Observing that there was no monitoring of multi-level marketing scheme by any government agency, the Madras High Court has directed the State government to not only prosecute offending parties but also take measures so that people are not lured by such schemes.
Hearing a PIL petition, the First Bench comprising Chief Justice S.K. Kaul and Justice T.S. Sivagnanam in a recent order observed that the “greed for extracting money without realising the pitfalls” has resulted in the public being misled into investing in multi-level marketing scheme.
“Such a kind of scheme is a pyramid scheme which is stated to be a non-sustainable business model, involving exchange of money primarily for enrolling other people to earn more by simple method of introducing new members to grow in the pyramid,” they said, noting that these schemes were not falling under direct jurisdiction of any regulator or department.
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Petitioner V.R. Othisamy in his petition sought to direct officials to take action by framing appropriate guidelines to prevent and stop any business in the name of multi-level marketing or any similar business with chain of members in referral scheme, involved in collection of money from the general public by any individual or any firm.