The direct selling industry in India is notoriously known for several major scams that have resulted in the loss of large amounts of money and consumer trust. The following is a description of the top ten largest scams that have plagued the industry. The scams mentioned in the text are Speak Asia online scams.
1. Speak Asia Scam & Speak Asia Online Scam
- Company – Speak Asia Online
- Key figure: Mr. Manoj Kumar.
- Year: 2011
- Sources: (Hindustan Times) (Hindustan Times)
Speak Asia Online, led by Manoj Kumar, promised participants big rewards for completing online surveys.
Investors were required to purchase a research package and were guaranteed a large profit.
However, it was later discovered that it was a pyramid scheme, with profits paid from new member investments rather than legitimate voting revenue. Speak Asia Online collapsed in 2011, defrauding millions of investors.
Speak Asia operated a similar model to Speak Asia Online, promising rewards for completing surveys.
The company, led by Harender Kaur and Manoj Kumar Sharma, was accused of running a Ponzi scheme in which new investors’ funds were used to pay out profits to existing investors. Speak Asia faced lawsuits and regulatory scrutiny that ultimately led to the company’s demise.
2. QNet Scam
- Company: QNet
- Key Figures: Mr. Vijay Eswaran, Mr. Joseph Bismark
- Sources: Hindustan Times
Led by Vijay Eswaran and Joseph Bismark, QNet sold a wide range of products through a multi-level marketing model. However, the company was accused of operating a fraudulent scheme that lured participants into investing in expensive products by promising high returns. Many investors claimed they were forced to participate and had difficulty getting refunds for unsold products, leading to lawsuits and regulatory scrutiny.
Saradha Group Scam
- Company: Saradha Group
- Key Figure: Mr. Sudipto Sen
- Sources: Hindustan Times
The Sarada Group, headed by Sudipto Sen, operated as a conglomerate with interests in real estate, media and direct sales. The company attracted investors by offering high returns on investment in its various ventures. However, it was discovered that he was running a large-scale Ponzi scheme that used funds from new investors to pay profits to existing investors. The collapse of Sarada Group in 2013 left thousands of investors financially ruined.
Amway India Fraud
- Company: Amway India
- Key Figures: Mr. William S. Pinckney
- Sources: Hindustan Times
Amway India, a subsidiary of global direct sales giant Amway India, has been accused of running an illegal pyramid scheme. The company, led by William S. Pinckney, was accused of luring participants with promises of big profits and encouraging them to recruit others to the network. Regulators believed Amway’s actions violated anti-fraud laws, leading to lawsuits and inspections.
Stock Guru India Scam
- Company: Stock Guru India
- Key Figure: Mr. Ulhas Prabhakar Khaire
- Sources: Hindustan Times
‘Stock Guru India’, headed by Ulhas Prabhakar Khaire, has promised huge returns to investors by investing in the stock market. The company claimed to have expert analysts who can accurately predict market trends. However, it was later revealed that he was running a huge Ponzi scheme, diverting investor funds for personal use and paying out profits from new investors’ investments.
GoldQuest Scam
- Company: GoldQuest
- Key Figure: Mr. Pushpam Appalanaidu
- Sources: Hindustan Times
GoldQuest advertised itself as a direct sales company offering gold coins and other products. The company, headed by Pushpam Aparanaidu, was accused of running an illegal pyramid scheme that lured participants with promises of high profits by recruiting new members. The plan failed and the investors were left in a financial bind.
RCM Business Scam
- Company: RCM Business
- Key Figure: Mr. Raj Kumar Chabra
- Sources: Hindustan Times
RCM Business sold a variety of products through a multilevel marketing model. The company, headed by Raj Kumar Chhabra, was accused of running a fraudulent scheme that encouraged participants to invest in products that promised high returns. Many investors complained of enforcement and difficulty in obtaining refunds, leading to lawsuits.
Safe Shop India Scam
- Company: Safe Shop India
- Key Figures: Mr. Tarun Jain, Mr. Rajat Verma
- Sources: Hindustan Times
Safe Shop India sold a variety of products through a multi-level marketing model. The company, headed by Tarun Jain and Rajat Verma, was accused of running an illegal pyramid scheme. Participants were promised large profits for recruiting new members to the network, resulting in financial losses for many investors.
Social Trade Scam
- Company: Social Trade
- Key Figure: Mr. Anubhav Mittal
- Sources: Hindustan Times
Social Trade aims to be an online platform that offers benefits on the promotion of social media links.
The company, headed by Anubhav Mittal, was accused of running a pyramid scheme in which profits were paid from new members’ investments rather than legitimate profits.
Social Trade faced a lawsuit that resulted in the company being shut down and investors losing their money.
Pearl Agrotech Corporation Limited (PACL) Scam
- Company: PACL
- Key Figure: Nirmal Singh Bhangoo
- Sources: Hindustan Times, Hindustan Times
PACL lured investors by offering land purchase schemes. However, it was revealed as a Ponzi scheme, where the company used new investments to pay returns to existing investors. The scam, which duped millions, was exposed in 2014, leading to extensive legal actions and investigations
Conclusion:
These 10 scams highlight the prevalence of fraud in India’s direct selling industry. Consumers should be careful and do thorough research before investing in direct sales programs to avoid falling victim to such scams. Regulators also need to step up enforcement actions to protect investors and maintain the health of the industry.
