ADSEI supports ED’s action against Unregulated Depository Schemes
FinTech BizNews Service
Mumbai, February 15, 2025: The Association of Direct Selling Entities of India (ADSEI) supports the Enforcement Directorate’s (ED) recent crackdown against a gang involved in an unregulated depository scheme run by that defrauded investors with false promises of high returns. ADSEI firmly believes that such decisive action is crucial in safeguarding consumers from financial exploitation and ensuring a more transparent and secure financial ecosystem.
While the immediate crackdown is commendable, ADSEI strongly urged that action should not be limited to just the promoters of these unregulated depository schemes. The agents and top earners who knowingly participated and profited from such schemes at the expense of innocent investors should also be held accountable. These individuals were not mere participants but active enablers who lured people into these high-risk financial traps despite being fully aware of their illegitimacy.
“This is not just about one individual or one case—history has shown that as long as the top promoters of such unregulated depository schemes remain unchecked, they will continue to create and support new fraudulent ventures under different names. Strict action against them today will prevent future unregulated depository schemes from emerging. We urge ED and other regulatory authorities to extend their crackdown to every individual who knowingly misled investors and reaped undue financial gains from these schemes,” said Mr. Jitender Dagar, Vice President, ADSEI.
ADSEI stressed upon the need for a long-term solution to ensure that such unregulated depository schemes do not resurface under different names, and suggested the following:
1. Action Against Top Promoters & Agents – Many high-earning promoters were fully aware that the fraudulent organisation was misleading investors. Despite this, they continued to push the scheme for their own profits, exploiting thousands of unsuspecting investors. Regulatory action must not only target the scheme operators but also these individuals who knowingly misled people.
2. Establishing a Dedicated Reporting Channel – ADSEI recommends that ED or relevant authorities create a helpline or reporting platform where victims and the general public can anonymously report names of agents and promoters involved in such unregulated depository schemes. This would help enforcement agencies proactively identify and act against emerging financial frauds before they gain traction.
3. Stronger Preventive Measures – The success of such unregulated depository schemes largely depends on aggressive network-based recruitment and misleading marketing strategies. A strong regulatory crackdown on individuals involved will deter future financial fraud and protect consumers.
Dr. Sanjeev Kumar, President, ADSEI, emphasized "We firmly stand against such incidents. At the same time, it is essential to acknowledge the significant role the Direct Selling industry plays in generating employment at the grassroots level and contributing to the nation’s economic and financial growth. This aligns with India’s vision of Viksit Bharat 2047. ADSEI remains fully committed to working alongside the government to build a credible and sustainable direct selling industry policies and frameworks that empowers millions of Indians.”
“ADSEI stands in full support of all regulatory measures that seek to eliminate financial fraud and safeguard investor interests. We urge authorities to take firm action against all promoters and agents involved in such schemes, ensuring that future unregulated depository schemes do not emerge under different names,” added Dr. Sanjeev Kumar.
