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Don't dive headlong into money-making schemes on the internet

by Prasad Krishna last modified Feb 07, 2017 03:02 PM
If you do fall victim to fraud, file your complaint at RBI's Sachet web site.

The article by Sanjay Kumar Singh was published in the Business Standard on February 7, 2017. Udbhav Tiwari was quoted.

By now you have surely read the news about a Noida-based company called Ablaze Info Solutions, which is said to have defrauded about 700,000 people of Rs 3,700 crore. In this scheme, participants first had to pay a substantial subscription fee to join it, after which they were compensated for clicking on links. There were also incentives for bringing in other members, which made it akin to a multi-level marketing (MLM) scheme.  Experts advise that investors should do the due diligence before putting their money in such schemes. According to cyber experts, this scheme took off because the activity it was pursuing was a legitimate one per se. There is an entire industry on the Internet, wherein you can earn money by clicking on links: This improves the traffic on websites and allows them to demand higher advertising rates. Many websites outsource the task of improving traffic to third parties, which in turn recruit people in countries like India for the task. You can also earn money through activities like filling up forms, answering surveys, etc.

The mistake participants made in this case was to join the scheme without exploring other options. "Many players would have offered a similar level of compensation without demanding a subscription fee. Moreover, the very fact that the company was demanding a substantial subscription fee should have made people suspicious," says Udbhav Tiwari, policy officer, Centre for Internet and Society, Bengaluru. Before participating in such money-making schemes, spend time doing a detailed background check of the company's credentials, especially if the promised returns are realistic or not. "If the return offered by the company is high compared to the market rates of return, or the company is new, you should be extra cautious. Check various blogs and forums on the internet for possible complaints against the company and its key stakeholders," says Mukul Shrivastava, partner, fraud investigation and dispute services, EY India.

If you join such a programme, be warned the moment the company defaults on payments, delays them, or avoids your queries. Stop all interactions with it and lodge a complaint with the police. If the company had used forged documents, especially the ones claiming that the scheme had the approval of a regulator like Sebi, submit them.

You can also file a complaint at Sachet, a website set up by the Reserve Bank of India (see box). Another option is to contact the Serious Fraud Investigation Office (SFIO) under the Ministry of Corporate Affairs. As the police take up a case usually when many complaints pour in against an entity, motivate other victims to complain, too. The state fights the case on your behalf. Your task after complaining is to cooperate with the investigation and depose in court. Nowadays victims can be compensated under the Criminal Procedure Code as well. They also have the option to file a civil suit for recovering their money.

Finally, there is a need for new laws to tackle online frauds. "There is a gap both in terms of legislation and effective enforcement. We only have a central 1978 Act for Prize Chits and allied rules in states, which need to be updated," says Nishant Joshi, partner, Shardul Amarchand Mangaldas.

Word box
Turn to Sachet

  • RBI has launched a website,, where you can complain if you have been cheated by an entity that has illegally collected money from you
  • The website also provides information on legitimate entities that are authorised to collect money
  • Many regulators and enforcement agencies take up the complaints filed on this site
  • Investors don’t have to know the regulator under whose jurisdiction the company they want to complain against falls
  • You will get an email informing you about the regulator/entity that will take up your case