Qnet Ltd, formerly known as QuestNet and GoldQuest, is a Hong Kong–based multi-level marketing (MLM) company owned by the QI Group. QNet was founded in 1998 by Vijay Eswaran and Joseph Bismark. The company's products include energy, weight management, nutrition, personal care, home care and fashion accessories on an e-commerce platform.
The company operates legally in some countries, but has been charged as a Ponzi scheme and multi-level marketing in countries like India. The government of India and the Telecom Regulatory Authority of India banned the site in the country after a protest spread in Bangalore.
History
1998–2000 QNet was founded in 1998 in Hong Kong by businessmen Vijay Eswaran and Joseph Bismark. Though born and brought up in Malaysia, Eswaran undertook his higher education in the United Kingdom where he learned how multi-level marketing schemes work.
The company was first known as GoldQuest and then QuestNet before the name was shortened to QNet in 2010. In the beginning, it made custom-commissioned commemorative coins and later began selling jewellery and watches. In 1999, Qnet expanded its operations to Malaysia and Singapore and began a partnership with B.H. Mayer's Mint, a German-based mint coin facility. By 2002, the company was active in India, the United Arab Emirates, Indonesia, Thailand, Australia, the United Kingdom, and Eastern Europe.
In 2000, Qnet was the official distributor of the Sydney Olympic Games commemorative coins. It was later named a distributor of FIFA's Centennial Commemorative coin set in 2004 and a distributor at the 2004 Athens Olympic Games and 2008 Beijing Olympic Games.
2001–2018 The company expanded its operations to Dubai, India, Indonesia and Thailand in 2001. Qnet started to diversify its products in 2002 into travel and vacations by partnering with QVI Club brand holidays. During this time, the company also announced that it was the official coin distributor for the 2002 FIFA World Cup and an expansion into Europe, Australia and Sri Lanka.
In 2005, QI Group acquired QI Comm, a British telecommunications company. That same year, the company introduced aspIRe Magazine and announced that there were one million Qnet independent representatives around the world. In 2006, Qnet began marketing energy, health and nutritional products. Also in 2006, QI Group acquired Prana Resorts and Spa, a vegetarian holiday resort in Koh Samui. QI Group also acquired the Swiss watchmaker, Cimier. In 2007, the QI Group acquired Down To Earth (DTE), a vegetarian organic health store chain in Hawaii.
The company announced its sponsorship of Team Meritus, a Malaysian motor racing team, and became a sponsor for the Commonwealth Heads Of Government Meeting Business Forum in 2007.
From 2009 to 2012, Qnet was an official sponsor of the Asian Football Confederation during the AFC Champions League. In 2010, the company partnered with Virgin Racing. Qnet received the TRUSTe Privacy Certification in late 2012. Qnet announced its intention to shift its manufacturing operations to India and to open an office in Russia in 2013. The company's QI Tower in Malaysia received the 2013 Building and Construction Authority (BCA) Green Mark Gold Award. In 2014, Qnet started a three-year partnership with Manchester City football club to become the club's official direct selling partner. The deal was then expanded in 2017, and signed a similar deal with the Confederation of African Football in 2018.
Since it opened in 1998, Qnet (Questnet at the time) promoted gold and silver coins. The coin collection business was outlawed in some countries. Though registered in Hong Kong, the company has never operated there or in China. Its majority customer base remains in India and a few African countries. A few years later Questnet changed its name to Qnet and offered additional products via the MLM system. It promotes its products using claims "that would not pass official muster in much of the world." Despite claiming to be an e-commerce based business, an ordinary retail customer can purchase a product only if they have a referrer ID of an independent Qnet representative. Qnet used websites such as www.Qnetindia.in, www.Qnetindia.net, www.Qnet.net and www.questnet.net to conduct its business. These were blocked by Indian Computer emergency response team (CERT) following a court order. Other websites like portal.Qnetindia.net, are under investigation.
The company continues to operate in countries including India, and sells its products using a multi-level marketing model, whereby independent representatives refer the products to consumers and receive compensation based on the sales volume of their referrals and the sales volume of other independent representatives in their teams.
The company has operations in 25 countries worldwide with offices in Indonesia, Malaysia, Hong Kong, Philippines, United Arab Emirates, and Ireland. The company also has franchise companies in India and Turkey.
It was sued by Egypt, Rwanda, and Sri Lanka for allegedly operating a product-based pyramid scheme. The company and its franchise Vihaan are under investigation in India. The Bombay High Court denied the anticipatory bail plea of the directors of Vihaan Direct Selling Pvt Ltd., a franchise of Qnet, which included world amateur billiards champion Michael Ferreira after it was earlier rejected by Sessions Court. They were facing charges of cheating and forgery The court observed that "the deceit and fraud is camouflaged under the name of e-marketing and business". The Delhi High Court also called it a multi-victim scam and refused to quash FIR against the directors of Indian franchise of Qnet, Vihaan Direct Selling Private Limited. The Serious Fraud Investigation Office, in its report on GoldQuest and QuestNet India has called multi-level marketing (MLM) schemes run by overseas operators as "a potential threat to national security". The Government of India ordered the Serious Fraud Investigation Office to file prosecution against GoldQuest International and QuestNet Enterprise under the Companies Act and Indian Penal Code. A brief executive summary of the SFIO report is now available in the public domain. The company has denied the allegations.
