The recently unearthed story by Headlines Today about speakasiaonline has confirmed our argument that it is a money circulation scheme. The TV channel presented the story well but it missed the crucial point. The speakers talked about the loopholes in the law. But the law is very clear and it was enacted way back in 1978.
The Prize Chits & Money Circulation Schemes (Banning) Act, 1978 could be used to check such crimes effectively.
The mother of all scams Amway India was booked under the provisions of the same law and later several criminal cases were also filed against other companies like GoldQuest International, Herbalife, Forever Living Products under the provisions of the same enactment.
It is not true to say that there are loopholes in the law to check this menace. The only problem is the dearth of complainants. The Madras High Court way back in 2003 pointed out in Apple FMCG case, the authorities close the stable only after the horse escaped.
With the help of the aforesaid enactment such type of frauds could be brought to book. Section 2 (c) of the enactment clearly defines the money circulation scheme and Section 7 empower police on receiving information to raid the premises and seize incriminating documents. So it is not true that there are no laws to curb the activities of money circulation schemes or ponzi schemes.