Sales occur at home, work or other non-store locations. It is an umbrella term for all marketing and sales methods whereby the product goes from the distributor to the client via a sales consultant who has personally sold the product to the end-user, bypassing retail outlets.
Mult-level marketing is also like direct selling. It means marketing distribution & sale of goods or providing of services as a part of the network or direct selling other than a pyramid scheme.
Multi-level marketing in India is legal and is the broad terminology given to marketing which takes through a distributor network such as a pyramid scheme or a direct selling scheme in India. It is employed by companies employing direct sales strategies under direct selling guidelines 2016 to encourage their existing distributors to recruit new distributors by giving the existing distributors a commission on the sales of the new distributors. The major multi-level marketing legal issue in India that is encountered is the protection of the consumer. Often the marketing scams in India by these companies are done against the innocent public and rob them of their money, consumers are left with no legal remedy.
A pyramid scheme in Indian law is described as the scheme where the organizer builds a structure of a pyramid that starts with one person, representing the top of the pyramid. This person recruits another person under him, who are required to invest a certain amount which is paid to the initial recruiter. In order to make returns on his investment, the new member has to recruit more investors who invest a fixed sum of money, thereby forming a chain of pyramids. Recently, the Reserve Bank of India (RBI) released a statement cautioning investors against pyramid scheme fraud that promise high returns and run on hefty member subscription fees
Pyramid scheme may be fraud or may not be “A Business That Uses A Pyramidal Structure Becomes A Fraud Only When There Is No Product That Is Exchanged For The Payment Of The Fees, And The Act Of Recruiting Participants Is Actually What Sustains The Structure.
Every direct selling entity intending to carry out a direct selling business shall within 90 days of publication of the notification, comply with the following condition:
Download legal guide on how to successfully start and manage business in India & achieve 100% compliance.
4.61 average based on 265 reviews.
Get helpful tips and info from our newsletter!