The DTI-Fair Trade Enforcement Bureau (FTEB) warns the public against chain distribution plans or pyramid sales schemes that are circulating online and are now heavily marketed or promoted on various social media.
As of April 2021, the FTEB already received a total of 28 complaints compared to the 12 complaints received last year.
Based on investigations conducted by the Securities and Exchange Commission, companies that practice and offer chain distribution plans or pyramid sales schemes tend to focus more on the recruitment of new potential members rather than encouraging its members and franchisees to actually sell products and services to consumers accompanied with promise of high returns of investment in a short period of time. Further, they claim that this business structure is pandemic proof to make more enticing and promising to interested investors.
Article 53 of the Consumer Act of the Philippines provides that chain distribution plans or pyramid sales schemes, such as deriving profits primarily or mainly from recruitment of participating members and not from the marketing and sales of products and services shall not be employed in the sale of consumer products.
“Victims of these fraudulent acts have the right to seek redress from the SEC or the DTI; our doors are always open to assist and guide them in addressing their complaints,” said DTI-Consumer Protection Group Undersecretary Ruth B. Castelo.
“Those companies taking advantage of consumers by disguising their pyramid sales scheme as a legitimate business opportunity in the form of multi-level marketing have to be investigated, charged, and penalized if warranted,” Assistant Secretary Ronnel O. Abrenica added.
Consumers are encouraged to report businesses that offer chain distribution plans or pyramid sales schemes by calling the 1-DTI (1-384) hotline or by sending an email to [email protected]. – Press release