Ideated, Drafted and published by Strategy India in October 2012. (Shared with the Ministry of Corporate Affairs and Department of Financial Services in November 2012)
More than 6 million (with couple of millions who were direct sellers once upon a time and more than double of that were the victims of scams) people within the country are engaged in direct selling which serves as an opportunity of entrepreneurship along with developing skills at a bare minimum investment, thereby reducing the spread of the deadliest ailment "Empty pockets" and "Empty minds".
While scam operations (commonly known as "Ponzi schemes) deploying Direct, Single level marketing compensation plans and Multilevel marketing compensation plans masquerading as direct selling continue to exploit greed and ignorance of our countrymen and the government officials, these Ponzi operations/illegitimate (unviable/unethical business operations) entities are gaining a foothold and creating financial and trust problems for the common man, due to the absence of clear understanding and regulations for operations deploying Direct, Single level and Multilevel marketing compensation plans.
It is primarily because a simple and easy to understand document to distinguish between viable and unviable/unethical does not exist and therefore the unsustainable/ immoral business operations flourish with ethical and feasible operations being unfairly punished due to the confusion surrounding the identification of what is legal and what is not.
The direct selling guidelines published on the 12th September 2016 further increases the complications by having pointers to stop people based pyramid (which is good) but encourages easy money via product based pyramid, where the individual who joins earlier need not pay renewal fees or purchase products (for self-consumption or retail) but will be able to earn from product purchases in his marketing organization. Plus, there are a lot of areas open to interpretation which will spell TROUBLE for product selling companies who would want to do business ethically.
Policymakers should understand that the terminologies need to be defined (like the ones here https://www.strategyindia.com/mlm-guidelines-1.html ) and understood well to ensure that they can be used for or against operations deploying Direct, Single Level and Multilevel Marketing compensation plans.
In the last decade, many direct selling companies (viable business models) had to shut shop because of people opting for Unviable business operations or Scams promising easy money to the masses. Therefore, we should have policies to ensure that the direct selling companies (business units/profit centers) can sustain and continue to contribute positively towards our country.
Apart from scams, direct sellers with couple of years' experience with viable business operations (direct selling companies- MLM), Software development firms, Chartered accountants and Law practitioners continue to misguide many individuals to start up operations deploying Direct, Single level and Multi-level marketing compensation plans without understanding the concept and technicalities to make this model work. Not only do they manage to fleece the promoters of the companies and other direct sellers who follow them to the venture but also do considerable damage to the image of the direct selling industry.
Despite the guidelines (published), hundreds of Scamsters will continue to make full use of the commonly widespread ignorance and desperation of our countrymen to earn money quickly and will continue their adventures.
The direct selling guidelines published here have been developed by Strategy India to ensure that:
- They are SIMPLE – therefore understood by all
- Preventing companies from short-changing direct sellers and consumers.
- Enlightening the authorities including police and common man to recognize, report, and prosecute those unviable/unethical business operations which intend to cheat people.
- Guide corporations with good intent wanting to start direct selling ventures or launch in India keeping in mind the laws prevalent in the retail sector.
These guidelines are developed as per activities/modus operandi of business entities (6 types of business models) and can be applied to various industries (not just limited to retail).
Glossary of Commonly used terms - https://www.strategyindia.com/mlm-guidelines-1.html
This document is developed by the team at Strategy India worldwide combining the experiences as a consumer, direct seller, corporate and direct selling consultants / advisors for direct selling companies deploying direct, single and multilevel marketing compensation plans.
Heads Up Research Team of Strategy India - Researches and evaluates the commitments made by operations deploying the Direct/Single/Multilevel marketing compensation plans (about 20 operations per week active in India) to continue to list and expose the scams on https://www.strategyindia.com/blog/scam-alerts/ (after due evaluation and confirmation of them being unviable or having found evidence of deception).
