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LATEST NEWS UPDATES | Govt plans to regulate pyramid marketing-Appu Esthose Suresh & Vidhi Choudhary </title>
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The Economic Intelligence Council will discuss the issue when it meets at the end of this month
The government is likely to form a central agency to regulate so-called multi-level marketing (MLM) schemes after the Economic Intelligence Council found they had..."/>
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The Economic Intelligence Council will discuss the issue when it meets at the end of this month
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<h1 class="cat-box-title">Govt plans to regulate pyramid marketing-Appu Esthose Suresh & Vidhi Choudhary</h1>
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Published on</span><span class="text-date"> Apr 12, 2012</span>
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<div style="text-align: justify"><br /></div><div style="text-align: justify"><em>The Economic Intelligence Council will discuss the issue when it meets at the end of this month</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">The government is likely to form a central agency to regulate so-called multi-level marketing (MLM) schemes after the Economic Intelligence Council found they had become a “preferred” mode of fraud. In the wake of an increasing number of economic offences, the United Progressive Alliance government has also decided to set up a multidisciplinary school of economic intelligence.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The Central Economic Intelligence Bureau (CEIB), which was asked to prepare a feasibility report for establishing a new agency to monitor such schemes, has also supported the idea.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">“We feel there is need for an agency to monitor MLM because the state police is not effective at all,” a senior CEIB official said. “We will soon present our report recommending the setting up of the agency to the finance minister.”</div><div style="text-align: justify"><br /></div><div style="text-align: justify">MLM refers to a system in which commissions are paid on sales to sellers, who also get rewarded for sales by people they recruit and so on. Also known as pyramid marketing or network selling, it came into disrepute after several companies, including Speak Asia Online, were accused of defrauding members.</div><div style="text-align: justify">The economic offences wing of the Mumbai Police in November last year said the suspected Speak Asia Online fraud amounted to Rs2,300- 2,400 crore. Speak Asia, which conducted online surveys on a variety of products and services, had around two million Indian panellists, or members, who paid money to join the firm’s network and earn reward points for referring its offerings to friends and peers.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Speak Asia’s spokesperson couldn’t be immediately reached for comment.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The Economic Intelligence Council, headed by Union finance minister Pranab Mukherjee, will discuss the issue when it meets at the end of this month, said the official cited above.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">“(There is a) need for a central agency to regulate/scrutinize the schemes at the initial stages of operation before large number of persons are cheated and operators disappear with huge amounts of money and the operations spread across jurisdictions, states and even countries,” read the minutes of the council meeting reviewed by Mint.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The schemes are currently being monitored by state governments, besides regulators such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi).</div><div style="text-align: justify"><br /></div><div style="text-align: justify">MLM schemes are mostly a state subject, according to CEIB. They come under RBI scrutiny if the entities running them function as non-banking financial companies, and under Sebi if listed.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">However, “it would not be possible for the state police authorities to take effective preventive actions”, Intelligence Bureau director N. Sandhu was cited as having said at the council meeting, according to the minutes.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Instances of suspected fraud involving MLM schemes last year are estimated at Rs7,000 crore, said a senior intelligence official who declined to be named. Apart from Speak Asia, these included Kerala-based Tycoon Empire International and a fraud estimated at about Rs1,000 crore by the police. Tycoon Empire was not immediately available for comment.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The government’s move has been welcomed by those who run legitimate direct-selling businesses.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">“The industry is filled with fly-by-night operators who are basically fraudulent in nature,” said Chavi Hemanth, secretary general of the Indian Direct Selling Association, an industry lobby group. “The regulatory body should make some stringent rules and regulations to curb these fraudulent, illegitimate operators from operating in the garb of genuine direct-selling companies.”</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Stringent laws are needed to govern the entry of companies, both Indian as well as global, into this sector, she added.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">A spokesperson for direct-seller Amway welcomed the initiative, saying it was long overdue and will boost confidence in the industry at large. “From the calamities of Speak Asia, Nano Excel, etc., we have reached a positive point through the emergence of this regulatory body,” he said.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">This body will bring clarity to standards and guidelines for the industry, which will be good for the smooth functioning of genuine players in the market, added the spokesperson.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">He said cases of illegitimate companies shutting down in Kerala 8-10 months back hurt the industry.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Nano Excel Pvt. Ltd refers to an MLM company that’s been accused of swindling about Rs350 crore after claiming to be setting up a power project jointly with the Arunachal Pradesh government, the police said. Nano Excel could not be immediately reached for comment.</div>
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<br><a href="http://www.livemint.com/2012/04/12001352/Govt-plans-to-regulate-pyramid.html" class="re" target="_blank">Live Mint, 12 April, 2012, http://www.livemint.com/2012/04/12001352/Govt-plans-to-regulate-pyramid.html</a><div class="clear"></div>
