Any company promising over 20% profits may be dangerous
Hyderabad: The Telangana State Cyber Security Bureau (TGCSB) has warned citizens against falling prey to multi-level marketing (MLM) schemes and urged them to report any existing operations to the nearest police station. TGCSB officials said they would take strict action as per the law against such operators.
“Any company using MLM to lure innocent citizens with promises of high profits in a short period is, in reality, cheating people for its gain,” explained TGCSB DSP K.V.M. Prasad.
Prasad stated that MLM operators exploited human greed by offering gold, luxury cars and extravagant returns. “These schemes rely on word-of-mouth publicity, using existing members to recruit others. Initially, they pay commissions using money circulated from new members,” he added.
Calling MLM a pyramid scheme and a large-scale fraud, Prasad cautioned that even companies promising returns above 20 per cent should be viewed with suspicion. “Such schemes are unsustainable and often collapse, leaving investors at a loss. Only private financiers who lend Rs 1,000 in the morning and collect Rs 1,200 to Rs 1,500 by evening operate with real cash flow,” he explained.
He said organisers collect membership fees ranging from Rs 5,000 to Rs 10,000, impose sales targets and promise lavish rewards. “People must realise that the so-called profits or commissions they receive are just their own money or funds circulated from new recruits,” he warned.
