Dubious mlm ploy get vips first and the rest will follow

PETALING JAYA: Errant direct selling companies are stopping at nothing, including using unsuspecting VIPs to recruit members.

Direct Selling Association of Malaysia (DSAM) executive director Lawrence Cheah said prominent personalities, celebrities and VIPs were recruited and used to convince others to join the schemes.

DSAM is a member of the World Federation of Direct Selling Associations.

Cheah said these companies worked on the premise that “if Datuk and Datin so-and-so are members, it’s credible,” he said.

He said the latest trend among consumers was to rely on public feedback and reviews before buying or signing up for anything.

“So, obviously, VIPs and celebrities are very influential.

“In a neighbouring country, a famous comedian-actor is endorsing a dubious company that’s now operating here,” he said.

A businessman, who is a Datuk Seri, shared how he and his friends found it difficult to decline because most of the time, they were approached by relatives.

“It’s sad. We know they’re being scammed yet they won’t listen.

“A Datuk in his 50s was approached by his 65-year-old sister and despite knowing that it was a scam, gave more than RM6,000 so that she could make a profit.

“If it had been any other person, I would have told them to go fly a kite because I know I’ll never see my money again.

“But this was my elderly sister. How could I disappoint her?” he asked.

Federation of Malaysian Consumers Associations (Fomca) secretary-general Datuk Paul Selvaraj said politicians and government officials were also used to lure naive consumers.

They may even have had their names or photos used without realising it.

“Some VIPs were recruited to bait other potential victims but some were clueless that their names or photos have been misused to convince prospective members that the business is legit,” said Selvaraj.

MCA Public Services and Complaints Department chief Datuk Seri Michael Chong himself was a victim.

Invited by a good friend to grace a ribbon-cutting ceremony, his photo and name were used to imply that he had endorsed the business and was involved in it.

“I didn’t suspect anything amiss because I had seen photos of a well-respected foreign ambassador at their previous events.

“Only after people started calling me to complain about how the company had swallowed their money did I realise the business was an MLM scam.

“I quickly got my lawyer to send them a notice demanding they stop associating me with the operation,” Chong said.

He said there were many cases where politicians, state leaders and even royalty were invited to events or asked to take a picture with someone from the company, to lend credibility to the scam.

Financial author and coach Yap Ming Hui warned the public against associating “star power” with sound investments.

He said there’s no such thing as a VIP being smarter than a lay person when it comes to investment.

He advised the public to practise due diligence.

“Scammers use big names for credibility. But due diligence isn’t about who’s also in the business – there’s no link between the two.

“It’s about capital safety, documents in black and white, and a track record.

“Before joining any direct-selling company, ask for the company’s AJL Number (Direct Selling Licence number) and check the products for registration and approvals by the relevant government regulators,” Cheah stressed.

Malaysian Direct Distribution Association (MDDA) president Rosedy Issa said it was mostly getrich-quick schemes that used such tactics, adding that there were many, including bad hats, with titles these days.

“One cannot assume that just because someone is a Datuk, he is good.

“No matter what, check if the business is licensed by the Domestic Trade, Cooperatives and Consumerism Ministry.

“If it isn’t, the company is illegal. It doesn’t matter who’s in the company,” he said.

He added that consumers must check if the company was a member of either the MDDA or DSAM so that they can have a recourse should any problem crop up later.

Selvaraj said big shots, especially government officials, must verify invitations to make sure that the company behind it wasn’t involved in dubious business.

And, if they’ve been photographed at an event organised by such a company, the VIP must quickly clarify that their presence was not an endorsement of the business, he said.

“Stern action must be taken against the company if it had misused such photographs to mislead the public,” he said.

Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hamzah Zainudin had warned that unethical multilevel marketing (MLM) companies would be shut down.

He said there used to be more than 600 licensed MLM companies in the country but the number has dropped to 308.