Hi experts,
Please can you advise if the scheme described below would be considered as a leagal scheme or a lucky draw or unfair trade practice?
Also please advise if it can invite any legal problems and how to avoid/tackle them?
A friend of mine has started a very attractive scheme which he describes as NOT a Lucky Draw system but for increasing the sales of goods.
It involves 2100 people in which every person give Rs 300 every week for 10 weeks...if anybody stops or misses giving in between then membership is terminated...
Total 2100 prizes he will give in form 1500 Induction burners, 150 tablets, 300 Invertor and 20 bikes , couple of Cars, laptop, washing-machines etc etc. and also metions that if anybody doesn’t get any prize then they will be given cash of Rs 15000....(but this wont be the case as they are giving away 2100 prizes anyways)..
Once a customer gets a prize through a draw system, he doesn’t have to pay anymore and will not be considered for any other prize (hence out of the scheme).
There will be draws for 10 weeks giving around 41 prizes with 2-5 prize each week, and all remaining prizes will be given on 11th week without collecting any amount.
I totally agree that he has NO intention or need to cheat anyone as he will anyways come out with good profit. Its just that a few lucky members will win really big prizes like Cars and bikes while majority of members will end up with a prize valued less than half of the money they invested.
Is this a legal business or scheme?
Also what are legal requirements to be able to start such business/scheme , I believe he has registered an organization or something with charity commissioner.
Can one also start such scheme with just a shop-act licence?
Your responses are highly appreciated, Many thanks.
