The latest action of the Enforcement Directorate to attach assets belonging to an American MNC, in connection with a money laundering case, is laudable. Hopefully, it is the beginning of a series of steps that spell the death knell for fraudulent pyramid and ponzi schemes that have defrauded the country of no less than Rs 10 lakh crore in the last two decades.
The need of the hour is to save gullible people from falling prey to such firms, whose clandestine business model is Multi-Level Marketing (MLM) but they falsely try to take protection by claiming to have adhered to the Consumer Protection (Direct Selling) Guidelines, 2016, issued by the Union ministry of consumer affairs. And for that -apart from the police and some central agencies – we need a dedicated central-level regulatory agency that will carry out focused surveillance and bust such Ponzi schemes. In the early 90s, taking advantage of economic reforms and the liberalisation, privatisation and globalisation process, several MLM firms flocked to India. These firms rallied together forming an umbrella organisation called the Indian Direct Selling Association (IDSA) and ran money circulation schemes camouflaged with goods and services through a chain of distributors who received commissions on recruitment.
In reality, only a few people at the top of the pyramid in these firms make money while those at the bottom make nothing. Reason: These unviable schemes are a mathematical impossibility. My…
