New Delhi/Mumbai: The economic offences wing (EOW) of Mumbai Police and the ministry of corporate affairs (MCA) are separately investigating several so-called multi-level marketing firms, largely on the basis of complaints made by individuals who invested money in them.

The wing is preparing a report on the companies being investigated. It has till 7 September to meet a deadline set by the Bombay high court and detail the preventive steps it proposes to put in place to deal with multi-level marketers.

The investigations come in the wake of a public interest case filed against multi-level marketer Speak Asia Online. On 24 August, the court directed the police to file a reply by 7 September.

Meanwhile, after initiating an investigation against Speak Asia by the Serious Fraud Investigation Office (SFIO) earlier this month, MCA plans to investigate some other multi-level marketing companies.

“While SFIO investigation on Speak Asia is on, the ministry is watching some other MLM (multi-level marketing) companies, which may be involved in dubious activities and making big promises to people who invest money in them," said a senior MCA official, who did not want to be named.

Multi-level marketers typically run a network where sellers of the company’s product or service, in turn, hire more sellers. These sellers or agents earn money not only from the products and services they sell, but also from the products and services the people they hire sell. Some multi-level marketers require sellers to pay a substantial amount upfront to enter the network—they get some products in return—and effectively function as Ponzi schemes with individuals in the network earning money as long as the network keeps growing. The people at the apex of the network, the promoters of the firm, earn the most. Such multi-level marketing firms are also called direct selling or referral companies.

India’s rules regarding the operation and regulation of multi-level marketers is unclear and several individuals who have burnt their fingers withinvestments in such companies have complained to various bodies. MCA itself has received several complaints, said the ministry official, who refused to name any of the companies involved.

A senior official in Mumbai Police’s EOW said the department was investigating several companies apart from Speak Asia, but declined to name them. This person, who did not want to be named, said all the information on pending cases and ways to tackle multi-level marketing frauds would be submitted to the court.

Speak Asia Online Pte. Ltd, which says it conducts online surveys on a variety of products and services, and which has around two million panellists (or members, who pay to enter the firm’s network) is being investigated on the basis of complaints regarding non-payment.

Not all multi-level marketing companies perpetrate frauds, say executives in the business. In an attempt to separate the bad apples from the good, Strategy India, a Mumbai-based consulting firm which advises direct selling companies on various issues, has published on its website ( names of over 250 multi-level marketing firms that it says have unviable business plans. The list includes Speak Asia.

Strategy India, which has some large direct selling companies as clients, also posted a warning on its website against these companies, some of which have a turnover of at least 1,000 crore and are being investigated by the EOWs of various state police departments, according to Daniel R. Pranjal, chief strategist at Strategy India.

Pranjal, who does not want to disclose names of his company’s clients, said Strategy India published the names on the basis of investor complaints, and after communicating with these firms and understanding their business models.

Mint wrote to 33 such companies asking for details.

Only one company, GAML Consultants Pvt. Ltd responded. “Neither are we an investment company nor do we pay our associates to fill in surveys. In fact, if we come across people promoting us as an investment group, their association with us is immediately terminated," the company replied through email.

The company added that its business model involves training people to make money from blogging, content writing and affiliate marketing.

Two companies named on the Strategy India website, Sankalp Business and, do not exist any more, and Mint found that complaints against them have been registered with the Indian Consumer Complaints Forum, a website where individuals can register their complaints about companies.

Chavi Hemanth, secretary general of Indian Direct Selling Association (IDSA), an industry lobby group, said these companies give others in the business a bad name.

IDSA doesn’t allow firms selling virtual offerings or which have unviable business models to be part of it, she added.

Moulishree Srivastava and Vidhi Choudhary contributed to this story.