India's financial crime agency has accused QNet, a direct selling company (a company that sells products directly to consumers), of defrauding "a large number of innocent investors".
The News Media has spoken to victims of the scheme and social workers who say Qnet agents sold them their products to resell them with false promises and the promise of getting rich overnight.
India's government agency, the Enforcement Directorate, said in a press release last week that as part of the scheme, investors who apparently started their own businesses were not told that their money was going to shell companies (companies that only exist on paper) is being inserted into
The agency says that 36 bank accounts of QNet have been frozen pending the completion of the investigation.
Multi-level marketing schemes (MLMs) offer people to make money by buying stocks (everything from diet supplements to cleaning products). People are told that they can resell these goods by buying in bulk.
However, in some schemes companies make money by involving more and more people in this work and it becomes difficult for consumers to make money themselves because there is no buyer for these goods.
In such a case profit is possible only when more new people are sold the scheme. At the top level, people make money, but at the bottom level, despite all assurances, people remain at a loss.
India has laws against such MLMs, but enforcement is proving difficult.
In such a 'pyramid' scheme, the only way left for the agents working at the bottom level is to get more people into the scheme and make a profit. And in this case, these agents are ready to cross all limits.
'How is it going in your life?'
Riya from the city of Hyderabad in South India has also gone through this experience.
In 2019, he had to support his family after his father's shoe shop closed down. Then he received a message on Facebook from a man who identified himself as a friend of a trusted friend from school and offered him a business opportunity.
He took a loan and enrolled himself in Qnet's scheme, but it became clear that selling goods was not the ultimate goal of the business. They were asked to bring in more people, first from family, then friends and even from social media and dating apps.
"They wanted me to write down everyone's name in my contact list," she says. I asked why, he immediately said that if you want to sell goods, you have to build your network first.
Then she remembered that she might also be on her school friend's front list, which led to the offer. "You have to attract men," he said. This was a red flag for me. I started asking him questions. I asked why should I spread this message on Bumble and Tinder?
Riya says she was asked to make changes to her social media accounts. Like doing photo shoots with borrowed luxury goods that she couldn't afford in real life but could pretend to be financially stable on social media.
"When you start wearing a Gucci bag, people start asking, 'How's your life going?' gets.'
'He was shy and could not talk to anyone'
Raag is an IT worker and he is also caught in such fraud. When they joined QNet, they were trained to tell similar lies.
“One person had a Tag Heuer (luxury Swiss brand of watches) or some such expensive watch,” he explains. He asked me to take a picture with this watch on my wrist. Now people think I have a Tag Heuer or Rolex watch.
He saw similar scenes on a friend's account on Instagram, which led him to the company. Raag is embarrassed that he was duped and lost his savings.
In desperation, he could not eat properly and could not talk to his parents, siblings and friends. "I was so ashamed of what I had done that I couldn't talk to anyone."
Raag says that he reached a point where he even thought of committing suicide.
"You are worthless, go die"
Experts say that operators of schemes like MLMs promote a mindset that is that of a cult or a group with allegiance to a particular faith or person. There are big meetings, people shout slogans and more people gather to celebrate their performance.
People involved are asked to show loyalty to the scheme agent more than to their family and friends. If they question it or talk about leaving it, they are treated harshly.
Riya explains that hundreds of people used to gather in WhatsApp groups and if anyone questioned anything, the senior agents would get together and disrespect him. "They used to take your name and say that you are not worth anything, go and die."
In these conditions, she was suffering from mental agony and could not concentrate on work due to fear. It took him a year to come out of this depression.
Indian authorities have termed QNet as a 'Ponzi scheme' and have tried to take action by registering cases against it, but these cases have not yet reached their desired conclusion.
The company has denied the allegations in the past. The company has not responded to questions about money laundering and the behavior of agents.
According to Hyderabad police officer VC Sajnar, there is nothing new in fake schemes like MLMs, but during the global pandemic, they have damaged people's lives very quickly.
He says that he used to hold meetings earlier too, but due to Covid everything went online. We no longer even know where the meeting is taking place. Their groups operate in a clandestine manner.
Rhea said that she used to stay in touch with QNet agents through WhatsApp and Zoom, which made it more difficult for them to trace the origin of the scheme. Due to their financial situation, it was easy for them to trust this scheme and its implementation was quick.
"They target people who are vulnerable and needy, who are already in trouble," she says.
"If you are living a good life, making good money and are satisfied with your situation, no one approaches you for such a job."
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