NEW LAW FOR MLM COMPANIES -FDCI

FDCI threatens nation-wide stir against police harassment

Courtesy: India Infoline News – Jun 19, 2013

Forum for Direct-Selling-Companies & Consumers of India (FDCI), a newly formed industry body representing all stakeholders of Direct Selling/Multi-Level-Marketing Industry, namely, Companies, Distributors/Consumers and Manufacturers, today announced planning of nation-wide agitations if the Government fails to curb police harassment with 45 days from today. These agitations will be organized along with Confederation of Direct Selling Distributors Association of India (CDSDAI) – a trade union organization and offshoot of the Indian National Trade Union Congress (INTUC) and reasoned as the only option left for over 7 crore Indian distributors under given desperate circumstances.

Speaking on the occasion P.A. Joseph, General Secretary FDCI and CDSDAI said, “More than 7 Crore people in India who are making a living through Multi Level Marketing (MLM) are going through a never before threat and uncertainty as the Police in various states have started trapping these companies and their distributors into criminal cases stating that all MLM business models are illegal as per the Prize Chits and Money Circulation (Banning) Act, 1978.  Though there are a large number of companieswhich operate illegal money chains under garb of MLM, genuine MLM Companies also use the MLM model to sell or distribute their products.

In these genuine MLM businesses people join these companies as Independent Distributors/Representatives and buy products at wholesale rates and sell them at retail price.  They earn a profit this way. These distributors expand their distribution network by appointing new distributors and through such appointmentsincrease sale volumes.  However, in illegal pyramid schemes there are no legitimate products and people join the model to make fast money by recruiting more people. Police authorities are however not trying to differentiate between the legitimate business models and illegal pyramid schemes and this has affected operations of many good companies.  Multinational companies which have invested millions of US Dollars in India are planning to wind up their businesses because of such harassments.  Unfortunately all this has finally affected crores of people in India who depend on this industry for their livelihood.”

Also speaking on the occasion, Suresh Thimiri, founding President of FDCI said, “All this is happening because even though this industry has been operational in India for the last around 18 years, the Governmenthas never taken any action to bring out a regulation for this industry though genuine companies and distributors have been demanding it for that last 15 years.  Even smaller countries like Vietnam, Malaysia and Indonesia have clear laws governing this Industry. There are hundreds of legitimate DS/MLM companies which possibly and collectively posted a business turnover of over Rs.20,000 crore last year in India.  Going by this estimate Central Government has earned more than Rs.2,000 crorethrough the exchequer by way of duties and taxes and various states earned another Rs.2,000 crore by way of Sales Tax.  Since these legitimate MLM companies make commission pay-outs to their distributors through banks, every rupee is being accounted for and the nation has benefited in terms of revenue generation for Government and employment for crores of people.”

As there is no proper legislation in place specific to this industry, Police in various states have been trying to fetch this business model into the purview of the PCMCA 1978 and register criminal cases against companies and its distributors.

The ambiguity in this industry is being exploited by the police officers to amass money from distributors and companies using unethical means.  In fact by not bringing out a clear regulation for this industry, Central Government is indirectly helping a few corrupt Police Officers to deprive people who are depending on this industry for making a living.CDSDAI has already made several representations to the Central Government and also various State Governmentsappealing for a clear legal framework for MLM Industry and to stop all police harassment against distributors of these genuine product-based MLM companies.  Unfortunately, neither the Central nor State governments (especially in the states of Kerala and AndharaPradesh) are listening to the pleadings of the crores of people in India.

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