Over 400 New MLM Pyramid Schemes Launched in India in 2023: Report
Moneylife Digital Team 13 December 2023
Over 400 new multi-level-marketing (MLM) pyramid schemes were launched in India in 2023, the highest in five years, says Strategy India, a policy, compliance and direct-selling consultancy, and associate member of the Indian Direct Selling Association (IDSA).
According to Strategy India, every single week, more than 15 Ponzi schemes in the form of MLM operations are launched in India, causing hundreds of thousands of families to lose their hard-earned money. "These scams target people from all walks of life, including police officers, teachers, homemakers, businesspersons, chartered accountants, students, government contractors, and business executives."
"The impact of MLM scams is widespread across every state in the country, resulting in a loss of faith in the government's ability to curb these scams, widespread corruption, and mental trauma experienced by millions of families every day," it says.
MLM, Ponzi and pyramid schemes are money-circulation schemes that pay existing investors with funds collected from new ones instead of profits. Many remain unchecked by taking advantage of loopholes in existing consumer protection laws.
According to Strategy India's 'scam alert', present, 4,125 MLM schemes are operating in India, including Mission Green India, Jivan Daan, Dhan Vriddhi and Capcha Pay. 
Tracking down the entities listed was difficult as the consultancy says they do not have functional websites. 
To tackle the menace of illicit deposit-taking schemes, which dupe people of their hard-earned savings and protect their interests, the Union government has enacted the Banning of Unregulated Deposit Schemes Act, 2019. The Act contains comprehensive provisions prohibiting promoting, operating, issuing advertisements or accepting deposits in any unregulated deposit scheme and provisions for severe punishment and heavy pecuniary fines to act as a deterrent. 
Further, 29 states and Union Territories (UTs) have passed the Protection of Interest of Depositors (PID) Acts to take action against illegal entities collecting money from the public.
Between 2019 and 2022, enforcement agencies working under the Union government have registered 196 cases involving 219 companies. The central bureau of investigation (CBI) has registered 100 cases relating to Ponzi schemes during the years 2019 up to 30 June 2022, involving 132 companies and firms and arrested 21 persons in this regard. The directorate of enforcement (ED) has investigated 87 cases related to Ponzi schemes under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA) during that period. (Read: MLM or Ponzi Schemes: CBI, ED & SFIO Registered 196 Cases in Past 3 Years: Govt)
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