Is MLM fraud back in disguise?

It's disturbing to learn of yet another mass-market-level consumer fraud that was reportedly committed exploiting legal financial channels to defraud thousands of people in various districts. According to a report by Prothom Alo, the group behind this is a multi-level marketing (MLM) company called Metaverse Foreign Exchange (MTFE) Group Inc. Its nature of exploitation is different from that of the now-defunct MLM company Destiny, but just as Destiny used customers to collect customers, it used "investors" to attract investors, using digital tools, a promise of lucrative returns on investments, and hired representatives on the ground to convince them.

All this happening even after the egregious precedents set by MLM companies like Destiny or Jubok – or latter-day players like UniPay2U or Evaly – is a big concern indeed. It means that there has been little improvement in financial governance in the country in all these years, as a result of which an estimated Tk 220 billion has been lost to MLM and e-commerce scams, unlikely to ever be returned in full to the victims.

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We must restore trust in e-commerce

Since the fallout of Destiny-Jubok controversies, there has been a lull in MLM practices for about six-seven years, and the business model reportedly made a comeback in 2018 through e-commerce ventures. There are laws against pyramid schemes and such fraudulent business practices in the country, although there are no approved MLM companies at present. The question is, how could the MTFE then stay under the radar and circumvent regulations, and do that so openly?

A big tragedy of our financial sector is that every time a scam like this is exposed, far from taking responsibility for it, those in charge just pass the buck – as they did this time, too. Reportedly, the Ministry of Commerce, Bangladesh Bank, and Bangladesh Telecommunication Regulatory Commission (BTRC) are unwilling to take responsibility for what happened, instead opting to blame gullible investors for it. In the past, we have seen the government initiate inquiries, form commissions, and suggest refund mechanisms, yet a majority of victims have not been able to recover their investments.

This is quite frustrating. To prevent the recurrence of such scams, it is imperative that the authorities strengthen financial regulation and monitoring, properly enforce relevant laws, and enhance consumer awareness. Technological vigilance in an era where digital platforms can easily be exploited for financial misconduct is also vital. Those defrauded by MTFE and others deserve nothing less.