Herbo International, which has been banned along with other network marketing businesses by the Supreme Court, has tried to justify its operation as legal one. The company was selling herbal products at higher rate than usual market price against the existing laws through the multi-level marketing approach.
The government can not claim our products to be expensive without setting appropriate price rate, says a Herbo press release. The company said that it could not be held responsible for operation of network marketing as they had also obtained the permission from the Department of Commerce (DoC).
For four years, Herbo had operated network marketing business freely taking advantage of absence of law. Two years ago, Herbo International along with other three network marketing companies had obtained license from the DoC based on a directive prepared to regulate network marketing businesses. However,
following the fraud case of Unity Life International (ULI) the government had scrapped the directive and banned such businesses.
Despite the ban from the government, the company was operating business based on stay order of the Supreme Court (SC). Last Wednesday, the SC had formally put an end to network marketing saying that such businesses hold no legal ground for operation. Herbo’s business model is against the Competition Promotion and Market Protection Act, Black-marketing Act and Consumer Protection Act, according to consumer rights forums.
Following the SC verdict, the Central Investigation Bureau (CIB) has already started investigation into Herbo case, seizing necessary documents from the company’s central office at New Baneswhor. Police have also sealed the office. Earlier, Jaggan Nath Mishra representing Consumer Rights Protection Forum had filed a complaint against Herbo in the Ministry of Home Affairs. The Consumer Rights Investigation Forum has also lodged a complaint at the DoC.
Besides, a group of consumers, cheated by Herbo has also filed a complaint at the National Women Commission seeking recovery of around Rs 7.5 million from the company. Meanwhile, a source said that a top official of company is under negotiation with the complainer.
As per the Black-marketing Act, selling of a product by maintaining a profit margin exceeding 20 percent is a crime. However, Herbo is found charging Rs 8,000 for one kg of “quality grade” green tea which is available in market at maximum Rs 1,500 a kg. Earlier, Executive Director of Shangri-La Agro Dilli Baskota had also complained of Herbo selling their green tea at expensive rate to its customers after buying at lower rate.
In any open market, the price of a product is fixed based on the demand and supply. But, in case of Herbo, the company itself set the price and sold its products only to limited people who are into its networking marketing as a member paying at least Rs 6,000.
Members were lured into the business with assurance of Rs 10,000 in daily income, according to customers duped by Herbo.
“A customers who took membership paying Rs 21,000 were given fake assurance of Rs 40,000 in daily earnings,” the customer said. However, the company in its press release says, they have not tempted customers.
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