MLMs: Lured into India’s get-rich-quick selling schemes

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Direct-selling company QNET has been accused by India’s economic crime agency of duping, “a huge number of innocent investors”.

The BBC has been speaking to victims and campaigners against the scheme, who say QNET agents lured them in with promises they could make quick cash if they bought its products to sell on.

An Indian government agency, the Enforcement Directorate, said in a press release last week that people signing up to the scheme were not told that their money – supposedly the start-up costs of their own business – was being routed into shell companies.

The agency says it has frozen 36 bank accounts pending further investigation.

Multi-level marketing schemes (MLMs), offer people the chance to make money by buying their stock – anything from diet supplements to cleaning products – in bulk in order to sell it on.

But some schemes in reality make money by recruiting more and more sellers at the bottom of the ladder.

The profits made by people at the top come from the cash invested by sellers further down the scheme, not from external customers – a structure that means new recruits, contrary to what they’ve been promised, are almost guaranteed to lose out.

There are laws in India against these types of MLMs, but they have proven difficult to enforce.

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