Some interesting articles...

• laurence82

  18 Jul 06, 13:59

  For your viewing pleasure
  
  Hieroglyphics in the pyramid selling act.
  By David Gabriel.
  679 words
  15 January 1992
  Business Times Singapore
  English
  (c) 1992 Singapore Press Holdings Limited
  
  THE Multi-Level Marketing and Pyramid Selling (Prohibition) Act is not the most precise piece of legislation on our statute books.
  
  Indeed, the law is so broad in its scope that legitimate multi-level selling operations may be declared illegal. Basically, there is no way for any manager of a multi-level marketing company to know where the boundaries start or end.
  
  As the Act stands, there are at least two reasons why the imprecision exists. First, it incorporates a concept from another branch of the law; and second, regulations that would narrow the scope of application - and which are provided for in the Act - have never been made.
  
  The essential sections of the Multi-Level Marketing Act make promotion of or participation in a multi-level or pyramid selling scheme illegal. It also is illegal to register or incorporate such a company in Singapore. The maximum fine is S$30,000 and may be accompanied by up to five years' jail.
  
  The Act covers managers, directors, company secretaries and other officers of such companies. One defence available to those charged is that the offence was committed without the person's consent or connivance, and that due diligence had been exercised to prevent commission of the offence.
  
  The most significant part of the Act is in Section Two, which spells out the elements of the scheme:
  
  It has to be a scheme for the distribution of a commodity.
  
  A person acquires a commodity or a right to acquire the commodity for sale, lease or otherwise, by giving "valuable consideration".
  
  A person receives consideration, directly or indirectly, for the recruitment or performance of additional participants, or a person is paid, directly or indirectly, commissions, bonuses or discounts as a result of the sale, lease or distribution of the commodity involved by any additional participant.
  
  Benefits, bonuses, commissions and so on accrue to other persons participating at different levels of the scheme.
  
  The critical phrase is "valuable consideration", which is not defined in the Act. This term, which derives from the law of contract, has been defined in a 100-yearold case to consist of "some right, interest, profit or bene-fit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other".
  
  Lawyer Chua Lee Ming argued at the recent Singapore Direct Selling Association seminar that the Common Law definition of "valuable consideration" was "not appropriate for the purpose of a multi-level marketing or pyramid selling scheme in section two of the Act".
  
  He pointed out that in the US, "valuable consideration" had been held in one case to include "the time and effort spent by participants in re-cruiting or selling to others". He concluded: "The problem of using the phrase without defining it is that it permits the broad Common Law in-terpretation to be applied."
  
  As it stands, the Act can be applied to any multi-level marketing operation. What comes to mind is the life insurance business. It is a multi-level marketing scheme and technically is caught under the broad prohibition of the Act. This is also true of all other such selling opera-tions. Direct selling, to be effective, has to be multi-level.
  
  Today, there are several companies marketing products and services in that way. The great majority of these businesses are honest and ethical - but they could still be illegal under the law.
  
  It was suggested at the seminar that the Act be amended, or that the minis-ter issue regulations more clearly specifying the elements of selling to be considered illegal.
  
  Particularly important is the need for a more meaningful definition of the term "valuable consideration". Perhaps it should be confined to cash payments or the purchase of goods and services.
  
  It may be useful for our legislators and law-enforcing bodies to study some recent developments in the US. Various regulations have been implemented to safeguard the public and sales people involved, including a mandatory buy-back obligation of inventory by a company.
• laurence82

  18 Jul 06, 14:01

  Multi-level marketing - time to review law?.
  By David Gabriel.
  688 words
  8 January 1992
  Business Times Singapore
  English
  (c) 1992 Singapore Press Holdings Limited
  
  MEMBERS of the Singapore Direct Selling Association are concerned with the state of legislation governing their business. They have raised the matter with legal advisers and Member of Parliament Mr Arthur Beng. Officials of the Association hope that the GPC for Law will take up the matter on their behalf.
  
  At a recent seminar organised by the Direct Selling Association, the legislation came under scrutiny. During question time, almost every question and comment was directed at the state of the 18-year-old piece of written law.
  
  Lawyer Chua Lee Ming, who delivered a paper on the Singapore Act, had a busy time as members sought clarification of finer points.
  
  Direct selling got a bad name in the 1970s because of what was possibly the biggest pyramid selling scam of all time - Holiday Magic. That was precisely what Parliament had in mind when the Multi-Level Marketing and Pyramid Selling (Prohibition) Act was passed in 1973. But for almost 20 years this Act has not been modified or amended in any way.
  
  Basically, a pyramid or multi-level selling scheme has different layers of people supervising sales operations and earning income from the sales efforts of those below them.
  
  The larger the sales force and the greater the sales volume, the higher the income of supervisors through the different layers. Such schemes, if not subject to tight controls, are open to abuses where the end losers tend to be members of the public.
  
  During the second reading of the Bill in August 1973, the Finance Minister at the time, Hon Sui Sen, spelt out the aim of the new law. It was to prevent multi-level selling operations under which participants pay for their right to join the scheme and receive rewards for recruiting new participants.
  