Since 2019 In 2019, Malou Caluza was announced as Qnet's new CEO, becoming the first female to hold the position. She began working at the company as its first Customer Service Officer.
Business model
Customers can choose to become "independent representatives" (IRs) of the company by paying $10 for a starter kit and an online office. IRs receive $250 commission after they introduce the products to six people, placing three people on their left and three people on their right, described as two 'legs'. When an IR introduces a new customer who then becomes an IR themselves, the original IR benefits (by receiving bonus points) from the success of their recruit. These bonus points build up on only one of the IR's legs. The IR must then find recruits for the other leg in order to receive commissions.
Many government entities described Qnet's business model as a pyramid scheme: early entrants earn money, and as the number of Independent Representatives (IRs) increases, finding more IRs to join becomes difficult or impossible; IRs that join late do not earn enough to cover their first outlay and the model collapses.
As per an official spokesperson, even though sign-up fees are not charged, a purchase might be required. This may be in the form of the sale of a qualifying product to a retail customer or by the new representative making a qualifying purchase.
Products and subsidiaries Initially in 1998 Qnet sold gold commemorative coins. The company expanded its products to include travel and vacations in 2002 through a partnership with QVI Club brand holidays. In 2006, they added wellness, health, and nutritional products. As of 2021, the company sells products related to home care, beauty and personal care, holidays and travel, education, wellness, watches and jewelry, and nutrition.
Some of its products fall under a "wellness" brand, such as the Amezcua Bio Disc (also spelled BioDisc and BioDisk). According to Quest Net's advertisement, the disc creates a 'water-impacting' energy field that 'helps to reduce stress, improve sleep'. The company claims that it was invented by Dr Ian Lyons, but his antecedents and research publication are not known. Schott AG is the only industrial glass manufacturer that certifies production of Biodisc, but does not reflect Qnet's advertising that it is 'creating an impact energy field'. The Amezcua Bio Disc has been evaluated by research facilities in Germany, India and Japan. The product has received scrutiny from various scientists, media commentators and watchdogs.
The subsidiary QI properties announced in 2016 that it would begin construction of QI City, a mixed-use development in Malaysia. It was due to be completed in 2020, consisting of an 840-bed teaching hospital, 768 condominium units, a convention center, and a 460-bed hotel. The development is the location of Quest International University's Perak campus.
Controversies Qnet has faced controversies since soon after its founding. It has faced litigation in many countries and hundreds of IRs working for it and/or its many subsidiaries have been arrested.
Gold coins GoldQuest marketed a gold coin at a 100% premium over similar coins. The President of the Madras Coin Society warned that the Goldquest coin was neither a period coin nor it was from an authorized body. Australian politician Cameron Thompson, the Nepalese Home Ministry, the Sri Lankan Central Bank, and the Iranian Government described GoldQuest as a pyramid scheme. In 2002, the Australian Office of Consumer and Business Affairs listed the company as one of 61 alleged pyramid schemes. The Fatwa council at Dar al-Ifta al-Misriyyah declared that the binary form of transaction adopted by Qnet is prohibited under Sharia law.
2003 In 2003, Indian police arrested two QI group senior managers in Chennai and froze the company bank account after receiving complaints from more than 50 of its members. In Philippines, the Department of Trade and Industry issued a cease and desist order after a complaint from a member. In Cambodia Goldquest organized the launch of Ankor Wat commemorative coins among 500 young Khmers who had paid $5 to attend and pick up a starter kit to help them sell. Managing Director, Richard Zinkiewicz, insisted that Questnet was not a pyramid scheme, because customers were never obligated to sell products and the product had real value. He said that the coins' high value was because they are limited edition collectibles. Eswaran claimed that the opportunities offered by QI could change members' lives. Royal Monetary Authority of Bhutan asserted that GoldQuest was a pyramid scheme.
Nepal banned the company from operating there in 2003, while Bahadur Manandhar, chief of the foreign exchange department of the Nepal Rastra Bank, said GoldQuest was "a hundred percent fraud". Sri Lanka banned GoldQuest in 2005, claiming that the company had caused 15 million dollars to leave the country.
India declared both Goldquest and Questnet to be Ponzi scheme companies.
2007–2009 In 2007, APLI, the direct selling Association of Indonesia, called GoldQuest a pyramid scheme. Interpol arrested Eswaran and other company officials for fraud. (Sourced from the Wayback Machine.) Qnet responded that the allegation was unfounded. After three weeks, Indonesian courts released Eswaran and dismissed the charges soon afterward. Qnet continued to operate there.