When you are offered to double your money in less than a year, or you are offered a consumer product with a lucrative discount, you may be tempted to jump at the offer without a careful assessment of risk. This happens when temptation defeats the rational mind.
Those defeats appear as blessings for those who make the offers to expand their business and make big bucks banking on your impulsive decisions.
Absence of effective enforcement of regulatory mechanisms fuels a boom of such businesses. And only after a disaster the regulatory authorities wake up to take actions, but cannot provide deceived consumers with any remedy.
This has become a pattern and there are some glaring examples of it.
Take the case of UniPay2U, a Multilevel Marketing company. It hooked thousands of people with a tempting offer that anyone can double their money in 10 months by making an investment with it. People jumped at the offer as they considered it as a golden opportunity once in a lifetime. UniPay2U collected Tk6,000 crore from around six lakh investors in just 13 months.
Then what happened? UniPay2U's fraudulent activity and corruption began to draw the attention of regulatory authorities, prompting the Anti-Corruption Commission (ACC) to file a case against it in 2011. The court delivered a verdict in favour of investors, but they are still waiting for the return of their money for the last 30 months. The deceived customers have been knocking the authorities concerned for months but there has been no assurance.
You should not forget the case of Destiny, another MLM company.
Founded in 2000, it collected around Tk5,000 crore from people over the next one decade alluring them with promises of high profits. The company went on with its highly dubious business openly and without hindrance for a long time, thanks to the absence of surveillance or action by regulatory or law enforcement agencies.
In 2012, information about various irregularities with Destiny began to surface. Allegations were brought against the company that it laundered around Tk4,500 crore of investors' money.
In the same year, the Anti-Corruption Commission (ACC), after launching a probe into the allegations, filed two cases.
On 27 November that year, the Dhaka Metropolitan Sessions Judge's Court ordered the confiscation of all immovable and movable properties of Destiny Group and assigned the police to look after them.
Since then, the Dhaka Metropolitan Police (DMP) has been maintaining Destiny's properties in Dhaka, while the company's assets outside the capital are being looked after by the district police superintendents.
The fate is the same. Around 45 lakh people who invested Tk5,000 crore in Destiny Ltd are uncertain if they will ever get their money back.
Did you forget the story of Jubok?
Jubo Karmasangsthan Society or Jubok allured people with the promise of high returns – Tk5,000 every six months against an investment of Tk1 lakh. Thus it hooked around 3.5 lakh investors who together made an investment of Tk2,500 crore.
After Jubok's activities were suspended in 2006 on charges of conducting illegal banking activities, the government promised to refund the depositors by appointing an administrator in the company. But no administrator has been appointed yet. And, none of the 3.5 lakh investors has got back a single penny of their investment of Tk2,500 crore.
The stock market crashes in 1996 and 2010 were also a culmination of the same greed. A group of people allegedly manipulated the market to allure investors to purchase some specific stocks with the hope to have their investments doubled overnight.
Again, failure of the regulatory body caused the market bubble to balloon and eventually bust.
With the change of time, types of fraudulent business have changed, but the main motivation remains the same: greed.
Today, some E-commerce platforms are making "unbelievable" offers – huge discounts of their products – 30% to 40% in some cases to allure buyers. People are rushing in and book orders to buy the products at a huge discount. Some are lucky to receive the products while many are kept waiting for months to get delivery.
This is an unhealthy situation in the market prompting the Bangladesh Bank to raise concern about high financial transactions through unregulated e-commerce sites because there is no asset against customer money taken in advance by the online shops.
In its primary analysis, the central bank has found that total sales of eight online shops were around Tk1,300 crore in six months from November last year to April this year. And these figures are only from one of the many payment gateways, according to a TBS report.
For example, the central bank inspection report finds Evaly's liabilities to customers and merchants have risen to Tk403.80 crore while its current asset is only Tk65.17 crore.
The gap between Evaly's assets and liabilities has grown abnormally and it is constantly making arrangements to pay off old liabilities by creating new liabilities – increasing liabilities to customers and merchants.
Evaly has put the money of its customers at risk by giving huge discounts using a huge amount of money received in advance payments from the general customers, said the central bank.
Yet, the regulatory authorities, the commerce ministry, have however yet to make effective efforts to discipline the markets run by the e-commerce platforms at higher discounts.
The moral of the story is clear. It's all about greed. A group of people's organised efforts can deceive people to make big money fast banking on their obsession with undeserved financial gains. This has become a vicious cycle in absence of effective enforcement of the laws to restrain such risky business.