Is Qnet a scam? Many in India have asked this question when the company was under intense scrutiny by government agencies, including the Enforcement Directorate, a few months back.
Qnet claims to be a legitimate business that offers direct selling opportunities on its platform. The company is headquartered in Hong Kong with offices in more than 25 countries.
In direct selling, the representative visits customers’ homes to see the goods. Usually, the products here are unique and exclusive and thrive on word-of-mouth referrals. This means that if the product is the best in the market, the sellers will get more orders, and they may earn more commissions.
This looks like a legitimate business model. But why are people claiming Qnet to be a scam? In this article, we’ll look at this issue in detail.
Why is Qnet considered a scam?
Qnet has been accused of running a Ponzi scheme.
In Qnet’s pyramid scheme, the independent representatives have to pay a large sum just to join the company. Moreover, they are promised equally large returns if they join.
A post on the RBI’s Sachet portal explained the scheme in detail. Although the post is long, here is an abridged version.
“The scam typically initiates with a friend’s phone call, followed by staged business meetings and manipulative sessions. This pyramid scheme profits from selling overpriced products and pressuring recruits to involve their family members. Participants are coerced into attending international events and adopting deceptive practices.”
“The scam targets IT employees and involves companies like QNet, QI Group, Vihaan India, Quest, and Gold Quest. Fortunately, there is a concealed refund policy for those who wish to exit the scheme within 30 days. It is essential to stay vigilant and protect personal finances and friends from falling victim to this scheme.”
RBI’s Sachet portal
This is a classic pyramid scheme where scammers lure their victims by promising hefty returns for an investment.
Investigation in many countries
Qnet’s alleged scams have been under investigation in many countries, including India, Sri Lanka, Bhutan, and Ghana, among others.
A 2012 article in Moneylife by Sucheta Dalal and Yogesh Sapkale warns that the Qnet scam has returned to India.
“QuestNet and GoldQuest, multi-level marketing (MLM) companies that had shut shop in 2009 following police action, are back with a bigger bang. They now call themselves QNet and are thriving in an environment where tens of thousands of Ponzis and MLM companies can lure people into believing that they have the formula for instant riches and a high-growth career,” the authors wrote.
While the previous companies, QuestNet and GoldQuest, dealt with gold coins, the new Qnet deals in ultra-luxurious lifestyle accessories like premium watches and herbal products.
In India, Qnet operated through its subsidiary, Vihaan Direct Selling Pvt. Ltd. To maintain a sense of luxury and legitimacy, Qnet partnered with various Bollywood celebrities. People easily fall for these scams when their favourite actors endorse the brand.
In March 2023, the Enforcement Directorate of India seized Rs 137 crores from Vihaan Direct Selling firm and froze the account. The Qnet scam in India is spread across Telangana, Andhra Pradesh, Karnataka, and Delhi.
“The company is involved in many Ponzi schemes, vacation packages and tactics deemed illegal. Qnet and Vihaan promoters give motivational lectures to the unemployed youths and the home-makers, stating that there is a business project which will yield huge profits to them. The scheme collapses at a time,” said a police officer.
What the police officer said in 2023 has already been on the RBI’s Sachet portal since 2016.
BBC’s interview with one of the several victims of the Qnet scam, where the MLM was described as having a “cult-like” vibe. One victim told BBC that the company representatives even wanted all the contact information on her device and advised her to “attract men”. This shows how morally degraded the company representatives can become for profits.
Qnet’s rebuttal
Even against all the allegations and investigations, Qnet refused them point blank. The company even expanded the business to South Africa at around the same time when Cameroon, another African nation suspended its activities.
Journalist Kenneth Awotwe Darko investigated Qnet. “The further I dug, the more I realized that the 24-year-old company has good intentions and an interesting business model, but the actions of some individuals who may or may not fully understand the brand’s line of business are causing some misconceptions about the company,” Darko explained.
The company’s supporters raise valid points — the company is about 25 years old and has officers in more than 25 countries. Also, the company is in partnership with Manchester City Football Club, a well-known brand. Qnet is also an official sponsor of the Confederation of African Football and is the main sponsor of the Malaysian Hockey Confederation.
Moreover, the company won some legal battles in India when the Supreme Court of India ruled in favour of the company. The court even issued a contempt notice against the police officials of Cyberabad.
However, the demand by the victims to investigate the company has been lingering.
Also read: Is this number a scammer?
Is Qnet a scam?
Based on the above evidence, one cannot surely say whether Qnet is a scam. The investigative agencies arrest and freeze the assets, but simultaneously, the courts refuse to pass judgment against the company.
As the investigation is still ongoing, we must remain patient and await official confirmation from the authorities.
Qnet mentioned on their website that you don’t need to recruit any other person to sell; the only way to earn is through commission on product sales: “Qnet’s business is based on a sustainable model that does not allow anyone to make money through recruitment”.
What is this “sustainable model” and how does it work? The company is quiet on this.
The answer by Ronak Kushwaha on Quora perfectly sums up the present situation:
“In a nutshell, is QNET a fraud company? No!
The business model they have established very cleverly prevents them from having any allegations from anybody. QNET is just a product-selling company with many low-quality products and brands you will never hear of in your lifetime, and they call it exclusive because only the upper echelon uses or maybe merely endorses them.
The people call them the associates, who are the real frauds.
How to protect yourself?
To protect yourself and your hard-earned money from MLM schemes, avoid picking up calls or entertaining the other person. It is harder than it seems, as the person will, in most cases, be your close friend or relative.
Educating yourself and your loved ones is also one way to counter the false claims by these representatives.
Also, make it a habit to read the documents carefully, especially the small texts that hide important information in plain sight.
Also read: Fake QR code scams explained
