The Economic Offences Wing of The Cyderabad Police has busted a multi-level marketing fraud by Vihaan Direct Selling Private Limited with the brand name of ‘Q Net’ which is a sub-franchise of Qi Group in India. A total of 58 persons have been arrested in the case.
While an amount of Rs 2.7 crore was frozen, 14 cases have been registered and the police has arrested people from Bengaluru, Delhi, Andhra Pradesh and Telangana.
The police officials informed that the Hong Kong based company was involved in several ponzi and binary schemes and other legal businesses.
Cyberabad Police Commissioner VC Sajjanar said,”They trap customers through sweet talk stating that they will be a part of the Q Net Kingdom where they can build their own future. They also add that if the customer did not like the packages, they could claim a refund within a month.”
Their business cycle involves a newcomer joining the business through a promoter after which he becomes an Independent Representative (IR). Once he pays the money, he gets some products while the promoter receives a commission. The promoter then asks the IR to get two other members who in turn join two each other new comers, if the IR wants more money. However, this was where the scheme starts to fall apart, when the IR struggles to enroll more people, they lose money
The police has seized a warehouse of Vihaan Direct Selling at Bengaluru, apart from sealing the office of Transview Enterprises, the marketing agency for Q Net products.
As for the arrests, 51 persons were arrested from Hyderabad, while five were arrested from Bengaluru and one each was taken into custody from Delhi and Eluru. 42 persons who got arrested were natives of Telangana, while five were from Andhra Pradesh, five from Karnataka, three from West Bengal and one each from Gujarat, Delhi and Odisha.
Q Net Vihaan promoters give motivational lectures to unemployed youth and also to homemakers telling that their business project would yield huge profits to them. Once the customer joins i.e., by paying cash or online, username and password are generated, but the password will not be given to the customer and will be with Vihaan only.
The Q Net/Vihaan business model is a simple model in which the early entrants earn money and as the number of independent representatives increases, finding more newcomers to join becomes difficult or impossible. Those who join late do not earn enough to cover their first outlay and the model collapses.