Sunday, 19 June 2011

Addl DGP CID warns people of dubious companies like Amway

The Additional Director General of Police (CID), Mr S V Ramana Murthy I.P.S., recently issued a press release  and almost all newspapers carried it prominently. Here is the full text of the Press Release which warned the people of Andhra Pradesh in particular and Indians in general not to fall prey to the money circulation schemes. Incidentally, the Addl DGP recalled that the CID has already booked a criminal case against Amway India also.

Press Release

Of late, many instances of rapid profusion of schemes which are pyramid in structure have come to notice, inviting membership/investment from the public on promise of very high returns, which are initiated and run ostensibly as multilevel marketing. These schemes have become rampant not only in Andhra Pradesh but also through out the country, looting hard earned money of the gullible public in the name of the get quick rich policy.
The main object of money circulation scheme is that promising easy and quick money by way of commissions and enrolling members into the scheme.The modus operandi of multilevel marketing/money circulation scheme is collecting entrance fees from the new members, bagging half of the collected fees and distributing remaining  among the chain or network. The commission depends on the making others to join in the scheme. These multilevel marketing/money circulation schemes are being promoted with different names, namely multilevel marketing, network marketing, chain business, direct selling, independent business, network mobile recharge and insurance etc.
The multilevel marketing is a myth and modern deceptive way aimed at looting people with attractive names and false promises. The companies which are promoting such schemes are collecting deposits from the public either in lump sum or in installments by assuring them high returns.
In fact, the companies do not have any permission from the Reserve Bank of India and the act of collecting deposits is done by contravening the RBI Act 1934. For instance, a company by name "Happy Network Sales Private Limited" a Chennai-based  company, which is said to be engaged in the network marketing of mobile recharge and insurance, has received cash by way of deposits from the public promising high returns. Case has been against Amway also.
Number of such companies have come up recently. At the initial stage, the scheme appears to be more profitable but in a long run due to the deceitful promises and activities of the company, the customer/member has to forego his invested money.
The Central and State Governments have concentrated on the illegal activities of such MLM companies and enacted 'Prize Chits & Money Circulation Schemes (Banning) Act, 1978' to ban such schemes whatever name called and which are promoting illegal money circulation  with camouflaged names and means.
The petitions filed by the companies against whom the law enforcing agencies have initiated criminal action for their illegal activities were also dismissed by the higher courts, supporting the action taken by the Government.
The C.I.D. appeals to all the public to be more careful about such companies who are promoting multilevel marketing and money circulation schemes and not to invest any amount in such companies. It also appeals not to get deceived with the attractive and deceitful advertisements.
The CID appeals to the public to inform about such companies directly to the CID or the Commisioner of Police/the Superintendents of police in cities/districts for conducting necessary inquiries and take timely action as per law.
S V Ramana Murthy
Additional Diretor General of Police
CID, AP, Hyderabad

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