  Such a company makes its money from two sources. First, the selling of goods or services to new participants, as everyone has to buy a fixed amount of inventory. And second, payments made by new participants or existing participants who want to move on to a higher level. This is the basic structure of a fraud. Eventually the operation has to collapse as people stop buying the goods and no one wants to join as a new participant in the scheme.
  
  These are what the minister referred to as the "objectionable features" of a pyramid selling scheme.
  
  Mr Hon pointed out that it was difficult to distinguish clearly between a pyramid scam and other legitimate selling operations which had pyramid ele-ments in them. The definition was critical, but should not be made so wide as to prevent "perfectly lawful schemes and arrangements".
  
  To overcome this definition quandary, the Act made provision for the Minister to make regulations to spell out the elements of a scheme or arrangement that may be lawful.
  
  At the time of the second reading, the minister said: "These elements have not as yet been comprehensively worked out by the Attorney-General."
  
  So far, neither the Attorney-General nor the Minister of Finance has pub-lished any regulations. It leaves the Act standing on its own, and managers of companies in direct selling operations none the wiser in regard to the precise parameters of the law.
  
  The Bill was passed into law and since then there have been very few prosecutions under the Act. In 1988, the managing director of a company called Forever Living Products was charged for promoting a marketing policy in contravention of the Act. In 1990 he pleaded guilty.
  
  In another 1988 case, a woman selling cosmetics through a network of about 60 agents was charged under the Act. She too pleaded guilty.
  
  The result of such cases going through the courts with the accused pleading guilty is that the case law does not advance at all. Lawyers would like to see some argument in court because there are areas in the legislation in need of definition.
  
  The wording of the Act is too wide - something the Finance Minister in 1973 had hoped to avoid but, it would appear, did not succeed in achieving.
• laurence82

  18 Jul 06, 14:02

  S888.com-style marketing scheme to be made illegal.
  By Toh Han Shih.
  543 words
  10 November 1999
  Business Times Singapore
  English
  (c) 1999 Singapore Press Holdings Limited
  
  [SINGAPORE] Multi-level marketing schemes like those used by Internet shopping mall S888.com will become illegal in future, said the Ministry of Finance (MOF) yesterday.
  
  This will be enacted by amending the Multi-Level Marketing and Pyramid Selling (Prohibition) Act. While MOF has been advised by the attorney-general that S888.com has not contravened the present Pyramid Act, "MOF is of the view that S888.com's recruitment scheme has a substantially disproportionate element of pyramid selling features that makes it contrary to the public interest", the ministry said.
  
  Under S888.com's scheme, people pay S888.com S$27,000 to $33,000 to become a franchisee of the local self-styled electronic commerce company. Franchisees are encouraged by S888.com to recruit more franchisees, and they will get commissions of S$3,000 for every new recruit down to five levels of recruitment. This makes it lucrative for franchisees to recruit more franchisees, although S888.com's core business is ostensibly its Internet shopping mall at www.s888.com.
  
  Accordingly, MOF will amend the current Pyramid Act and these amendments will come into force by early next year, said an MOF spokesman. He could not give details about these amendments but said the definition of a pyramid selling scheme will be changed to render illegal self-perpetuating schemes which make most of their revenue from recruiting people. The amendments will allow the minister in charge of the Pyramid Act to make rulings as to which multi-level scheme is legal, he added.
  
  In reaction, S888.com founding chairman David Chang said yesterday: "I think it's a good move. The ministry acted wisely. It gives me a chance to learn from my Singapore experience."
  
  As a result of these amendments to the Pyramid Act, S888.com will not conduct franchising and membership activities in Singapore, but restructure its Singapore office as its worldwide operational headquarters. "I'm expanding my business overseas," Mr Chang said. S888.com has incorporated a company, S.com BVI, in the British Virgin Islands which will control S888.com's business in Europe, Africa and Asia, he said. S888.com has also incorporated two companies in the US - S888.com USA Holdings and S888.com USA.
  
  S888.com USA Holdings will own both S.com BVI and S888.com USA while S888.com USA will run S888.com's business in North and South America, he explained. Mr Chang said he is discussing with an unnamed company listed on Nasdaq whether this company can do a reverse takeover of S888.com USA to enable S888.com USA to be listed on Nasdaq. In addition, S888.com has incorporated a wholly-owned subsidiary in Malaysia, he said.
  
  S888.com has been charged under a separate Act, Section 112 of the Companies Act, which prohibits private companies like S888.com from offering an "interest" to the public, which includes the right to share in the profits of the company. If found guilty, S888.com has to pay a fine not exceeding S$5,000. BT understands the trial will take place in the first quarter of next year.
  
  (c) 1999 Singapore Press Holdings Limited.
• FireIce

  18 Jul 06, 14:05

  wah liew..........1992.............1999
  
  need to be so nostalgic or not.......................
• laurence82

  18 Jul 06, 14:07

  E-Commerce Firm Accused of Running Pyramid Scheme.
  862 words
  29 July 1999
  Business Day
  English
  (c) 1999 Business Day, Thailand.
  
