Complaints against Multi-level Marketing Companies

Mr Ang Wei Neng asked the Minister for Trade and Industry (Industry) (a) apart from insurance companies, how many companies in Singapore are currently operating using the multi-level marketing (MLM) model; (b) whether the current laws and regulations governing MLM are sufficient; and (c) how many complaints have been received on the practice of MLM in the past five years.

Under the Multi-Level Marketing and Pyramid Selling (Prohibition) Act (MLM Act), it is unlawful to promote or participate in a MLM scheme or arrangement; or register a business designed to promote MLM schemes or arrangements.

However, not all multi-level marketing activities are prohibited under the Act. The Exclusion Order specifies the schemes which are excluded from the MLM Act, such as insurance businesses, which are licensed under the Insurance Act; and master franchise schemes and direct selling schemes which fulfil certain conditions. Companies do not require a special licence to operate using MLM techniques. As such, we do not have a record of the number of companies operating using MLM techniques.

Over the past five years, CASE has received, on average, less than 10 complaints a year relating to MLM schemes, compared to the average annual total of 24,000 complaints received. Hence, there are no plans to review the current laws on MLM activities.

We urge members of the public to exercise due diligence when deciding whether to participate in business schemes, particularly those which offer get-rich-quick promises. Should members of the public suspect that certain activities are illegal MLM schemes, they should make a report to the Commercial Affairs Department.