‘Second income’ trap: How QNet scam targeted techies and cost them crores

Hyderabad: In a major crackdown on a nationwide multi-level marketing (MLM) fraud, Hyderabad City Police have arrested 32 key operatives linked to the QNet network, accused of cheating victims of crores of rupees through an illegal money circulation scheme.

Hyderabad Commissioner of Police VC Sajjanar on Monday said that the racket has been spreading across states while increasingly targeting IT professionals and job seekers with promises of high returns and ‘second income’ opportunities.

32 arrested in multi-state raids; majority are techies

The Special Investigation Team (SIT) of the Central Crime Station (CCS), Detective Department, conducted simultaneous raids at 27 locations across Telangana, Andhra Pradesh, and Karnataka on March 23. Around 30 police teams participated in the operation, leading to the arrest of 32 accused, including 11 women.

Sajjanar said that the accused were actively involved in promoting, recruiting and training members in the fraudulent network. Many among them are current or former IT employees.

22 QNet cases in Hyderabad

Police data shows that 68 cases related to QNet have been registered across Telangana so far, including 22 in Hyderabad. Four new cases were recently added, indicating the continued expansion of the network.

Modus operandi: Hidden identity, false promises

Elaborating further, the CP said the fraud was operated through Vihaan Direct Selling Pvt. Ltd., allegedly functioning as a franchise of QNet.

The network lured victims under the guise of e-commerce, part-time jobs and investment opportunities promising returns of Rs 3–4 crore within two years for investments ranging between Rs 5 lakh and Rs 10 lakh.

Victims were invited to meetings in star hotels, particularly in Hyderabad’s Hitech City, where presentations were made without initially revealing the company’s name or the MLM structure. In many cases, investors were made to sign agreements before being informed about the business model.

Funds collected from recruits were often diverted towards purchasing products such as wellness items, and more recently, goods like biscuits and honey—used as a front to mask the real nature of the scheme.

Binary model and illegal structure

The scheme followed a ‘binary model,’ where each member had to recruit two more members, creating an expanding chain. Earnings were largely dependent on enrolling new participants rather than actual product sales.

Sajjanar said such operations fall under banned money circulation schemes as per the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. Officials also cited Supreme Court observations describing such models as unsustainable and ultimately exploitative.

Targeting IT employees by offering loans

The network primarily targeted IT professionals and unemployed youth, projecting the scheme as a lucrative second income source.

To make entry easier, agents reportedly arranged loans through fintech companies for those unable to invest, pushing victims into financial distress.

Recruits were further enticed with promises of luxury lifestyles, including expensive cars and houses, to encourage deeper involvement and further recruitment. Police noted that even employees from reputed IT firms have fallen prey.

Scam led to suicide and losses in crores

Highlighting the severity of the fraud, Sajjanar said a victim in Telangana died by suicide in October after suffering losses in the scheme.

So far, 11 victims have been formally examined in four cases, with losses amounting to around Rs 75 lakh, though the total fraud is believed to run into several crores nationwide.

Police said efforts are ongoing to track down the absconding accused and dismantle the wider network. The probe is being carried out by CCS teams under the supervision of senior Hyderabad Police officials.

Public advisory

The Hyderabad Police have cautioned the public against enrolling in or promoting dubious MLM schemes that promise unrealistic returns.

Officials emphasised that participation in such illegal money circulation activities is punishable under the law and urged citizens to thoroughly verify investment opportunities before committing funds.