Monday, July 13, 2009

.: Losing All In Get Rich Schemes :.

A lenghty article was written by The Star today, which have highlighted my concerns over this "Get Rich Quick Scheme" or also known as "Skim Cepat Kaya". Just to very quickly summarise what have been written, which I have also basically covered in my previous post here : For The Love Of Money.

- Most of these schemes thrived in “grey areas” which can only be loosely regulated, many of which operates under the guise of multi-level marketing (MLM) operations which blur into pyramid schemes.

- Like Ponzi schemes, they makes no or very little actual investments from money collected from public, but would promise returns that even top fund managers found hard to attain in good economic times and often that the earlier investors would get some returns compared to those who join later.

- Their aggressive and “successful” marketing approach has even become somewhat of a trend and they are able to navigate their way around existing laws and capitalise on their marketing strategies before the law catches up with them.

- Even though the company is registered with the Registrar of Companies (ROC) with a identifiable business, how they market their products/services are not within the purview of ROC

- With regards to companies illegally taking deposits without having an investment licence, Bank Negara (BNM) has the right to investigate and prosecute them, but due to the sheer number of operations, it is not possible to catch all of them. (during the year, about 19 companies have been raided and being under investigation)

- An official from the Consumers Association of Penang said such MLM companies were perfectly legal as long as they were licensed by the Domestic Trade and Consumer Affairs Ministry, but some MLM operations get into grey areas when the bulk of their sales are not derived from products/services but rather from other forms of collections. A sign of a possible scam was when most of the earnings of the company is derived from activities unrelated to the sale of goods or services.

For the full article, please read here.

Remember, do not be blinded by greed. If things sounds too good to be true, then they are likely to be that.

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