Complaints against Multi-level Marketing Companies
Ministry of Trade and IndustrySpeakers
Summary
This question concerns the regulation of multi-level marketing (MLM) companies in Singapore, with MP Mr Ang Wei Neng inquiring about firm numbers, legal adequacy, and the volume of complaints received. Minister S Iswaran explained that while the Multi-Level Marketing and Pyramid Selling (Prohibition) Act bans such schemes, exclusions exist for licensed insurance and certain direct selling businesses. Since no special license is required for these operations, the government does not track the number of participating companies, but CASE reports an average of fewer than 10 related complaints annually. Minister S Iswaran stated there are no plans to review current laws given these low figures compared to the 24,000 total annual consumer complaints received. He further advised the public to remain vigilant against get-rich-quick promises and to report suspected illegal MLM activities to the Commercial Affairs Department.
Transcript
35 Mr Ang Wei Neng asked the Minister for Trade and Industry (Industry) (a) apart from insurance companies, how many companies in Singapore are currently operating using the multi-level marketing (MLM) model; (b) whether the current laws and regulations governing MLM are sufficient; and (c) how many complaints have been received on the practice of MLM in the past five years.
Mr S Iswaran: Under the Multi-Level Marketing and Pyramid Selling (Prohibition) Act (MLM Act), it is unlawful to promote or participate in a MLM scheme or arrangement; or register a business designed to promote MLM schemes or arrangements.
However, not all multi-level marketing activities are prohibited under the Act. The Exclusion Order specifies the schemes which are excluded from the MLM Act, such as insurance businesses, which are licensed under the Insurance Act; and master franchise schemes and direct selling schemes which fulfil certain conditions. Companies do not require a special licence to operate using MLM techniques. As such, we do not have a record of the number of companies operating using MLM techniques.
Over the past five years, CASE has received, on average, less than 10 complaints a year relating to MLM schemes, compared to the average annual total of 24,000 complaints received. Hence, there are no plans to review the current laws on MLM activities.
We urge members of the public to exercise due diligence when deciding whether to participate in business schemes, particularly those which offer get-rich-quick promises. Should members of the public suspect that certain activities are illegal MLM schemes, they should make a report to the Commercial Affairs Department.