The short and sweet answer to your question is Yes, network marketing or multilevel marketing (MLM) is legal in India. But, and it is a big but, you should always be aware of the scams that are going on in India in the name of MLM. Remember, a Ponzi scheme and MLM are two different things, and it is your responsibility to identify which is which, or else, you’ll lose a whole lot of money, time, and effort that you already put in. Today, we will talk about what laws are there in India regarding MLM, is it even legal in India, if Yes, then how can you find the actual MLM companies to work with? If that’s the info you are looking for, then just keep on reading. Here we go.
What Is MLM’s Legal Standing in India?
Network Marketing, also known as Multi-Level Marketing (MLM), is a business model through which companies continue to encourage existing distributors to recruit new salespeople for the company. These distributors earn a commission not only from their own sales but also from the sales made by the people they recruit. Of course, India is one country where MLM has had its share of legal issues but, like any other business enterprise, it is regulated under strict rules to separate legitimate operations from scams.
The Laws Governing MLM in India
MLM businesses in India must adhere to various laws ensuring their operations are transparent and fair. The 2016 Direct Selling Guidelines require a focus on actual product sales in MLM companies without the need for pyramid operation. The Consumer Protection Act of 2019 further concretizes this protection by the mechanism for their redressal and protecting the consumer from unfair trade practices. Further, according to the Prize Chits and Money Circulation Schemes (Banning) Act of 1978, it is for sure a pyramid scheme if that prioritizes recruitment over sales.
Are Pyramid Schemes And MLM The Same Thing?
It is essential to understand the difference between a legitimate MLM and a pyramid scheme. In MLM, you see, most of the money comes from the sale of products, and the distribution of commission is done through a network of representatives. On the other hand, pyramid schemes typically pretend to be an MLM company, but they gain most profits from the recruiting fee and eventually fall out when they cannot bring new members.
How Can You Identify Credible MLM Companies In India?
The primary focus will be on whether the company emphasizes product sales and meets legal standards to make a credible multi-level marketing company. If you really want to know which MLM company is legit and won’t run away with the money and effort that you put in while working with them, then you have to make sure at the beginning that you do your research well. This research of yours should include searching for the reviews of the company, legit profiles, proper and real addresses, and things like that.
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