Govt bans pyramid marketing
The government has outlawed pyramid schemes offered through multilevel marketing (MLM), in a bid to check fraudulence by such companies.
The move was made by promulgating Multilevel Marketing Activities (control) Ordinance 2013, which also suggests 10 years' imprisonment, at most, for running MLM business without licence.
The gazette of the ordinance, which also banned trade of any nonexistent products by MLM companies, was published on Monday.
Pyramid schemes offer money for simply recruiting people. This money can come as commission from the sale of starter kit or as a recruiting bonus. Most of the MLM companies in Bangladesh follow the pyramid model of business, which benefits the members at the top of the pyramid.
Lakhs of people were cheated by MLM companies, such as Destiny 2000, Unipay2u, ITCL and many more, in absence of a law, since the business model was introduced in Bangladesh in 1998.
The MLM companies will now be allowed to trade eight types of products -- household, electric and electronics, home appliances, cosmetics and toiletries, herbal, telecommunication services, training-related products and services, and agricultural.
If an MLM company is found selling nonexistent products, its operators will face a penalty of imprisonment for up to ten years and a fine of Tk 50 lakh at maximum, according to the ordinance.
The ordinance also requires an interested individual to apply to the authorities concerned for opening an MLM company under the Bangladesh Companies Act-1994.
“The interested companies will have to apply to the commerce ministry for licences,” Commerce Secretary Mahbub Ahmed said.
“The Destiny Group will also have to apply for licences under the new law,” Ahmed said, adding that the new law has empowered the government to appoint administrators in any troubled company.
If an existing MLM company fails to apply to the government for a licence within 90 days of the gazette notification, its operators will face imprisonment for up to 10 years and a fine up to Tk 50 lakh.
A law ministry official said the ordinance will be placed in parliament in its next session for passage.
MLM, which was first introduced by Global Guardian Network or GGN in Bangladesh, is also known as network marketing, direct selling, person-to-person marketing or matrix marketing.
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