10 years jail for MLM business without licence
Cabinet clears draft lawMustafizur Rahman
The cabinet on Monday approved the draft of Multi-Level Marketing Activities (Control) Bill 2013 incorporating provisions for a maximum 10-year imprisonment and Tk 50 lakh in fine for operating MLM businesses without licence.
The government will be able to take over management of any MLM companies in case they are found involved in fraudulent practices, according to the draft.
The commerce ministry placed the draft at the weekly cabinet meeting with prime minister Sheikh Hasina in the chair at the secretariat aiming at regulating the increasing number of MLM companies involved in ‘pushing sales’ through creating a network.
The move came in the wake of mushrooming of MLM companies with more and more people being deceived reportedly by their controversial ‘pyramid schemes’ in the absence of any legal framework to control the multi-level marketing businesses growing across the country, according to officials.
‘The new law would bring the MLM companies under a legal framework and protect clients from being deceived,’ cabinet secretary Mohammad Musharraf Hossain Bhuiyan told a briefing after the meeting.
The law would be promulgated through an ordinance since Parliament was not in session, he noted.
MLM companies, such as the Destiny Group, are widely blamed for swindling money from innocent people through their controversial marketing system.
The cabinet secretary said that the new law would allow the government to take over management of any MLM companies and appoint one or more administrators to run their businesses in case they were found involved in dishonesty.
He said the existing companies would be given three months to get licences after the law would come into effect. The minimum punishment for doing MLM business without licence would be five-year jail, he mentioned.
The punishment would be double for repetition of the offence, Musharraf said, adding that one would be punished with five-year jail and Tk five lakh in fine for selling sub-standard products while one-year jail and Tk one lakh fine would be awarded for pushing sales.
The offences under the proposed law would be cognizable, that means police would be allowed to arrest the offenders under the law without warrant orders.
On September 17 last year, the cabinet endorsed in principle the draft MLM control bill.
The cabinet secretary said any MLM company selling its products at exorbitant
prices would face one-year jail and Tk three lakh in fine.
The pyramid scheme is a system of sales that is not concerned with the end users of the product. Under the pyramid scheme, which is different from legitimate direct selling, profits are made on sales to the company’s new recruits, who buy the products to get into the cycle.
Non-material and non-existent commodities and commodities and services saleable in future will also be banned once the law is enacted.
Only commodities and services approved by the government can be sold through direct sales only.
The draft law contains a list of commodities and services which MLM companies can sell directly. They will not be able to recruit people by selling products.
The government or any firms authorised by the government can change the list of saleable commodities and services, according to the draft.
Household utensils, electrical and electronics, home appliances, toiletries, and herbal products are on the list approved for marketing, the cabinet secretary mentioned.
Most of the MLM companies are allegedly cheating people across the country by offering them double return on deposits in less than a year, high monthly returns and huge profits from product sales.
Around 70 MLM companies are operating in the country, according to official records. Nearly two-thirds of them are involved in banking flouting the rules and regulations.
Anti-Corruption Commission is now investigating into the alleged embezzlement of money through illegal banking by Destiny Multi-Purpose Cooperatives Society Limited.
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