comprehension, can you? A complaint that lacks facts should be rejected. A complaint that includes facts should be acted upon. That's why India and the U.K. have gotten rid of the Amway Tool Scam, but the Amway MLM business is still in operation. Think...for a change. LOL

Rajwinder Singh said...

People have cheated others morally, ethically for achieving success in mlm's. Above 90% of this business is done on false promises.

Arun said...

Supreme court has rightly remarked. Even Reserve Bank of India has alerted banks to be areful of MLM companies.RBI has even named seven MLM companies (Fine India Sales Pvt Ltd, Lakshya Levels Marketing, Eve Industries, Trident Advertising & Trade Links Pvt. Ltd, Super Life Link Distributors, Lue Brain Education Society and Manya Mantra Marketing.
Govt. of India should immediately take stringent action in this regard.
Still Many new firms Like Steadfast Sales, AvisoPacific, ezyfi.com, Swarnsagar Trade India Ltd." have cropped up posing as MLM agencies for consumer goods and services & actually mobilising large amounts of deposits from gullible public with promises of high returns.

avinash jha said...

I also cheated by one MLM company name VRIDDHIPLUS.COM .I worked 1 and half yrs there.they stopped many cheques from yet never gave.I also achieved royalty there but nobody is hearing or giving any response so finally I confuse, how can I file case against vriddhiples company.please inform me anyperson.

Jedi said...

we have still many MLM operating in force and looting people everywhere. why this government is silent over this groups(looters)?

Shyam Sundar said...

Dear Jedi, Government would have no idea about the business model of these fraudulent companies. Generally, the cheated public won't lodge a complaint with the police. More often than not, the police would not take the complaint on file. That is why these companies are escaping.

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super said...

Dude... If a product is sold, the people who are responsible for the sale are getting some commission from the price of the product. Enlighten us me what is illegal in this, unlike pyramid schemes-where money of people who join later is circulated up in the pyramid.

Get well soon broo... u need a psychiatrist.

Shyam Sundar said...

Dear Super
Enrollment of members to create a chain is illegal in India. This is called illegal money circulation schemes.

Shyam Sundar said...

Don't pull an innocent face and claim that it was only commission on sales. Do not deceive yourself. You keep on enrolling members and soon you will become enemy of your friends and relatives. Then you would have to run to a psychiatrist.

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