The Office of Consumer Protection (OCP) has declared another online marketing company called ‘Crowd1’ as an illegal pyramid scheme.
The office initiated the investigation of the business after it was notified by the general consumers via toll-free number 1214 in the second week of March last year. The same concerns were also shared on its Facebook page.
The allegation was that the online business called Crowd1 is being vigorously promoted through talks on the prospects and benefits of registering as members.
On March 12, OCP met the two promoters of the business. They shared that the business has been active in the country with more than 24 members.
According to the OCP report, the interested Bhutanese are required to pay Euro 99 equivalent to Nu 9,000 to register as an affiliate. The affiliates can be only obtained through the use of a reference number. The reference number is the registration code provided by existing affiliates.
It was shared that money is deposited in an Indian Bank and converted into Euros and then deposited into a bank in Europe.
According to the report based on the statement from the two affiliates, the payments were made with the gift codes created from their Crowd1 account balance where business points (BP) earned can be converted into gift codes. The members were rewarded in the form of BP. 10BP is equal to one Euro.
One promoter told OCP that initially, his friend who is in Tezpur Assam funded the membership subscription for him and some friends.
He said that at a later stage when they started earning, it was easy to fund their new members’ subscriptions by selling euros.
The total earning by 24 members was Euro 34,411.65 equivalent to Nu 2.924M.
An official from OCP said the investigation team established that the consumers are made to participate as a member of the business plan without clear information of the business prospectus.
The recruitment of downline members (affiliates) are basically done without providing prior and detailed information about bonuses, benefits, compensations in order to enable consumers to make an informed purchase decision. “This was in contravention to Section 4 (b) of Consumer Protection Act 2012,” the official said.
The section states that the consumer has the right to true, sufficient, clear, timely information on goods and services offered and Rule 30 of Consumer Protection Rules and Regulations (CPRR) 2015.
The official also said that there was a huge outflow of convertible currency to the tune of Nu 1.32M through the purchase of packages by the downline members without approval of the relevant authority which may have contravened the provisions of Foreign Exchange Rules and Regulations 2020.
Further, the members are encouraged to join as affiliates to the scheme by giving hopes of achieving higher ranks and promising higher financial returns within a short span of time violating Rule 33 of CPRR 2015.
”The investigation team also based the evidentiary documents of Crowd1 established the operation of the Crowd1 business as a pyramid promotional scheme under Rule 38 (xiii) of CPRR 2015,” the official said.
The OCP has written to the promoters to discontinue the business immediately and recommended RMA take appropriate actions as per prevailing rules and regulations.
The OCP has also recommended the Department of Revenue and Customs for appropriate action as per income tax law for non-declaration of income earned by the promoters and their members.