any laws against pyramid schemes?

I would like to know if there is any law against Pyramid schemes/ MLM which invite people to join them and invest money (in the form of overpriced or redundant products) and pay commission if they recruit new members.

A certain company by the name ebiz.com Pvt. Ltd has been carrying around with such a scheme where they invite young students to seminars/presentations and ask them to buy a product - essentially a pack of computer course cd's which is worthless - at a cost of Rs.7500/- Then the new members are given 2000 commission for every two new members they recruit apart from the initial qualifying members. This is a classic 8-ball pyramid scheme. And I'm quite confident that if it is, a lot of my friends will end up loosing their money. Because such systems by rule breakdown after market gets saturated, and 88% of members will loose money.

I'm especially worried because the members are young degree students who are lured into it by a promise of 'limitless income' over a short range of time. I know that such schemes are illegal in most states abroad. But I'd like to know if there is anything I can do against this in Mumbai.

Will be greatful for your reply.

Forum Moderator

Pyramid schemes are illegal in India; the Prize Chit and Money Circulation (Banning) Scheme Act, 1978, bans them

Thanks a lot, Kalpana. Can you also please tell me if the scheme I've described will fit the act you mentioned?



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