QNet is a Hong-Kong based multi-level marketing or MLM company, which is a wholly-owned subsidiary of QI Group. The company was founded in the year 1998 by businessmen Vijay Eswaran and Joseph Bismarck. QNet sells a number of products in various categories, including nutrition, personal care, home care, wellness, fashion accessories, weight management and consumer goods.
QNet uses an MLM structure in which distributors earn money through product sales and commissions from recruiting others. The company operates in over 100 countries worldwide and has offices in Hong-Kong, Malaysia, Indonesia, UAE, Ireland and Philippines. QNet faces accusations of being a pyramid or Ponzi scheme in multiple countries.
Legal Status in India
QNet is not banned in India, despite a long history of trouble with the Indian regulatory authorities. It is currently operating in India through its franchisee, Vihaan Direct Selling (India) Private Limited, which is a registered entity under the Companies Act, 2013. QNet complies with the Direct Selling Guidelines, implemented by the Government of India’s Ministry of Consumer Affairs, Goods and Public Distribution, including ethical sales, refunds and grievance redressal.
QNet consistently faces allegations of running a pyramid or Ponzi scheme which relies on recruitments over product sales. Many participants have reported losses due to high upfront costs and recruitment pressure. Thus, while QNet continues to operate in India, risks remain even though no Indian court has confirmed the allegations.
Regulatory Challenges
QNet came to the attention of the Indian authorities when Chennai police froze the company’s accounts and arrested its managers over complaints made by over 50 members in the year 2003. In the year 2009, QNet’s previous entities, QuestNet and GoldNet, were temporarily banned in India, with the Indian authorities declaring them Ponzi schemes under the Prize Chits and Money Circulation Schemes(Banning) Act, 1978. Subsequently, QNet’s website in India was blocked by the Telecom Regulatory Authority of India or TRAI.
QNet relaunched in India through its franchisee, Vihaan Direct Selling (India) Private Limited. In August 2013, an investigation against QNet and Vihaan was launched, concerning allegations over an alleged commercial transaction. However, in March 2017, the Supreme Court of India stayed all proceedings against QNet and Vihaan.
In the year 2016, Delhi and Mumbai police alleged MLM scam by Vihaan Limited and froze over Rs. 100 crore in the company’s accounts. In February 2017, Karnataka High Court dismissed a cybercrime case filed by CID Bangalore, stating that QNet is not a Ponzi scam.
In the year 2019, the Supreme Court of India ordered no coercive action in over 60 FIRs filed against QNet across the country. The Enforcement Directorate probed money laundering charges against QNet and froze multiple accounts of the company in the same year.
