Before one year only we have witnessed mega scam of “Speak Asia” online survey based company they have cheated people through MLM route. Where investor has lost several lakh rupees, history repeats again and many people are cheated again by using MLM concept by Nmart retail chains.
NMart Retails, a division of Newlook Multitrade Pvt Ltd has run collective investment scheme (CIS) based on the multi-level marketing (MLM) business, under the excuse of selling products through its retail chain.
Now most of the stores of Nmart are closed and this scheme is declared as fraud. It is estimated that more than 20 lakh people are cheated through this scheme. Estimated scam value is 1400 Cr. Master Mind behind this scheme is Mr.Gopal Sekhawat.
Let’s look at mouthwatering scheme proposed by Nmart Retail to customer.
Nmart Fraud Scheme Details:-
According to information available on the company’s Website, anyone wanting to join the NMart Retail system or business plan, has to invest or deposit Rs5,500. The company provides 48 vouchers of Rs220 (it needs to be consumed each month over a period of four years), a ‘smart’ card, credit facility of Rs1,500 per month (provided you settle the bill by the 7th of the following month), and last but not the least, a bonus of Rs11,000, if at all you remain with the company (and continue to enrol new recruits and buy products from its shop) for 48 months.
The company also promises to pay other incomes, like binary income, spill-over income, royalty and repurchase incomes.
For any two new joinees, on either your left or right leg or down line, you would get Rs600 as pair income for an unlimited depth. (But it is capped at 100 pairs, or a payment of Rs60,000 per week.) So, the company says, enrolling 8,000 new distributors below your rank can earn a binary income of Rs24 lakh. If your success percentage is just 1%, you could still earn Rs24,000 just as binary income!
It, however, does not mention that for this you still need to enroll 80 new people with an investment of Rs5,500 each, or a total Rs4.40 lakh, of which the company would pay you Rs24,000. That’s about 5% only and it keeps the rest with itself! If this is not enough, then the company promises to pay you spill-over income, or Rs200, for every new joinee below your line for an unlimited depth. In addition to this, NMart also promises to pay royalty and repurchase income.
The company projects an income of Rs48 lakh for a down line of 16,000 distributors, with 8,000 associates on the left and right legs, each earning Rs24 lakh. But the next presentation slide suggests that you to do ‘smart work’ and instead recruit your own family members (like your spouse and your mother) instead of outsiders, to you can keep all the money (Rs48 lakh + Rs24 lakh + Rs24 lakh = Rs96 lakh) within the family!
Learning from Nmart the latest mega scam:-
After going through scheme details let look for learning from this scam how you can safeguard yourself from this type of fraud scheme.
Avoid participation in Ponzi Schemes:-
Please remember there are no shortcuts for long term goals/dreams. I don’t see this more than a ponzi scheme. One must analyse the compensation plan to determine whether participants are paid from actual sales/profit to customers and not from money received from new recruits. If participants are paid primarily from money received from new recruits, then the company is on illegal pyramid or running Ponzi scheme. This is what Nmart was doing.
Research before participation:-
Before participation in any scheme you must do enough research about scheme including background of company and promoters.
Nmart Company is promoted by Gopal Shekhawat, who is also said to be chairman for Asia of the International Human Rights Association. In some places, Mr Shekhawat is also referred to as being the nephew of the President of India, Pratibhai Patil, but this information is false.
Newlook Multitrade, the parent of NMart Retail, has its corporate office in Surat and mentions a Mumbai address in the records of the Registrar of Companies (RoC).
Control your Emotion:-
What we have seen here is most of the people has attracted by mouthwatering scheme details of Nmart. So request is you should control your emotions don’t get let emotion get controlled over your behavior.
Apart from this type of schemes in market you will find many companies including banks offering discounts & special offers to sale their products, remember they are not fool that they are giving lucrative offers for your betterment. Ultimately they are getting business benefit and that is pretty higher than what offer they are giving to you.
Avoid participation in Pyramid Schemes:-
Pyramid schemes is referred to as “chain referral”, “binary compensation” or “matrix marketing” schemes, these are marketing and investment frauds which reward participants for inducing other people to join the program.
NMart has also adopted same practice they paid commissions for recruiting new people.On the issue of MLMs, the United States Federal Trade Commission states, “Steer clear of multi-level marketing plans that pay commissions for recruiting new distributors. They are actually illegal pyramid schemes. Why is pyramiding dangerous? Because plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when a plan collapses, most people-except perhaps those at the very top of the pyramid-end up empty-handed.”
Truly Nmart Fraud has happen due to lake of knowledge & awareness. People have participated in scheme considering their money will get double and ultimately they lost all hard earned money.
If we don’t educate ourselves and participate in schemes based on emotion and not by data, these types of fraud will keep on happening, very few are big enough that comes to everyone’s notice including Nmart & speak asia.