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LATEST NEWS UPDATES | Govt plans to regulate pyramid marketing-Appu Esthose Suresh & Vidhi Choudhary </title>
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The Economic Intelligence Council will discuss the issue when it meets at the end of this month
The government is likely to form a central agency to regulate so-called multi-level marketing (MLM) schemes after the Economic Intelligence Council found they had..."/>
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<h1 class="cat-box-title">Govt plans to regulate pyramid marketing-Appu Esthose Suresh & Vidhi Choudhary</h1>
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Published on</span><span class="text-date"> Apr 12, 2012</span>
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<div style="text-align: justify"><br /></div><div style="text-align: justify"><em>The Economic Intelligence Council will discuss the issue when it meets at the end of this month</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">The government is likely to form a central agency to regulate so-called multi-level marketing (MLM) schemes after the Economic Intelligence Council found they had become a “preferred” mode of fraud. In the wake of an increasing number of economic offences, the United Progressive Alliance government has also decided to set up a multidisciplinary school of economic intelligence.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The Central Economic Intelligence Bureau (CEIB), which was asked to prepare a feasibility report for establishing a new agency to monitor such schemes, has also supported the idea.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">“We feel there is need for an agency to monitor MLM because the state police is not effective at all,” a senior CEIB official said. “We will soon present our report recommending the setting up of the agency to the finance minister.”</div><div style="text-align: justify"><br /></div><div style="text-align: justify">MLM refers to a system in which commissions are paid on sales to sellers, who also get rewarded for sales by people they recruit and so on. Also known as pyramid marketing or network selling, it came into disrepute after several companies, including Speak Asia Online, were accused of defrauding members.</div><div style="text-align: justify">The economic offences wing of the Mumbai Police in November last year said the suspected Speak Asia Online fraud amounted to Rs2,300- 2,400 crore. Speak Asia, which conducted online surveys on a variety of products and services, had around two million Indian panellists, or members, who paid money to join the firm’s network and earn reward points for referring its offerings to friends and peers.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Speak Asia’s spokesperson couldn’t be immediately reached for comment.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The Economic Intelligence Council, headed by Union finance minister Pranab Mukherjee, will discuss the issue when it meets at the end of this month, said the official cited above.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">“(There is a) need for a central agency to regulate/scrutinize the schemes at the initial stages of operation before large number of persons are cheated and operators disappear with huge amounts of money and the operations spread across jurisdictions, states and even countries,” read the minutes of the council meeting reviewed by Mint.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The schemes are currently being monitored by state governments, besides regulators such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi).</div><div style="text-align: justify"><br /></div><div style="text-align: justify">MLM schemes are mostly a state subject, according to CEIB. They come under RBI scrutiny if the entities running them function as non-banking financial companies, and under Sebi if listed.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">However, “it would not be possible for the state police authorities to take effective preventive actions”, Intelligence Bureau director N. Sandhu was cited as having said at the council meeting, according to the minutes.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Instances of suspected fraud involving MLM schemes last year are estimated at Rs7,000 crore, said a senior intelligence official who declined to be named. Apart from Speak Asia, these included Kerala-based Tycoon Empire International and a fraud estimated at about Rs1,000 crore by the police. Tycoon Empire was not immediately available for comment.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The government’s move has been welcomed by those who run legitimate direct-selling businesses.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">“The industry is filled with fly-by-night operators who are basically fraudulent in nature,” said Chavi Hemanth, secretary general of the Indian Direct Selling Association, an industry lobby group. “The regulatory body should make some stringent rules and regulations to curb these fraudulent, illegitimate operators from operating in the garb of genuine direct-selling companies.”</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Stringent laws are needed to govern the entry of companies, both Indian as well as global, into this sector, she added.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">A spokesperson for direct-seller Amway welcomed the initiative, saying it was long overdue and will boost confidence in the industry at large. “From the calamities of Speak Asia, Nano Excel, etc., we have reached a positive point through the emergence of this regulatory body,” he said.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">This body will bring clarity to standards and guidelines for the industry, which will be good for the smooth functioning of genuine players in the market, added the spokesperson.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">He said cases of illegitimate companies shutting down in Kerala 8-10 months back hurt the industry.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Nano Excel Pvt. Ltd refers to an MLM company that’s been accused of swindling about Rs350 crore after claiming to be setting up a power project jointly with the Arunachal Pradesh government, the police said. Nano Excel could not be immediately reached for comment.</div>
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<br><a href="http://www.livemint.com/2012/04/12001352/Govt-plans-to-regulate-pyramid.html" class="re" target="_blank">Live Mint, 12 April, 2012, http://www.livemint.com/2012/04/12001352/Govt-plans-to-regulate-pyramid.html</a><div class="clear"></div>
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LATEST NEWS UPDATES | Govt plans to regulate pyramid marketing-Appu Esthose Suresh & Vidhi Choudhary </title>
