Thursday, 1 January 2015

Don't fall prey to promises of multi-level marketing firms:RBI

Cautioning investors against multi-level marketing firms promising easy and quick money, 
RBI today asked public not to be tempted by such offers. 
"MLM/Chain Marketing/Pyramid Structure schemes promise easy or quick money upon enrolment of members. 
"The Reserve Bank has advised that members of public should not to be tempted by promises 
of high returns offered by entities running Multi-level Marketing/Chain Marketing/Pyramid 
Structure Schemes," it said in a statement. 
There have been a spurt of such schemes in the recent past while various regulators are 
taking actions such entities. 
Advising caution, RBI said investors should not fall prey to these kind of unscrupulous 
entities as the pyramid structure mandates all members to enroll more members. 
"Any break in the chain leads to the collapse of the pyramid, and the members lower down 
in the pyramid are the ones that are affected the most," it added. 
It said falling prey to such offers can result in direct financial losses and they, in 
their own interest, should refrain from responding to such offers in any manner. 
Further, RBI said that acceptance of money under Money Circulation/Multi-level 
Marketing/Pyramid structures is a cognizable offence under the Prize Chit and Money 
Circulation (Banning) Act 1978. 
"Members of public coming across such offers should immediately lodge a complaint with 
the state police," it added.

This statement by the RBI could be understood as warning against joining the schemes of Amway India and other IDSA members as the Hyderabad High Court conclusively stated that the business model of Amway is illegal.

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