Is multilevel marketing legal in India? If you’re asking yourself this, you’ve probably heard of the multilevel marketing scams in India. Social media memes about “25 din mein paisa double” are very helpful in raising awareness of the importance of using your eyes and your brain when such a tempting offer is presented to you. It is your responsibility to avoid falling for an Indian pyramid scheme. What can appear to be a levelling of the network might turn you into a stepping stone that only serves to increase the perks of the top authorities while moving you closer to facing legal action when those officials go. Find out below what’s being said about the direct selling businesses that are forbidden in India.

What is Multilevel Marketing?

In India, multilevel marketing has long been a well-liked business model. Multilevel marketing, or MLM, includes companies like Tupperware, Amway, Oriflame, and many others. Many people from various socioeconomic backgrounds can easily make money by working for search companies. Companies like Amway are well-known, particularly to housewives and other household members.

Another name for multilevel marketing is MLM. It is a network marketing, referral marketing, or pyramid selling scheme. A marketing method called multilevel marketing uses employees or workers to sell products and services by acting as both buyers and salespeople. This non-salaried workforce is where a multilevel marketing business derives or produces its money.

The multilevel marketing business in India hit the business industry in the year 1995 with the global MLM company Oriflame. There are several such MLM companies that have seen a spurt in growth in the country.

Multi-Level Marketing Companies Legal in India?

In India, it is allowed for businesses to engage in multi-level network marketing to offer certain goods or services. Despite the fact that the idea of ponzi schemes has been deemed unlawful, some businesses use their goods to trick consumers into making investments that eventually forward the objectives of such a scheme. Is network marketing legitimate at this point? Yes, up till such a network is established in order to create a chain of consumers buying real goods. Laws prohibit money-making enterprises that solicit contributions from individuals. Therefore, a company is more likely to fall into the category of prohibited direct selling companies in India if it generates more revenue by hiring new distributors or recruiters under the guise of networking than through its products or services. Following multiple multilevel marketing scams in India, the issue of whether pyramid schemes are lawful in that country arose.

Is Multilevel Marketing Legal in India?

Is network marketing legal? According to the most recent regulations and legislation, the answer is yes, unless it qualifies as a Ponzi scheme or an unlicensed pyramid scheme business in India. It is lawful to join a pyramid scheme through a network as long as you are not asked to pay a fee to do so. The following clauses will take effect if the same is different and loses its ability to conduct business or employment legally:

Cheating under Section 420 of IPC – The provision applies when someone else induces the person to do or not do something which he may refrain from otherwise. Illegal pyramid scheme in India often induces people through unrealistic benefits.

Consumer Protection (Direct Selling) Rules – It lays the provisions under the rules regulating multilevel marketing in India and banned direct selling companies in India. Non-compliance with the rules may prove a toll against such companies for the protection of consumers.

Competition Act, 2002 – Sometimes, multilevel marketing under the garb of pyramid scheme companies in India tags their products at such overwhelming prices that the real value rises exponentially without any justification. In such cases, the authorities come into picture which also regulate the pricing of such products so that the quality of product compliments the price as confirmed by the Competition Act to restrain monopoly or illegal practices in the market.

How to Check Multi Level Marketing Frauds in India?

The best way to remain safe is not to look up a list of unlawful MLM firms operating in India. If you are approached by allegedly forbidden direct selling businesses in India, you can determine their legitimacy by using the following guidelines:

• Assess if proposed benefits are genuine
• Do not fall for unrealistic financial luring schemes
• Target audiences are not only the vulnerable and unemployed people like housewives
• Is there any training methodology followed
• There should be a concrete profit plan/ layout
• Check whether there is a physical office of the company
• Profit payout should be recurring and not one time
• There should be more focus upon product than networking
• The product/ services are genuine and trustworthy
• Know if you are being paid for sale of products or for enhancing network
• Promises of becoming overnight billionaires arei a trap
• Know about the company’s people, culture and their philosophy

Difference between Legal and Illegal MLM

A new multi-level marketing scheme is launched every other day!

While some MLM is lawful, employing genuine businessmen, others are MLM frauds, using con artists who entice a naive audience and steal their money.

It might get difficult to identify a genuine or fake multi-level marketing in India. But there are some ways to know the difference between network marketing that is legal and illegal in India, such as:

• There is a promise of a very high rate of return, but there are typically no underlying goods or services that have any value, according to the common characteristics of MLM schemes that are illegal in India.
• On the other hand, a legal multi-level marketing company in India like Tupperware is built through the actual sale of products
• In illegal network marketing schemes, commissions are paid to agents for merely roping in other agents or investors. Whereas, in a legal scheme, distributors are paid a commission on actual product sales of the agents who they have roped in.
• An unlawful affiliate marketing scheme typically operates on the premise that it is a way to earn money quickly and easily; this is not the case with a legal multilevel marketing programme.

Who can help you here?

In the advent of such a situation where you are scammed by a multi-level marketing illegal company, it is best to consult a good lawyer near you, who can help you understand what approach and steps would be right.

To get connected with expert lawyers in Delhi and get the best consultations, you can approach Sure Fire Law and we’ll help you find an expert and provide assistance in filing a complaint against any fraud MLM company in India. Just ask a legal question at surefirelaw@gmail.com or call at +91 9090849191