Hyderabad: Pyramid multi-level market scams on the rise in city

Hyderabad: Multi-level marketing (MLM) scheme is a very old concept, but the rising instances of pyramid scam in the guise of MLM scheme during the Covid pandemic has rung alarm bells for the city police. The top brass of the department say that the MLM/ pyramid scams are rising in Hyderabad, mostly due to free time which many residents have spent at home during the lockdown.

The MLM schemes are lucrative and attract people easily. The best way to lure people, other than promotion, is through the social media (SM). Many gullible citizens are falling for their tactics of offering high returns and gifts.

Hyderabad Police Commissioner Anjani Kumar said the recent arrest of three persons has raised alarm about the pyramid scams again. They were carrying out a high-profile campaign through SM networking websites and luring people promising to make them rich overnight. He noted: "The culprits earlier used to cheat people by inviting them to make investments and get commission on the amount for almost three years. They cheated many people and fled with Rs. 2 crore. Now that a lot of awareness has been created about MLM frauds, many people are now investing in such schemes through physical contacts, as citizens are aware of such crimes."

"However, the conmen hatched another conspiracy to cheat people and in order to commit the crime, but through online mode. They created a fake trading company and started enrolling people by luring them to invest in its stocks. If a person gets any referral then he was promised rewards," stated CP.

The modus operandi of such conmen is to establish a fake trading company online, create a user ID-password and provide it to customers, while promising them profits if they invest, and additional profits if they refer their friends. Thus, the gangs are cheating gullible persons and making huge money.

Praveen Kumar, a CCS officer, says, "MLM schemes enable companies to sell their products or services through person-to-person sales. It means that an individual is selling directly to people, from any location either it be an office or a house or through online mode. However, pyramid schemes are just disguised as MLM, but they are actually scams."

"The promoters of a pyramid scheme recruit people by promising them high returns and a luxurious and lavish life with the commission earned. They often adopt the technique of luring a person saying that his/her life can be changed in a span of six months to one year by quitting job, as they only have to sell the company products. Once the individual takes to the business, he is made to recruit more persons rather than selling products. Based on the recruitment a person is promised commission," the officer elaborated.

But the fact is it is a scam. A person never gets paid. Rather, he ends up losing more by getting his friends and family also in the loop, as they all keep pouring money to become members of the organisation with an intent to earn more, explained the officer.