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.