THE multi-level marketing (MLM) trade Act will be reviewed soon to protect consumers from increasingly complex scam schemes and those which fall outside Singapore jurisdiction.

The Direct Selling Association of Singapore (DSAS) and the Consumers Association of Singapore (Case) will be working together to re-assess the Act and suggest recommendations.

At a media conference held yesterday at the HDB Hub, DSAS chairman Leo Boon Wang said: 'The reputation of the direct-selling industry here, including MLM, has been damaged by the few bad apples here.'

He added that dishonest MLM companies 'should be quickly weeded out and subjected to more punitive measures under the proposed tightening of the MLM Act'.

MLM is a business model where a company's products are sold directly to consumers through independent participants who pay an upfront fee.

Participants earn a commission based on their sales and those of others they recruit.

Mr Leo said that with globalisation and the rise of the Internet, questionable MLM practices are also more pervasive.

This means that a product or company can be misrepresented quite easily.

And with such bad practices gettingmore sophisticated, a review of the Act is timely.

Mr Seah Seng Choon, executive director of Case, told my paper: 'Over the last three to five years, we have seen more MLM schemes with investment structures and claims of very high returns of 20 to 30 per cent. This is a concern.'

As a result, new investment structures in MLM schemes like wine investments are not sufficiently addressed.

They are not regulated by the Monetary Authority of Singapore and do not fall under the ambit of the MLM Act.

He hopes the review can address such grey areas.

In the first nine months of this year, Case has received 64 cases regarding MLM companies.

This compares to 36 cases last year and 30 in 2006.

An engineer, 42, who did not want to be named, told my paper about a misrepresentation he had seen by a company which he suspected to be an unethical MLM firm.

'The company put up testimonials of people who earned a lot of money from the company's product, but I realised they might be false after I found out there were inconsistencies in the claims,' he said.

Mr Michael Chen, second vice-chairman of DSAS, has a piece of advice for consumers: 'Other indicators of an errant MLM company include a short company history and large fees of several thousands for consumers to join the company.

'The fees for normal MLM companies are below $100.' The review is targeted to be done by next April, and the findings and recommendations will be presented to the Ministry of Trade and Industry, which regulates the Act.

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