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Many multi-level marketing (MLM) companies and similar entities are running nationwide in breach of regulations, thus endangering investors and undermining the country's economic management, according to an official finding.
Without valid licences, these companies employ false promises of substantial earnings and commissions to deceive individuals, says an intelligence report.
Urging investigation and immediate action, the report suggests measures to tackle disguised multi-level marketing in the name of micro-loans, cooperative societies, cooperative banks and multi-purpose societies.
The report mentioned some of the firms, including World Mission 21 Ltd, Visiting Marketing Private Limited, Magnessa Bangladesh Limited, Dream Touch Savings & Credit Ltd in Khulna, Excellent World in Kushtia, Amar Bazar Ltd in Dhaka, Tianshi in Satkhira and BWB (Business with Blessing) in Khagrachari. Of them, World Mission 21 Ltd, Magnessa Bangladesh and Dream Touch Savings & Credit obtained licences from the Registrar of Joint Stock Companies and Firms.
Excellent World, Amar Bazar, Tianshi, BWB, and Visiting Marketing Private Limited received permission from the North City Corporation. However, all licences for these companies are currently expired.
World Mission 21 Ltd, Visiting Marketing Private Limited, Magnessa Bangladesh Limited, Amar Bazar Ltd, Tianshi and Business with Blessing have been conducting their business in violation of the existing MLM Act 2013 and Cooperative Society Act 2001, as indicated in the report.
It recommends taking legal action against Amar Bazar Ltd and Tianshi for providing counterfeit goods to customers.
Over the past two decades, millions of people across the country fell victim to several fraudulent MLM companies, including Destiny, Jubok, Unipay-2U, Newway Multipurpose Co, Islamic Trade and Commerce Limited (ITCL) and Social Development Sangsad (SDS).
By promising extraordinary profits, the firms subsequently emerged as market leaders in the deceptive scheme. The fraudulent practices of certain MLM companies, particularly Destiny and Unipay, came to light, prompting government authorities to take notice.
Subsequently, the authorities introduced the 'MLM Activities (Control) Act, 2013' to instil discipline in the sector. As a result, the MLM business faced challenges and came under scrutiny. Embezzlement of substantial funds by these companies severely undermined customer confidence in the MLM industry.
However, according to the intelligence report, some companies have resurfaced, engaging in fraudulent activities under the guise of micro-loans, cooperative societies, cooperative banks, and multi-purpose societies, perpetuating scams nationwide with alarming frequency.
According to the intelligence report, these companies continue to operate without valid licences or with expired licenses, enticing people with false promises of sizeable earnings and hefty commissions.
The report urgently recommends investigating the matter and taking immediate action against these companies. Moreover, it advocates for measures to be implemented against those conducting multi-level marketing under the guise of distribution and share agent companies.
The report highlights that eight out of ten MLM and similar companies examined were found to have irregularities, calling for swift intervention and remedial measures.
The report expresses concerns about the embezzlement of customers' deposits by the now-closed Dream Touch Savings & Credit Ltd. The report does not mention the exact amount of funds taken from the affected customers by the companies.
Thousands of people, including youths, fell victim to various MLM schemes, including Destiny, which defrauded millions of people across the country. While some key sponsors of the MLM companies are currently in prison, the victims have not received any restitution thus far.
Experts have strongly recommended taking firm actions against companies found to be involved in illegal MLM practices.
Former Bangladesh Bank (BB) governor Salehuddin Ahmed said the relevant government authorities, including the Ministry of Commerce, Ministry of Home Affairs, Ministry of Rural Development & Co-operative Division and the central bank, should collaboratively take necessary steps to bring discipline to the sector.
He believes that if any licenced company or firm conducts MLM business in violation of the existing rules and regulations, the authorities must impose appropriate penalties.