Although Pyramid-like sales activities are prohibited in Bangladesh, pyramid marketing is still going on in the country.
On the other hand, licensing system was introduced for the MLM (Multi-Level Marketing) business, but hundreds of MLM companies are in operation across the country without any license. Not only that, not a single MLM company is now under the licensing system.
Against this backdrop, it can be said that there is no legal MLM business in Bangladesh as per the law, said Advocate Kamruzzman, a lawyer in Dhaka.
Thousands of people were cheated by the MLM companies, such as Destiny 2000, Jubak, Unipay2u and ITCL, in absence of law, since the business model was introduced in Bangladesh in 1998.
Most of the MLM companies follow the Pyramid model of business, which benefits the members at the top of the pyramid. The Pyramid schemes offer money for simply recruiting people. This money will come as commission from the sale of starter kit or as thousands of crores of money from people through the MLM business, applying the Pyramid model. Alongside the two organisations, many others have created fraud traps in the name of MLM business.
The issue of fraudulence and cheating came into the discussion after the scandals of ‘Destiny’ and ‘Jubok’ were leaked.
Against this backdrop, the government had banned the Pyramid marketing in a bid to check fraudulence. Later, the ‘MLM Activities (Control) Act, 2013’ was enacted with provisions of making licensing system mandatory and banning the Pyramid-like sale activities.
The law has the provision for maximum ten years’ jail and a maximum of Tk 50 lakh fine for not having license or forgery in business.
In 2014, four companies got licenses after enactment of the law. The four companies are- World Vision 21, Swadhin Online Public Limited, Rich Business System and MXN Modern Herbal Food. Later, the government did not give licenses to anyone for MLM business.
According to the 2013 law, the license for MLM business must be renewed every year. But after 2015, licenses of the four companies were not renewed. As a result, there is no legal MLM company in Bangladesh now.
According to commerce ministry sources, there were only 16 MLM companies in the country in 2002. The number stood at 24 in 2006. Currently a good number of MLM companies are conducting their business in the country.
However, many of the companies run their MLM business through collecting joint stock approval and company name clearance where they don’t mention the MLM issue.
On the other hand, a number of Indian, Malaysian, Sri Lankan and Pakistani companies are continuously entering the country’s market by managing Multipurpose Certificates or only trade licenses with the help of some corrupt officials.
Allegations have also been raised that the MLM companies are cheating common people also in the name of e-commerce, e-business and telemarketing. When any individual makes any investment in such companies, he is provided a package of products. Price of these unusual products is very high, which is not only fraudulent for the customers, but also revenue loss for the government.
The 2013 law also banned trade of any nonexistent products by MLM companies. According to the law, MLM can be traded for eight types of products. These are household products, electrical and electronics products, home appliance products, cosmetics and toiletries products, herbal products, telecommunication services or its usable products, training related products and services, and agriculture and agricultural products.
But the country’s existing MLM offers many other products, including food items. The MLM companies lure common people with hopes of making them rich overnight.
Against this backdrop, the government doesn’t issue licenses to MLM companies, said an official of the commerce ministry.
Advocate Khurshid Alam, a lawyer of the Anti-Corruption Commission (ACC), said that the law on MLM business needs to be repealed as such kind of business should be banned in the country. If anyone wants to work through a financial institution, they will work under a bank in Bangladesh. MLM here means fraud, he added.
Nasreen Akhter, a professor of marketing at Dhaka University, said that there is controversy around the world about the MLM business. Just as it is important to have law, it is also important to enforce the law.