MDDA warns public to beware of get-rich-quick schemes

KUALA LUMPUR, 1 June 2017: 

The Malaysian Direct Distribution Association (MDDA) has issued a warning to the public to be aware of illegal schemes that offer very high returns on their investments within a very short period.

President of Malaysia Direct Distribution Association (MDDA), Rosedy Issa said the public can easily become confused between valid direct selling companies and illegal schemes such as the illegal pyramid and Ponzi Scheme, commonly known as Money Games. According to him, a lot of Malaysians have already fallen prey to this sort of businesses scam that promises ridiculously high returns from their investment.

MDDA – a non-profit organisation that represents direct selling companies in Malaysia in promoting ethical, responsive and excellent business conduct amongst its corporate members in the direct selling industry, is urging the public not to be fooled by these illegal investment companies. According to MDDA, the public should refer to the alert by Bank Negara (BNM) on the list of companies and websites which are neither authorised nor approved under the relevant laws and regulations administered by BNM and avoid these companies at all costs.

“The public must know such companies need to secure their licence from Bank Negara irrespective to any marketing plans they have before they are even authorised to accept any investment deposit or becoming an investment company. It is clearly stated that only companies licensed by BNM under the relevant laws and regulations administered by BNM, under Financial Service Act 2013 and Islamic Financial Services Act 2013, are allowed to provide financial services in Malaysia. Truthfully, a legitimate company will not offer returns from an investment exceeding 20% per annum for the first few months.”

Schemes such as get-rich scheme, Ponzi scheme, forex scheme and gold investment scheme cunningly camouflage their business and operate under a multi-level marketing (MLM) umbrella. The public need to be aware that such schemes are not associated with the MLM or Network Marketing or Direct Selling Industry but it is an illegal pyramid scheme. Such an illegal scheme or business falls under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFAPUAA) 2001. BNM has also set up the National Coordination Committee, which includes BNM, the Trade Ministry, the police, Companies Commission of Malaysia, and Securities Commission to coordinate enforcement activities under AMLATFAPUAA 2011. The public must be made known that both the Company together with individuals involved in promoting such schemes may face prosecution for criminal offences.

The public is encouraged to play a role by reporting any illegal or suspicious financial entities and activities as highlighted by Bank Negara such as illegal deposit taking, illegal foreign exchange trading scheme, illegal money services business activities, improper market conduct or practices by BNM’s licensee, misuse of BNM and Senior Officers’ names and positions and other illegal financial activities expressly mentioned in the relevant law and regulations administered by BNM.

Recently, the association launched its Code of Ethics which acts as a robust series of policies that every MDDA member must abide by as a condition of membership. This Code is an obligation that requires a level of ethical compliance from companies and direct sellers, which conforms with or exceeds applicable legal requirements. The Ethics Arbitrator shall adjudicate this code pursuant and in the spirit of the Direct Sales and Anti-Pyramid Scheme Act 1993.

The Code of Ethics was launched by Deputy Minister of Domestic Trade, Cooperatives and Consumerism, Dato’ Henry Sum Agong and witnessed by President of Indian Federation of Direct Selling Association (FDSA), A.P Reddi; Deputy Secretary General of Domestic Trade, Co-operatives and Consumerism (MDTCC), Dato’ Basaruddin Sadali; Commissioner Police of Royal Malaysia Police, Dato’ A. Thaiveegan; MDDA Code Arbitrator Dr Zainal Abidin Abdul Majeed and members of MDDA.

“As an association with the intention and responsibility to improve the industry of Direct Selling, MDDA has come out with this codified Code of Ethics for our member companies. It sets out the duties and obligations for members and their distributors towards the protection of consumers and respecting other Direct Selling companies’” said Rosedy

“We would like to see the misconception of direct selling industry resolved with this Code of Ethics. Consumers can feel safe as their rights are protected when dealing with direct seller.”

With the intention to educate members of associations and direct sellers on the proper guidelines in conducting the direct sales business, MDDA has been working closely with Ministry of Domestic Trade, Cooperative and Consumerism by constantly giving inputs to the Guidelines for Application of Direct Sales License and Direct Selling Blue Print (2013-2020) that are still being used by all the licensed Direct Selling companies in Malaysia.

MDDA is on a mission to be the most distinguished self-regulating body, dedicated to assist its members in achieving excellence in Direct Selling. They also act as a watchdog for the general public and consumers to curb unscrupulous acts or malpractices by Direct Selling companies.

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