In India, multi-level marketing (MLM) companies are regulated primarily under the Consumer Protection Act, 2019, and the Direct Selling Guidelines, 2016, issued by the Ministry of Consumer Affairs, Food and Public Distribution. These guidelines aim to protect consumers from fraudulent practices and ensure transparency in direct selling operations. Some key rules include:
MLM companies must register with the Ministry of Consumer Affairs and comply with the Direct Selling Guidelines. Companies must provide accurate information about their products, compensation plans, and the risks involved in joining the MLM scheme. MLM companies cannot engage in unfair or deceptive practices, such as making false income claims or pressuring individuals to join. Compensation plans must primarily reward sales of products or services, rather than recruitment of new members. MLM companies must maintain records of sales, commissions, and other relevant data, which should be accessible to regulators for inspection. It's important for individuals considering participation in MLM schemes to thoroughly understand these rules and conduct due diligence before getting involved. Additionally, they should be aware that despite regulations, MLM schemes can still be risky and may not always deliver the promised returns.
