RM50m fine for pyramid offenders

From The Star, Thursday April 15, 2010

ANY company or society found guilty of a repeated offence in promoting a pyramid scheme can be fined up to a whopping RM50mil under a new Bill by the Government to plug loopholes in the direct sales sector.

The proposed amendment to the Direct Sales Act will also see individuals, including those working in companies or societies, fined up to RM10mil or jailed up to 10 years or both for repeated offences.

The Bill – which will also see the Act renamed as the Direct Sales and Anti-Pyramid Act – was tabled for first reading by the Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob.

The minister later said the second reading of the Bill was expected during this meeting.

The maximum fine for a first offence in promoting such schemes is RM10mil for companies and RM5mil for individuals in addition to a possible five-year jail term.

Among others, the Bill will define a pyramid scheme to include features such as having no buy back policy or refunds, the promotion of bonuses or benefits through the recruitment of participants rather than the sales of goods or services, pressuring members to buy goods to qualify them for bonuses, and disallowing them from withdrawing from the programme.

Such a scheme will also be defined by requiring members to buy goods or make minimum payment in order to be eligible for participation, and to force them to buy more stuff than can be re-sold within a reasonable period of time.

The Bill aims to protect those giving information to authorities about pyramid schemes and other offences by disallowing any disclosure of their names or addresses during court trials.

Under this clause, no witness in civil or criminal proceedings is obliged or even permitted to disclose the names or addresses of informers or the nature of their information and any documents bearing their names will be concealed from view.