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Legal action against four companies (1 Feb 2009)

SIX directors of four companies dealing in Multi-Automated Touchscreen Kiosks (Mat Kiosk) and vending machines were charged in court on Jan 22 for carrying out direct selling without a licence.

Domestic Trade and Consumer Affairs Ministry enforcement division director-general Mohd Roslan Mahayudin said the companies were Waterdrops Ventures Sdn Bhd, Waterdrops Holding Sdn Bhd, Waterdrops Corporation Sdn Bhd and Waterdrops (M) Sdn Bhd.

He said a person found guilty of this offence could face a sentence of up to three years jail or a fine of a maximum of RM1 million, or both.

A corporate body could be fined a maximum of RM250,000.

Roslan said there were 17 cases involving 10 companies which had been caught selling Mat Kiosks and vending machines without a direct selling licence.

“Action has been taken against all these companies. We received many complaints from the public in connection with cheating and embezzlement by the companies selling these kiosks and vending machines.”

Roslan said there were 138 complaints against companies selling Mat Kiosks and vending machines between 2007 and this year.

Representatives of these companies would get people to buy the machines, with a guarantee of an income of up to RM1,000 a month.

A Mat Kiosk or vending machine costs at least RM20,000 and payment could be made with credit cards or bank loans.

“Their method of doing business is by contacting the buyer through telephone calls or by making house calls and this falls within the definition of direct selling under the Direct Sales Act 1993.

“Thus, they must have valid licences to carry out such businesses.

“However, the action taken by the enforcement division in charging these companies will not be able to help those who lost money in these scams.

“The victims also do not have a remedy at the Consumer Claims Tribunal as they do not fall within the definition of ‘consumer’ as they had entered into a business,” Roslan said.

He suggested a tripartite solution agreed to by all parties.

This arrangement could be handled by a committee chaired by the head of the consumer protection unit in his ministry.

On banks providing credit facilities to companies without valid licences, Roslan said:

“We have been talking to Bank Negara about stopping credit facilities being extended to scratch-and-win companies. Maybe we can extend this to these kind of companies as well.”

[© Copyright 2009 The New Straits Times Press (M) Berhad]