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DAPSY urges the Domestic Trade and Consumer Affairs to reverse its policy of leniency for direct-selling companies to safeguard the interests of the consumers Press Statement by Loke Siew Fook (Petaling Jaya, Friday):  DAPSY urges the Domestic Trade and Consumer Affairs to reverse its policy of leniency for direct-selling companies to safeguard the interests of the consumers.  The Domestic Trade and Consumer Affairs Ministry announced two days ago that it will be more lenient in issuing licences to direct-selling companies in a move to spur competitiveness in the industry. Its Minister Tan Sri Muhyiddin Yassin said the move involved waiving the annual renewal of licences with companies free to operate for an indefinite period and the initial capital requirement for direct-selling companies to be reduced from RM2.5 million to RM1.5 million.   The ministry should not have made it easier for direct-selling operators to obtain licences as this will encourage those who make use of direct-selling to launch “quick-rich scheme”. DAPSY is not against the direct-selling industry but the government should make sure only those genuine and serious players are allowed to operate the business.   Over the years, there have been many reported cases of consumers were cheated by direct-selling companies with the lure and promises of quick financial returns. The companies usually asked the consumers to be their agents or distributors and continue to recruit more distributors under their supervision with the rewards of attractive overriding commissions.   Although under the Direct Selling Act 1993 any pyramid scheme is prohibited in the marketing plans of direct selling companies, the reality is there were still many cases of cheating through such a scheme occurred over the years in Malaysia. I have knowledge that a few DAP Members of Parliament have received complaints from the public who were victims of pyramid schemes or quick–rich scheme which losses runs into millions of ringgit.   Currently, I have a case in my hand where a group of complainants claimed that they were misled by a direct-selling company by multiple rewards scheme. Ironically, all the complaints received showed that all these companies have licences issued by the ministry.   The ministry said that while conditions were relaxed, enforcement efforts would be stepped up to ensure companies followed rulings stipulated under the Direct Selling Companies Act 1993. DAP MPs had submitted complaints and reported many cases of cheating to the ministry before but investigations and enforcement were slow and ineffective.   Furthermore, the current penalty under the Act is insufficient where the maximum penalty for those who violated the Act is only RM250,000 but there are cases involving millions or even tens of millions of ringgit. Prevention of quick-rich scheme is better than enforcing the law as in many cases the monies lost by the victims were never able to get back. Therefore, DAPSY urges the Domestic Trade and Consumer Affairs to reverse its policy of leniency for direct-selling companies to safeguard the interests of the consumers.   Instead of reducing the initial capital requirement, the ministry should increase the capital requirement to RM5 million and the licences should be renewed every year with stringent monitoring of their activities so that only genuine direct-selling companies are able to operate in this industry.   DAPSY also urges all consumer associations in particular Federation of Malaysian Consumer Associations (FOMCA), Era Consumer, Consumer Association of Penang (CAP) and others to come out in full force and voice to their objections to the ministry. The interest of the consumers should be the utmost priority. (9/5/2003) * Loke Siew Fook,  DAPSY National Secretary