QNET/Vihaan Direct Selling (India) Pvt. Ltd is a SCAM
It is a chain where a person is fooled and then he is trained to fool others to earn money - Bombay High Court Order on Qnet in 2016
Two years ago my senior from college came to me with this ‘big business opportunity’ and asked me if I was interested to go to Bangkok for an event she gave me absolutely no details of. The only answers to my endless questions on what, why, how were “If you want to do something big in life then join us”,”If you want to be the boss of your life then come with us”,etc. I told her I was moving out of India soon and that conversation ended. It reminded me of a very dear friend who fell for this scam and lost money some years ago. Just a month ago my journalist friend got approached by our batchmate from college with the same scheme(He wrote about it in detail- read here).
These people call themselves ‘entrepreneur’ and try to lure naive, innocent people by flaunting their (fake) riches on social media. What they don’t tell you is (the list is endless) you have to bear your own expenses for your trips abroad, you’re not going on a pleasure trip so there’s no sight-seeing which is why most of their social media posts are pictures from their Hotel rooms or airports not from the famous places of the countries they visit, they’re never really transparent about the work they do- they can become a business development manager to an entrepreneur to anything in a few minutes. They talk like they’re next on Forbes List while most of their bosses have only made it to the Absconders’ List.
They often hesitate to name the firm they’re working for and will instead name the team they’re working for, that’s like saying you’re in red house or yellow house when asked which school you’re from. They get very defensive when asked about the countless cases against their company. Defense #1-“We’re a registered company under XYZ”, so was the Saradha group which was involved in a huge financial scam and many other such companies. I bet you most of them can’t even correctly name the ministry that they’re registered under. Their Defence #2- “Then how are so many people happy with the company? How did so many join if this is a scam?” Even Zakir Naik, Asaram Bapu and Gurmeet Ram Rahim Singh had millions of followers, it doesn’t absolve them of their crimes. Another very common observation is these IRs(independent representatives) get very emotional in defending their company Vihaan, they’ll almost remind you of Ma Anand Sheela going to great lengths to defend Osho.
They lie through their teeth about everything possible despite knowing all their fake claims can be verified on the internet. And when you call out their bluff they block you from contacting them and simply vanish.
I request you all to avoid putting your hard-earned money in Vihaan and similar firms. Nothing in life comes easy, there are no shortcuts to making money. Do the fundamental research and use common sense especially when money and investments are involved.
What is QNET/VIHAAN?
Qnet Ltd, formerly known as QuestNet, GoldQuest, and QI Limited, is a Hong Kong-based multi-level marketing (MLM) company. Vihaan is in the business of direct selling of various products for QNET in India in the categories of Home care, Personal care, Skin Care, Health food supplements, Watches and Holiday packages through e-commerce.
What is a Pyramid Scheme? (read here)
For an easier(filmy) understanding watch this video and substitute the noble cause for Money.
“It is a sketchy and unsustainable business model, where a few top-level members recruit newer members, who pay upfront costs up the chain, to those who enrolled them. As newer members in turn recruit underlings of their own, a portion of the subsequent fees they receive is also kicked up the chain. Often called pyramid scams, these operations are illegal in some countries”.
Qnet has faced controversies since its founding. It has faced litigation in many countries and hundreds of independent representatives working for it and its subsidiaries have been arrested. Many are still absconding.
In 2016, SEBI issued a public notice on QNET (read here)
In 2017,The Supreme Court ruled that the model adopted by QNET is not a money circulation scheme and does not fall under the purview of the Prize Chits and Money Circulation (Banning) Act 1978. (Read here).
Even after this Supreme Court ruling, Bengaluru and Hyderabad police made several arrests in 2018–19 in connection with Vihaan Direct Selling Pvt Ltd. Several public notices have also been issued.
Petition for Winding up
In 2019, the registrar of companies (RoC) in Karnataka had inspected the books of Vihaan, which allegedly revealed fraudulent activities of the company with an intention to dupe investors. Based on this report, the RoC has filed a winding up petition against Vihaan Direct Selling under Section 271 of the Companies Act before the National Company Law Tribunal (NCLT)’s Bengaluru bench.
Further, the Ministry of Corporate Affairs has also issued lookout circulars (LOCs) against many persons associated with the company.
The department of consumer affairs has also published an inspection report. From the balance sheet of Vihaan Direct Selling, total cost of purchase for FY 2016–17 was Rs 47.26 crore, while as per note 18 of the balance sheet, the company paid a commission of Rs 302.12 crore which is highly disproportionate business transaction. It clearly shows that the company is running an illegal product based pyramid scheme and offering huge commission to its IRs(Independent representatives).
The report states-
The company is using greater amount of deception for recruitment and selling of the products at exorbitant prices. Thus the inspecting officers are of opinion that this company and its directors should also have been examined under section 420 and 120B of Indian Penal Code (IPC) and various provisions of the Prize, Chits and Money Circulation (Banning) Act,1978 by the concerned agency and department at their end. In addition, the company has also grossly violated the provisions of the Consumer Protection Act, 1986 and Direct Selling Guidelines, 2016 and collected huge amount from gullible public promising high returns.
The inspection also found violation by Vihaan Direct Selling while using trademark of QNet as the trademark of QNET is registered with Transview Enterprises India Pvt Ltd instead of Vihaan Direct Selling. Thus the company has violated the provisions of clause3(1) of Direct Selling Guidelines, 2016.
Read the press note released by Cyberabad Police in early 2019 after making 58 arrests in the case(here).
The Cyberabad police had issued notices to several Bollywood actors including Shahrukh Khan, Anil Kapoor, Jackie Shroff, Vivek Oberoi, Boman Irani, Allu Sirish and Pooja Hegde for participating in QNet programmes.
VC Sajjanar, commissioner of police at Cyberabad, says, Promoters of QNet or Vihaan target software employees, unemployed youth, and homemakers stating that there is a business project which will yield huge profits to them. They give motivational speeches to the people whoever comes to the meeting and make them believe it is a good opportunity to earn quick money.
He further said that the Registrar of Companies (RoC), Bengaluru, had filed a petition in the Bengaluru Bench of the National Company Law Tribunal (NCLT) for shutting Vihaan. The RoC had launched prosecutions against Vihaan for various violations of the Companies Act, 2013.
He appealed to public to not join Qnet and also to not make any payments to Vihaan.
