Monitoring is next challenge after Enagic is declared to be a Pyramid Scheme

With the Office of the Consumer Protection (OCP) declaring the Enagic Alkaline Water Ionizer and Water Filtrations of Kangen Water Machine as a Pyramid Scheme that is forbidden in Bhutan, the next big headache is monitoring.

Though there are no exact figures there are significant numbers of those claiming to run or own digital businesses based on the above all over Facebook and Instagram.

The Bhutanese found that some members had still not removed the website link on their facebook profiles which is an entry door into the pyramid scheme. They were some even declaring that their business is now legal.

The OCP Chief Trade Officer Gopal Pradhan said that first off for the people selling the product offline they have taken a signed undertaking from all of them to remove all health claims and not make any such claims to promote the water ionizer or the water.

This was done in collaboration with the Drug Regulatory Authority (DRA) and is important as one of the main selling points of the device is its unsubstantiated health claims which is not backed by any data.

The OCP has said that the import and retailing of Enagic products is allowed without engaging in scouting and registering new members.

Some members of the Pyramid have taken this as an interpretation that they can continue selling their machines online which in effect is registering new members.

However, here Gopal said that they need to read the notification carefully as people can do the above only after getting a valid trade license or e-commerce license and he said there will be certain terms and conditions of such licenses.

An important monitoring tool will be financial institutions as payments have to be made online and so whenever such products are sold or imported then system will be able to track those engaging in this without proper licenses or doing it to recruit and register new members.

People who have been doing this both online and offline have told the OCP that business is down as awareness on the pyramid scheme spread and the health claims were busted.

The OCP checked the health claims against the labs in developed countries and there was no evidence to support them.

However, there is a possible loophole in the OCP notification which can be used by the Pyramid members to recruit people and earn commission.

Enagic products from the company itself is not available for retail sale like other products, but it is given only to members and if you buy a product you become member of the pyramid with a unique ID sent to you that allows you to sell these products.

Also, whenever a sale is made around 8 people up the line get a commission as around half the price of the product goes into paying commissions.

So it is not clear how the OCP notification can actually stop the pyramid scheme when the sale the of the products are still allowed.

Here Gopal said that even in e-commerce after getting a license the only sale that will be allowed is a direct sale without the recruitment part. He said when people sell these products they are not allowed to recruit new members.

The OCP, RMA, DRA and others are counting on the fact that this pyramid scheme will die a natural death now that the recruitment and unproven health claims is not allowed.

Gopal said that in case people want to violate the decision of the OCP those people selling the products may have to incur a fine equivalent to the value of the product, lose their license if they have one and even be subject to prosecution in court.

He said that if people are still engaging in recruitment sales then they can be tracked down in a variety of ways including through customs when the good enters the country.

The OCP in its investigation found that the pyramid scheme is primarily based on enticing individuals to purchase these machines, claiming unproven heath benefits of the Kangen water and it also entices buyers to register as members by promising commission and and when they register new members, and to become a member, it is mandatory to buy one of these products.

This violated rule 38 of the Consumer Protection Rules and Regulations that forbids such pyramid schemes.

The Bhutanese in late January and February 2022 did a series of investigative stories into the issues exposing the whole scheme as a pyramid scheme designed to suck out the savings of ordinary Bhutanese; showing that there is no science to back the tall medical claims; and also exposed the two masterminds behind the whole scheme in Canada named Mike Dreher and Darren Ewert.

This paper also provided data and information to the OCP to aid in its investigation of the scheme.

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