PETALING JAYA: A direct selling company has aroused suspicion after demanding huge investments from potential members.
Promising lucrative returns and riches, the company even tells its potential customers to take out personal loans to invest.
A quick Google search revealed a long list of complaints and allegations that the company is running a pyramid scheme that has left many poorer and worse off than before they joined.
In 2014, the Direct Selling Association of Malaysia (DSAM) received at least five complaints and enquiries about the company’s legitimacy.
The e-mails and calls were about the company’s modus operandi in recruiting members.
DSAM executive director Lawrence Cheah said these were forwarded to the Ministry of Domestic Trade, Cooperatives and Consumerism for further action.
“Unfortunately, the lack of black and white proof makes it difficult for the authorities to act. Most aren’t willing to lodge a formal complaint and testify if it ends up in court,” he said.
“Those who have contacted us say they were asked to invest multiple sums of money which can amount to RM20,000 or more, were guaranteed returns and told that they would be paid for recruiting others.
“DSAM is a member of the World Federation of Direct Selling Associations. Among our members, we practise self-regulation based on our globally recognised and Ministry of Domestic Trade-endorsed Code of Conduct.
“As the company is not our member, we can only assist the ministry by forwarding the complaints,” he said.
Cheah said “starter kits” for legit companies were usually below RM200 and forcing a new member to buy stock or invest was illegal.
Getting paid to recruit is also strictly against the law.
“Members can only earn from sales profits and commissions from the sale of products,” he added.
Malaysian Direct Distribution Association (MDDA) president Rosedy Issa confirmed that the company was licensed by the ministry and is a member of the association.
“We’ve received enquiries about whether this company is legal,” he said, adding that the company’s licence – issued in 2013, expires in August this year.
After being alerted by Sunday Star, a sub-committee was set up to investigate the allegations, he said.
He advised the public to check with the ministry, the MDDA and DSM on whether a company is genuine before joining.
“We take public complaints very seriously because the bad hats give the industry a bad name,” Rosedy said.
The ministry is said to be still monitoring the company although recent investigations showed its business was legitimate.
On April 20 this year, the authorities found that the company’s marketing plan was in line with licensing terms and all its marketed products had been approved, the ministry said in an e-mail response.
“However, the company is still being monitored. An inspection will be carried out when it applies to renew its licence which expires in August,” it said.
To date, no renewal application has been submitted.