Sixth part of the series on commercial frauds in SG
These articles aim to distingusih legal and ethical direct
selling/network marketing companies from pyramid schemes and
unethical companies.
From CAD websites
Multi-Level Marketing & Pyramid Selling
Scheme
In 1973, the Multi-Level Marketing and Pyramid Selling
(Prohibition) Act was enacted to prohibit objectionable features of
pyramid selling. These are schemes where participants are required
to pay a lump sum upfront to join, and to recruit new members in
order to recoup their upfront payment. Such schemes will ultimately
collapse because the supply of willing recruits will run out. When
that happens, many participants will lose their upfront
payments.
In June 2000, the Act was amended, with changes made to the
definition of pyramid selling schemes. At the same time, the Act
also exempted certain classes of schemes, such as insurance-related
schemes, master franchises and schemes that adopt direct selling
and network marketing method provided they satisfy certain
conditions. The exempted schemes and the conditions are set out in
the Multi-Level Marketing and Pyramid Selling (Excluded Schemes and
Arrangements) Order. The Exemption Order was amended in 2001 and
came into effect on 1 January 2002. A set of FAQs on the amendment
is published at the website of Ministry of Trade and Industry (MTI)
at http://www.mti.gov.sg.
.MTI administers the Multi-Level Marketing and Pyramid Selling
(Prohibition) Act while the Commercial Affairs Department (CAD) of
the Singapore Police Force investigates into offences under the
said Act. Both MTI and the Singapore Police Force do not grant
endorsement to companies or business operating as exempted schemes.
The Singapore Police Force also does not advise on the legality of
business schemes.
Members of public who wish to operate or participate in any
marketing schemes are thus advised to acquaint themselves with the
relevant laws and seek legal advice from lawyers, where necessary.
The definition of illegal pyramid selling schemes and the
conditions for exempted schemes can be found in the Act and the
Order which are available at the LawNet website at
http://lawnet.com.sg/freeaccess. Hardcopies of the Act or the
Exemption Order may also be purchased online at
http://www.myepb.com/script/legalpub.asp, or at MyEPB
bookstores.
Members of public and consumers are advised to beware of
"opportunity meeting" or any other pressure-filled situation that
requires you to pay or sign contract immediately. Insist on taking
your time to think over your decision. Talk it over with a family
member, friend or lawyer. Ask the promoter to substantiate any
claims or representations he/she has made in respect of the product
and the purported earnings
Members of public who wish to report suspected illegitimate
MLM/pyramid selling schemes may do so at the Commercial Affairs
Department at 391, New Bridge Road #06-701, Police Cantonment
Complex Block D, Singapore 088762 or any other police
station.