The mode of operation of business involved in the two popular new businesses entities – MagneSSa and Oriens are pyramid schemes and unethical, according to an inference from a relevant stakeholders’ meeting held recently.
Recently, MagneSSa and Orienshave spread rampantly in the country.More than thousands of people are involved in the business in the country.
The Director of Office of Consumer Protection (OCP) under the Ministry of Economic Affairs, Sonam Tenzin said that the mode of operation of these two entities is unethical.
He said that the schemes are trying to entice consumers giving assurance that there will be higher returns.
In these businesses, the products are sold by recruiting down lines. They offers good equal to the value of corresponding investments in the business. People are promised that if they can recruit more downlines they will get higher benefits.
“It is only the people at the top level who receive the benefits and it is unfair for the lower levels,” said the Director.
OCP has also issued a notification stating that it has come to their notice that the Bhutanese citizens are being lured to participate in the pyramid scheme by a few business entities against whom the ministry is taking action based on the findings of their involvement in the pyramid schemes.
Section 83(xii) of the consumer protection rules and regulations, 2015 strictly prohibits the services providers, suppliers and manufacturers from establishing operating or promoting a pyramid promotional scheme whereby a consumer receives compensation that is derived primarily from the introduction of others consumer into the scheme rather than from the sale or consumption.
Similarly section 6 of consumer protection act of Bhutan, 2012 prohibits business from making misleading representations in relations to the goods and services. It is illegal for a business to engage in conduct that misleads or deceives or is likely to mislead or deceives consumers about goods and services.
Further, it is a violation for business unit to make false and misleading representation about the goods and services when supplying, offering to supply or promoting those goods and services.
Section 16 of consumer protection act, 2012 states that no person shall advertise for supply of goods and services at a specified price which that person(d) doesn’t intend to supply or provide safe goods and services.
OCP mentioned that additionally, these pyramid schemes are dealing in the sale of various health supplements, which poses risk to the health of general consumers.
OCP notified the public from refraining from involvement or promotion of such pyramid schemes in the country. Anyone found facilitating or participating in such schemes will be dealt as per the laws of Bhutan.
These two entities deal with health supplements and cosmetic items claiming that the items have health and monetary benefits.
In the earlier interview with the Business Bhutan the financial intelligence department of RMA stated that these business ventures are not ponzi scheme.
The officials from the department said that all ponzi schemes are pyramid schemes but not all the pyramid schemes are ponzi schemes.
Ponzi scheme is a fraudulent investment scheme promising high rate of return with little risk to investors. In ponzi scheme, an individual is required to make an investment in cash and then look for downlines.
The OCP Director said that their mandate is to protect the economy and interest and health of the consumers in the country.
“It also a direct competition with bio products produced in the country. There are lots of implications at a macro level with these business entities,” said the Director.
Currently, there are around 500 to 600 Bhutanese people engaging in MagneSSA while around 5,000 to 6,000 are active members of Oriens in the country.
People who want to be a member in Oriens have to pay around Nu 6, 000 and Nu 35,000 plus for MagneSSa.
Dechen Dolkar from Thimphu