In recent years, Multi-Level Marketing (MLM) schemes have seen a rise in towns like Hospet and other parts of Karnataka. Often disguised as “business opportunities” or “financial freedom” models, many of these schemes prey on job seekers, students, and homemakers by promising quick and easy money. But behind the glamorous pitches and success stories often lies a web of deception.
What Is MLM?
At its core, Multi-Level Marketing involves selling products directly to consumers while also recruiting others to join the business as distributors. Members earn commissions not just on their own sales, but also on the sales made by their recruits. This forms a pyramid-like structure, where money is made primarily by building a team.
The Thin Line Between MLM and Pyramid Schemes
While some MLM companies are legal and product-focused, many operate dangerously close to pyramid schemes, which are illegal in India. In such scams:
- Income is largely based on recruitment, not sales.
- Products are overpriced or of poor quality.
- Participants are required to invest upfront, often by purchasing “starter kits” or “training materials.”
- There’s immense pressure to keep recruiting new members just to break even.
Common Tactics Used in MLM Scams
- Big Promises, Little Proof
You’ll hear things like “Earn ₹1 lakh a month from home” or “Live the boss life.” But when you ask for proof or real success stories, answers get vague. - Fake Sense of Urgency
You’re told to join quickly to “secure your spot” in the hierarchy, a classic pressure tactic to stop you from doing proper research. - Disguised Recruitment
The invite may seem like it’s for a job interview or business seminar, but you’re soon pitched a dream that depends on bringing in more people. - Use of Influencers and Paid Testimonials
Scammers use rented luxury cars, fake success stories, and local influencers to build credibility and attract more victims.
Real Impact on Victims
People across Karnataka, including many in Hospet, have fallen prey to such scams. Students have lost savings, homemakers have been left embarrassed after involving family and friends, and some have even taken loans to pay for these so-called “business packages.” The emotional and financial toll can be devastating.
How to Protect Yourself
- Research the company: Look up reviews, complaints, and whether the business is registered.
- Ask the right questions: What are you selling? How much do real customers (not recruits) buy? What percentage of people actually earn money?
- Avoid upfront payments: Legitimate jobs don’t require you to invest your own money.
- Talk to someone outside the group: MLM recruiters may isolate you from skeptics. Always get a second opinion.
What the Law Says
The Consumer Protection (Direct Selling) Rules, 2021 issued by the Government of India mandates that MLM companies must not:
- Promote pyramid or money circulation schemes.
- Make exaggerated income claims.
- Require participants to purchase inventory as a condition of joining.
Violating these rules can lead to fines and imprisonment.
Final Thoughts
If it sounds too good to be true, it probably is. The best path to success is through hard work, skill-building, and ethical opportunities, not quick-rich schemes that benefit only the top few. As Hospet grows and becomes more connected, let’s also grow in awareness and protect our community from falling into such traps.
If you or someone you know has been a victim of an MLM scam in Hospet, don’t stay silent. Report it to local authorities or share your experience anonymously on Hospet.online, your voice could save someone else.