Is Multi-Level Marketing (MLM) Legal in India
And India is not different. Issues, however, surrounding its legality and potential risks have overgrown together with the growth of mlm. According to the Federal Trade Commission, a disappointing 99% of all people who ever enlist in one of the corporations lose money. Hence, despite the attractiveness, those at the top of the pyramid lose 98% of people who enroll in the programme. Then after a whole lot of effort from our members, every business that gets legalized this way by the Indian Government doesn ‘t accept.
What is Multi-Level Marketing (MLM)?
MLM by its ancient name as network marketing, pyramid selling or referral marketing is a very popular way of earning money, where any individual can sell products and services in their name on behalf of someone that is recruiting. As a reward of the own sales they make, even commissions can be paid through the sales of the recruits. Offers on sales will benefit those at higher levels because their percentage increases will come out of what goes to the level(s) below.
In India, the most popular and well-executed MLM plans are operated by such brands as Amway, Avon, MaryKay, and Forever Living. The companies are the ones that introduced the concept of direct selling to the Indian side, offering a huge store of jobs for housewives, retirees, and others willing to have earnings on their own terms.
The MLM business was just getting off the ground in India by the mid-90s, with brands like Oriflame and Tupperware taking some steps ahead. Since then, many more MLM companies are coming up and according to Direct Selling News, Amway is the fastest-growing MLM company in India today.
Yet, among all these instances of success, everything seems muddied with scams and fraud; the scams are often aimed at the many people at the lowest of the spectrum. Let us have a look, in India, at what really makes a distinction between legal and illegal MLM plans.
What Makes an MLM Legal or Illegal in India?
In India, network marketing is legal under 2016 Direct Selling Guidelines as claimed to govern the businesses of direct selling. However, that does not make all MLM businesses legal. The government has distinguished between genuine MLM companies that market real products and fraudulent schemes wherein only the new members are accepted for money.
Illegal MLM schemes are mostly targeted to cheat people out of high returns or “easy money”. In these cases, new members join by paying in money but without any good or service being delivered. This money is used essentially to pay the former contributors by running a vicious cycle termed the ‘robbing Peter to pay Paul’ approach, which ultimately collapses.
Types of Harassment under the Indian Penal Code
Several types have been specified in Indian Penal Code that are indeed considered harassment and various activities such as:
Sexual harassment (forceful sexual intercourse): This section punishes forcible offenses, including rape and other less severe offenses against the will, depending upon the principle of consent-it is one where the ingression of vulva or gen'[i]tal organ into the body of a woman would constitute an offense against the will.
Unsightly acts willfully intended to insult the modesty of a woman-most Indian intellectuals do agree that this section also prohibits the publication of nude pictures of a woman in the media even as an advert.
Stalking-mostly, it is a kind of harassment that frightens a woman within community boundaries to which society and the legal professions react in the most hushed way when a woman who ventures to take actions against such guys gets punished through their own fear (or even through some other discomforts). It is because only the wicked mind of stalkers can interpret the term differently, though the former is apprehended as a true fact.
Pyramid Schemes: These schemes are almost like Ponzi schemes since they pay elevated returns to those who invest in them. The difference between the two lies in the fact that, in Ponzi schemes, the returns are not based on investments. New recruits pay off earlier victims of the scheme. The collapse of Ponzi schemes takes place when the chain breaks due to a lack of new recruits.
Chit Funds: No actual MLM scheme as such, chit funds are generally misunderstood to be MLM schemes only because of network marketing systems of these schemes. This is the mode of saving wherein a group of individuals collectively contribute to some money, and the said pooled money is allocated to one member. The way in which an agreement is structured is what determines the legality or illegality of the contract.
How to Recognize a Legal MLM in India:
Product or Service: A legal MLM company must have a legitimate product or service that its consumers can buy. If the focus is on recruiting more and selling later, it’s a bad sign.
Gifts and Rights: In an authentic MLM, the reason for a commission is the real acquisition of a product or service. If it is purely based on recruiting more new people instead of on genuine acquisitions, it is likely a hoax.
Returns Must Hold Legality or Illegalone: Look out for quick and huge returns guaranteed by MLM companies. Understane the economic growth through a legal MLM and the entire credible paying ground rather than the dream world.
Regulation and Transparency: Does the allowed Multi-Level Marketing Company come under compliance through Direct Sales Guidelines of India 2016 and is the transactions transparent? They should have the registered office, bank account, and tax matters settled.
What to Do if You Are Duped
Here are the steps if you have been the victim of fraudsters who call their con trick “opportunities” in the shape of a fake MLM company.
Hire a Lawyer: With some consultancy fees, legal expert advice will lead you through to the available remedies and will guide you through the procedure of registering a complaint.
File an FIR: If the issue has been resolved, then you can lodge an FIR with your area police, who will take care of the matter.
Complain to the Registrar of Companies: Complain to the Registrar of Companies (RoC) in India about the illicit MLM Company, which keeps an eye on companies in India.
Conclusion While the practice of MLM is effective in earning some income, it is wiser to be precautious and research more before you enroll directly. Always make sure that the company is dealing with legitimate products, and following the norms of Indian law. Don’t keep thinking because even though the industry is a small one, the chances of earning money are much bigger, unless you have clearly understood it.
A legal perspective through a legal expert would always clear your doubts regarding whether this is the proper MLM or the bogus company. There are experienced legal experts you would like to get engaged on a portal such as MyAdvo, which offers services to connect an individual to the right lawyer to help in providing top-quality total legal solutions.
