Frauds by Companies Running Pyramidal Schemes | 51
to sell sham survey kits for which they were charg-
ing INR 11,000 each. Thousands of Indians partici-
pated in it and through this process, a few hundred
crores worth of money was remitted abroad.
Regulatory Gaps
The Prize Chits and Money Circulation (Banning)
Act has been enacted by the Ministry of Finance,
Government of India and the enforcement of its
laws has been entrusted to the state governments.
It has been observed that there is ambiguity in the
role of central agencies with regard to this Act. Be-
cause of these regulatory gaps, a large number of
unethical companies are exploiting the situation.
While state police agencies register cases under the
Prize Chits and Money Circulation (Banning) Act
against these companies, the eect of enforcement
action is limited as a large number of these compa-
nies have a pan-India presence. Some of them are
also operating from abroad. Unless all central and
state agencies in India join hands to address these
gaps, the situation is not likely to improve.
There is a need for a separate Act to regulate
multi-level marketing along the lines of similar
Acts in Singapore and Malaysia. The Competi-
tion Commission of India can be empowered to
act against pyramidal marketing as well as certain
other unfair trade practices along the lines of
Federal Trade Commission in the US.
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