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The Economic Intelligence Council will discuss the issue when it meets at the end of this month
The government is likely to form a central agency to regulate so-called multi-level marketing (MLM) schemes after the Economic Intelligence Council found they had..."/>
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<h1 class="cat-box-title">Govt plans to regulate pyramid marketing-Appu Esthose Suresh & Vidhi Choudhary</h1>
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<div style="text-align: justify"><br /></div><div style="text-align: justify"><em>The Economic Intelligence Council will discuss the issue when it meets at the end of this month</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">The government is likely to form a central agency to regulate so-called multi-level marketing (MLM) schemes after the Economic Intelligence Council found they had become a “preferred” mode of fraud. In the wake of an increasing number of economic offences, the United Progressive Alliance government has also decided to set up a multidisciplinary school of economic intelligence.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The Central Economic Intelligence Bureau (CEIB), which was asked to prepare a feasibility report for establishing a new agency to monitor such schemes, has also supported the idea.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">“We feel there is need for an agency to monitor MLM because the state police is not effective at all,” a senior CEIB official said. “We will soon present our report recommending the setting up of the agency to the finance minister.”</div><div style="text-align: justify"><br /></div><div style="text-align: justify">MLM refers to a system in which commissions are paid on sales to sellers, who also get rewarded for sales by people they recruit and so on. Also known as pyramid marketing or network selling, it came into disrepute after several companies, including Speak Asia Online, were accused of defrauding members.</div><div style="text-align: justify">The economic offences wing of the Mumbai Police in November last year said the suspected Speak Asia Online fraud amounted to Rs2,300- 2,400 crore. Speak Asia, which conducted online surveys on a variety of products and services, had around two million Indian panellists, or members, who paid money to join the firm’s network and earn reward points for referring its offerings to friends and peers.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Speak Asia’s spokesperson couldn’t be immediately reached for comment.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The Economic Intelligence Council, headed by Union finance minister Pranab Mukherjee, will discuss the issue when it meets at the end of this month, said the official cited above.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">“(There is a) need for a central agency to regulate/scrutinize the schemes at the initial stages of operation before large number of persons are cheated and operators disappear with huge amounts of money and the operations spread across jurisdictions, states and even countries,” read the minutes of the council meeting reviewed by Mint.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The schemes are currently being monitored by state governments, besides regulators such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi).</div><div style="text-align: justify"><br /></div><div style="text-align: justify">MLM schemes are mostly a state subject, according to CEIB. They come under RBI scrutiny if the entities running them function as non-banking financial companies, and under Sebi if listed.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">However, “it would not be possible for the state police authorities to take effective preventive actions”, Intelligence Bureau director N. Sandhu was cited as having said at the council meeting, according to the minutes.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Instances of suspected fraud involving MLM schemes last year are estimated at Rs7,000 crore, said a senior intelligence official who declined to be named. Apart from Speak Asia, these included Kerala-based Tycoon Empire International and a fraud estimated at about Rs1,000 crore by the police. Tycoon Empire was not immediately available for comment.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The government’s move has been welcomed by those who run legitimate direct-selling businesses.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">“The industry is filled with fly-by-night operators who are basically fraudulent in nature,” said Chavi Hemanth, secretary general of the Indian Direct Selling Association, an industry lobby group. “The regulatory body should make some stringent rules and regulations to curb these fraudulent, illegitimate operators from operating in the garb of genuine direct-selling companies.”</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Stringent laws are needed to govern the entry of companies, both Indian as well as global, into this sector, she added.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">A spokesperson for direct-seller Amway welcomed the initiative, saying it was long overdue and will boost confidence in the industry at large. “From the calamities of Speak Asia, Nano Excel, etc., we have reached a positive point through the emergence of this regulatory body,” he said.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">This body will bring clarity to standards and guidelines for the industry, which will be good for the smooth functioning of genuine players in the market, added the spokesperson.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">He said cases of illegitimate companies shutting down in Kerala 8-10 months back hurt the industry.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Nano Excel Pvt. Ltd refers to an MLM company that’s been accused of swindling about Rs350 crore after claiming to be setting up a power project jointly with the Arunachal Pradesh government, the police said. Nano Excel could not be immediately reached for comment.</div>
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<br><a href="http://www.livemint.com/2012/04/12001352/Govt-plans-to-regulate-pyramid.html" class="re" target="_blank">Live Mint, 12 April, 2012, http://www.livemint.com/2012/04/12001352/Govt-plans-to-regulate-pyramid.html</a><div class="clear"></div>
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The Economic Intelligence Council will discuss the issue when it meets at the end of this month
The government is likely to form a central agency to regulate so-called multi-level marketing (MLM) schemes after the Economic Intelligence Council found they had become a “preferred” mode of fraud. In the wake of an increasing number of economic offences, the United Progressive Alliance government has also decided to set up a multidisciplinary school of economic intelligence.
