Illegal get-rich-quick schemes are on the rise as complaints regarding pyramid schemes received by the Department of Trade and Industry Fair Trade Enforcement Bureau (DTI-FTEB) more than doubled.
DTI-FTEB said it has received a total of 28 complaints regarding chain distribution plans or pyramid sales schemes from consumers and investors. The figure is 133 percent higher than the 12 complaints filed with the DTI-FTEB in 2020. These schemes are being “heavily marketed” on social media sites.
“Victims of these fraudulent acts have the right to seek redress from the SEC [Securities and Exchange Commission] or the DTI; our doors are always open to assist and guide them in addressing their complaints,” DTI-Consumer Protection Group (DTI-CPG) Undersecretary Ruth B. Castelo said in a statement.
Based on investigations conducted by the SEC, companies that practice and offer chain distribution plans or pyramid sales schemes tend to focus more on the recruitment of new members rather than encouraging its members and franchisees to sell products and services. Organizers of pyramid schemes promise high returns in a short period of time.
DTI-FTEB said these companies claim that their business structure is “pandemic-proof” to make it more enticing and promising to interested investors.
“Those companies taking advantage of consumers by disguising their pyramid sales scheme as a legitimate business opportunity in the form of multilevel marketing have to be investigated, charged, and penalized if warranted,” DTI Assistant Secretary Ronnel O. Abrenica added.
Article 53 of Republic Act 7394 or 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.
Consumers are encouraged to report businesses that offer chain distribution plans or pyramid sales schemes to the DTI.