The Department of Trade and Industry (DTI) has expressed concerns about new complaints of online chain distribution plans and pyramid sales schemes spreading on social media sites.
DTI-Palawan information officer Persival Narbonita said that while there have been no such reported cases in Palawan since the pyramid scheme controversies emerged in 2015, their department has noted its re-emergence in other parts of the country.
“So far, wala na sa ngayon. ‘Yong last namin na balita ay ‘yong kapanahunan pa ng Seven Star yata ‘yon,” Narbonita said in a text message on Wednesday.
She said the DTI Fair Trade Enforcement Bureau (DTI-FTEB) has received 28 consumer and investor complaints as of April 2021.
The department said in a statement that this figure rose from the 12 complaints it received in 2020. These business structures are advertised on Facebook, Instagram, and YouTube, among other social networking sites.
“Based on investigations conducted by the Securities and Exchange Commission (SEC) on the subject matter, companies that practice and offer Chain Distribution Plans or Pyramid Sales Schemes tend to focus more on the recruitment of new potential members rather than encouraging its members and franchisees to actually sell products and services to consumers accompanied with the promise of high returns of investment in a short period,” DTI added.
They also claimed that this business structure is pandemic-proof to make it more enticing and promising to interested investors.
“Victims of these fraudulent acts have the right to seek redress from the SEC or the DTI; our doors are always open to assist and guide them in addressing their complaints,” said DTI-Consumer Protection Group (DTI-CPG) Undersecretary Ruth B. Castelo.
Article 53 of Republic Act 7394 or the Consumer Act of the Philippines states that the chain distribution plans or pyramid sales schemes, such as deriving profits primarily or mainly from recruitment of participating members and not from the marketing and sales of products and services shall not be employed in the sale of consumer products.
“Those companies taking advantage of consumers by disguising their pyramid sales scheme as a legitimate business opportunity in the form of multi-level marketing have to be investigated, charged, and penalized if warranted,” DTI Assistant Secretary Ronnel O. Abrenica added.
DTI also encouraged consumers to report businesses that offer chain distribution plans or pyramid sales schemes by calling the 1-DTI (1-384) hotline or by sending an email to email@example.com.