The Central Economic Intelligence Bureau (CEIB), which was asked to prepare a feasibility report for establishing a new agency to monitor such schemes, has also supported the idea.
“We feel there is need for an agency to monitor MLM because the state police is not effective at all,” a senior CEIB official said. “We will soon present our report recommending the setting up of the agency to the finance minister.”
MLM refers to a system in which commissions are paid on sales to sellers, who also get rewarded for sales by people they recruit and so on. Also known as pyramid marketing or network selling, it came into disrepute after several companies, including Speak Asia Online, were accused of defrauding members.
The economic offences wing of the Mumbai Police in November last year said the suspected Speak Asia Online fraud amounted to Rs2,300- 2,400 crore. Speak Asia, which conducted online surveys on a variety of products and services, had around two million Indian panellists, or members, who paid money to join the firm’s network and earn reward points for referring its offerings to friends and peers.
Speak Asia’s spokesperson couldn’t be immediately reached for comment.
The Economic Intelligence Council, headed by Union finance minister Pranab Mukherjee, will discuss the issue when it meets at the end of this month, said the official cited above.
“(There is a) need for a central agency to regulate/scrutinize the schemes at the initial stages of operation before large number of persons are cheated and operators disappear with huge amounts of money and the operations spread across jurisdictions, states and even countries,” read the minutes of the council meeting reviewed by Mint.
The schemes are currently being monitored by state governments, besides regulators such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi).
MLM schemes are mostly a state subject, according to CEIB. They come under RBI scrutiny if the entities running them function as non-banking financial companies, and under Sebi if listed.
However, “it would not be possible for the state police authorities to take effective preventive actions”, Intelligence Bureau director N. Sandhu was cited as having said at the council meeting, according to the minutes.
Instances of suspected fraud involving MLM schemes last year are estimated at Rs7,000 crore, said a senior intelligence official who declined to be named. Apart from Speak Asia, these included Kerala-based Tycoon Empire International and a fraud estimated at about Rs1,000 crore by the police. Tycoon Empire was not immediately available for comment.
The government’s move has been welcomed by those who run legitimate direct-selling businesses.
“The industry is filled with fly-by-night operators who are basically fraudulent in nature,” said Chavi Hemanth, secretary general of the Indian Direct Selling Association, an industry lobby group. “The regulatory body should make some stringent rules and regulations to curb these fraudulent, illegitimate operators from operating in the garb of genuine direct-selling companies.”
Stringent laws are needed to govern the entry of companies, both Indian as well as global, into this sector, she added.
A spokesperson for direct-seller Amway welcomed the initiative, saying it was long overdue and will boost confidence in the industry at large. “From the calamities of Speak Asia, Nano Excel, etc., we have reached a positive point through the emergence of this regulatory body,” he said.
This body will bring clarity to standards and guidelines for the industry, which will be good for the smooth functioning of genuine players in the market, added the spokesperson.
He said cases of illegitimate companies shutting down in Kerala 8-10 months back hurt the industry.
Nano Excel Pvt. Ltd refers to an MLM company that’s been accused of swindling about Rs350 crore after claiming to be setting up a power project jointly with the Arunachal Pradesh government, the police said. Nano Excel could not be immediately reached for comment.
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