Investing in thin air

THEY tell you all about it but you will never see it for yourself.

Gold bars and investments in property overseas are just a few popular things that fake multi-level marketing (MLM) businesses online are trying to sell to their victims today.

Aside from the threat of ransomware, authorities are also warning of such fake MLM companies online and social media fraud.

Claiming to be legal MLM companies, these conmen rope in the unsuspecting public as members, promising attractive returns – some tout they can rake in up to a 50% profit within a month.

Fooling the public with a “legitimate-looking” website and impressive slideshows, the sales pitch is usually done online, with scammers claiming that their companies have branches worldwide such as in Hong Kong, Thailand and the United States.

Victims then buy the product or service which they will never see or experience. And once realisation that they have been scammed sets it, it is too late – they have given up their money for literally nothing.

Domestic Trade, Consumerism and Cooperatives Ministry enforcement director Mohd Roslan Mahayudin says online scams often occur, especially via Facebook.

“Scammers behind fake MLM companies will bait victims to join their investment schemes and at the same time, encourage them to find other members. The more, the better,” he says. 

The conmen will also promise to pay them an incentive for every new member.

Mohd Roslan however stresses that the public must differentiate between the scammers and legitimate MLM companies, with proper operating licenses.

“Scams usually promise overly high and unreasonable amounts of profit within a short period,” he adds.

Mohd Roslan says the ministry receives a total of over 12,000 complaints a year, including online scams.

In recent reports, the Consumer Claims Tribunal had recorded 1,354 cases of online fraud last year.

Among the issues raised to the tribunal were that goods purchased were not received (638 cases); unsatisfactory after-sales service (60 cases) and goods received were not goods ordered (11).

Smartphones like the latest iPhone models are popular items “sold” online for cheap prices by scammers but never delivered to the victim.

Malaysia Communications and Multimedia Commission (MCMC) has also received more social media complaints for possible scam-related activities.
 
The number of complaints  MCMC has referred to the police have been steadily increasing from 126 in 2013, 144 in 2014 and 182 last year. As at March 7, the MCMC received 55 complaints.

“We urge the public not to engage in such suspicious activities, especially when it involves transactions of money, or personal details, and to refer to authorities should they come across such sites,” MCMC advises.

However, despite the numerous warnings, some Malaysians are still lured into the trap.

Malaysian Mental Health Association deputy president Datuk Dr Andrew Mohanraj says Malaysians still appear gullible and end up being cheated for various reasons. 

“Most Malaysians are social media savvy. But frequent use of the Internet does not necessarily mean being more careful. On the contrary, it means that more are likely to fall for a scam,” he says.

Dr Mohanraj, who is a consultant psychiatrist, says many become victims because of greed, which overcomes their rational thinking. 
 
“Others are lonely souls who are cheated in pursuit of love or companionship. Malaysians are also compassionate and generous, easily falling for fake sob stories,” he adds.

Dr Mohanraj reminds Malaysians not to give in to greed or to participate in anything that sounds like an illegal activity.

“Even if an offer appears to be above board but seems too good to be true, then it is likely to be just that – a scam.
  
“Do not give in to the pressures of the supposed time limit or a cry for an urgent need,” he says.