DTI Warns Public Against Online Pyramid Scheme
Philippines , 15 June 2021
The Department of Trade and Industry-Fair Trade Enforcement Bureau (DTI-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 sites such as Facebook, Instagram, and YouTube.
As of April 2021, the DTI-FTEB already received a total of twenty-eight (28) complaints regarding Chain Distribution Plans or Pyramid Sales Schemes from consumers and investors. This number increased more than two-fold compared to the twelve (12) reported complaints received last year.
Based on investigations conducted by the Securities and Exchange Commission (SEC) on the subject matter, 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 the promise of high returns of investment in a short period of time. Further, they claim that this business structure is pandemic proof to make it more enticing and promising to interested investors.
Article 53 of Republic Act 7394 or the Consumer Act of the Philippines clearly 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 (DTI-CPG) 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,” DTI Assistant Secretary Ronnel O. Abrenica added.