Hyderabad: The Cyberabad Police on Wednesday cracked down on a Visakhapatnam based MLM company that was trying to spread its network here in Hyderabad.
The economic offences wing of the Cyberabad Police busted the MLM Company SERFA Marketing Pvt Ltd, which is based in Visakhapatnam of Andhra Pradesh and recently opened its branch here in Kukatpally. The company Managing Director B Srinivas Reddy, a former QNet scheme member, was also arrested.
Earlier, a case of cheating and promotion of the money circulation scheme and sections of the Prize Chits and Money Circulation Schemes (Banning) Act was booked against the company following a complaint from a woman from Miyapur who grew suspicious of it. Police said the crackdown has prevented people from being trapped and cheated.
SERFA was established last year in Visakhapatnam and registered with the Registrar of Companies in Vijayawada. Srinivas, a native of Srikakulam had earlier invested Rs 13 lakh in the QNet scheme but lost.
"Subsequently in 2018, he started his own business similar to QNet in Visakhapatnam and opened a branch in Kukatpally and was trying to expand it here. The company currently has over 5,000 representatives as members," said VC Sajjanar, Police Commissioner, Cyberabad.
According to the police, the promoters have been giving motivational lectures to the people, especially students, home makers and job aspirants that the business will yield huge profits. The business model is a simple pyramid scheme in which the early entrants earn money and as the number of representatives increase, finding more representatives to join becomes difficult or impossible.
"A representative who joins late does not earn enough to cover their first outlay and the model collapses. It works as a binary scheme in the ratio of 1:1 in left and right legs. Down the line the number of persons to be joined becomes difficult or impossible. The scheme collapses at some point of time," Sajjanar said.
This scheme, similar to that of QNet has vacation tour packages and other incentives on offer. The products are mostly unbranded, sourced from mostly unscrupulous agencies are valueless and are sold typically overpriced. Officials said the scheme is rampant in the 16 States across the country and two Union Territories.
The office premises in Kukatpally was seized and the hard disc pertaining to the software was seized. Other suspect persons in the case are yet to be arrested. Detailed investigation is being done, officials said.