government

Ban on pyramid marketing to fight commercial fraud, hidden trade practices

August 9, 2021

Strong measure: Officials, experts applaud Ministerial Decision prohibiting hierarchical / network marketing activities in Oman

MUSCAT: The Omani government’s recent decision to ban all forms of pyramid or network marketing schemes in the Sultanate has been welcomed by a number of experts who have cited the measure’s importance in combating potential fraud in the retail activities and thwarting those involved in hidden trade.

Earlier this month, the Ministry of Commerce, Industry and Investment Promotion (MoCIIP) issued a Ministerial Decision outlawing selling, advertising or promoting goods, products, and services via network marketing or hierarchical schemes as a safeguard against commercial fraud and unfair competition. It also seeks to protect those engaged in legitimate trade activities.

Dr Mohammed bin Rashid al Badi, Acting Director of the Legal Department at the Ministry, explained that pyramid marketing typically involves an individual or company sitting atop the pyramid that usually siphons off the lion’s share of all revenues generated by the scheme. Those at the lower rungs of the pyramid, while contributing the most to revenue generation, are left with little or nothing at all.

Pyramid or network schemes are similar to ‘get-rich-quick’ scams that channel huge profits to a small handful of individuals sitting at the top at the cost of the gullible

Dr Mohammed bin Rashid al Badi

Acting Director of the Legal Department, MoCIIP

Pyramid or network schemes are similar to ‘get-rich-quick’ scams that channel huge profits to a small handful of individuals sitting at the top at the cost of the gullible.

Dr Maha bint Khamis al Balushi, Assistant Professor of Marketing and Identity at Sultan Qaboos University, noted that the new measure will strengthen regulation of direct marketing activities patronized by young entrepreneurs.

Direct marketing also contributes to the country’s gross domestic product as it’s a legitimate commercial activity. In developing economies like India, for example, direct marketing is linked with major initiatives launched by the Government of India such as Made in India, Skill India, Startup India, and so on, she said.

Sameh bin Salem al Adawi, another market expert, said: “The ministerial decision to ban pyramid marketing activities is a timely one, particularly as we embark on the journey to Oman’s long-term growth guided by Vision 2040. The ban will help combat the illegal outflow of funds earned through hidden activities, regulate the marketing of products lacking approval in the Sultanate and help control pricing and quality of goods in the local market.”

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