  SINGAPORE - The president of the Consumers Association of Singapore (Case) said hundreds of Singaporeans "have been sold a dream" by a new e-commerce company whose business practices smack of "pyramid selling".
  
  Dr Toh See Kiat told Business Times (BT) Case has grave reservations over the way S888.com conducts its business, in particular, its method of signing up franchisees for its e-commerce venture.
  
  S888.com is a private company that has created quite a stir in recent days over a controversial business model. In a matter of weeks, it has signed up 200 franchisees who have paid or will pay the company a total of over $6 million in franchising fees even before any on-line shopping is done.
  
  Founded by entrepreneur David Chang, a former general manager of listed Pertama Holdings, S888.com claims that it is "probably the first e-commerce company in the world to be profitable from day one".
  
  Mr Chang declared: "If things go well, I could be the next Sim Wong Hoo." He and chief executive officer Damian Tan told BT the company has a winning business model and plans to list itself on Nasdaq next year.
  
  The model marries three concepts: franchising, network referral and e-commerce.
  
  Under the scheme, franchisees pay S888.com to be trained in promoting the franchise, and receive commissions for roping in other franchisees and shoppers for the company's Virtual Shopping Mall.
  
  This is an electronic marketplace which now lists about 30 merchants but does not allow any serious shopping because the electronic payment system has not been sorted out.
  
  Franchisees are also trained to help people not savvy with computers shop on the Net.
  
  Each franchisee pays S888.com $27,000 in cash or $33,000 in 11 monthly instalments. For this, he will be trained to sell the franchise and will also receive a personal digital assistant.
  
  "There are five levels of franchisees," Mr Tan explained, "for every dollar we receive in franchising fees, we give out 50 cents." Thus, if franchisee A signs up franchisee B, he gets $3,000, and another $3,000 if B signs up C.
  
  Franchisee A, assuming he pays cash, will thus break even if there are eventually nine franchisees from his original effort.
  
  Judging from the response so far, the scheme appears to be hot.
  
  Yesterday, at the company's office in Suntec Tower One, at least 100 people attended a training session.
  
  When S888.com ran full-page newspaper advertisements on Monday, it received a couple of thousands of phone calls. Its Web site has been jammed, receiving "6,000 hits out of 69,000 requests", officials said. It said in a press statement that "thousands of eager shoppers" have thronged its Web site when it launched the mall with huge discounts on Gucci Envy perfume, Panasonic Discmans, HP Jornadas and wine, some at cost.
  
  Franchisee Jacob Tan, a business consultant, said he joined because he believes in the potential of e-commerce and that it will take off in a big way in Singapore because of the government's efforts in promoting the Internet. "I would like to run it as a business, to build the links between members and the shopping mall," he explained.
  
  He added that his downside risk is $33,000 but the upside is enormous.
  
  One industry observer familiar with S888.com's business plan said: "This can be the next Amazon.com for Singapore or a big bubble full of hype that will burst." Last weekend's launch of its Virtual Shopping Mall was accompanied by a press conference and a dinner talk by John Neshein, a Silicon Valley-based consultant and author of the book High Tech Start-Up as well as associate professor at Cornell University in New York state.
  
  Mr Chang said Mr Neshein told him: "David, you've finally found the answer to e-commerce. You've bridged the gap between supply and demand. Your thinking process is light years ahead of those in Silicon Valley." S888.com's marketing tactics have, however, not gone down well with Dr Toh at Case and some people who attended a series of seminars organised by the company.
  
  Case and BT were told that S888.com has assured prospective franchisees that everything is above board because legal firm Lee & Lee has certified in a letter that the franchising scheme does not contravene the Multi-Level Marketing and Pyramid Selling (Prohibition) Act.
  
  As well, there was the impression given that Case has endorsed S888.com.
  
  Mr Chang and Mr Tan showed the Lee & Lee letter but declined to let BT make a copy of it.
  
  A partner at Lee & Lee said: "I've received dozens of phone calls from members of the public asking me if we have blessed the scheme. The advice we gave them as our client is protected by solicitor-client's privilege and we cannot comment o whatever advice we may or may not have given them".
  
  "We advise members of the public to seek their own legal advice," he said.
  
  (c) (1999) Business Day, Thailand.
• laurence82

  18 Jul 06, 14:08

  Originally posted by FireIce:

  wah liew..........1992.............1999
  
  need to be so nostalgic or not.......................

  for fun reading mah
  
  coz i posted all those after 2000 already
  
  
• Eikei

  18 Jul 06, 21:54

  Its a good reminder to forumers cos most new people here seem to be not very well informed about MLM laws and stuff.
• N00dle

  18 Jul 06, 22:57

  Perhaps you should summarise it up, just looking at its length kinda put me off reading it, who would really be bothered to read a long long message..
  
  Summary?
  
  Just a suggestion