Avoid Pyramid Marketing Schemes

Avoid Pyramid Marketing Schemes

Making big bucks is a dream of everyone. Many of us may have contemplated participating in pyramid marketing or a Multi- Layer Marketing (MLM) scheme. Despite numerous instances of frauds, people often fall for exaggerated claims of companies or the middlemen who drag several into such schemes. And unfortunately since regulations aren’t in place, company and their middlemen make hay. But now the Finance Ministry seems to have finally recognised the threat stemming from proliferation of such schemes and to crack the whip, is considering a ban.

The Department of Financial Services is pondering on the idea of banning pyramid marketing schemes by making amendments to “Prize, Chits and Money Circulation schemes (Banning) Act, 1978”. But it is yet unclear whether MLM would also bear the brunt of the proposed banned. Technically, pyramid marketing schemes compensate participants for getting other people registered with company. Compensation is being paid for adding to the list of members registered with the company and there is no real exchange of goods or services at any level. On the other hand, MLM is a structure where the person(s) influencing others into the schemes is not only compensated for sale of some real products, but is also incentivised for sales undertaken by people recruited by him. The picture looks slightly obscure as far as banning MLM is concerned for the want of some changes in definitions which might be unwarranted while making amendments to the Act.

The primary intent of imposing a ban on ponzi and money circulation schemes was the method and purpose of compensation. While MLM also comes in the ambit of the aforesaid ban remains to be seen; on-going developments at least hint at tighter regulations for MLMs. We believes that any scheme that promises you incredible success and portrays it to be the fortune changer, should be completely avoided. To earn attractive returns on investments one might consider time tested and well-regulated investment avenues. Personalised asset allocation and investment plan may help you achieve your long-term goals. While you may look like a turtle in the race of wealth creation, remember slow and steady wins the race.