The direct selling industry was pitching for a clearcut guidelines for the sector to remove legal ambiguities to differentiate between fraudulent ponzi schemes and genuine businesses run by them.
The process for framing proper guidelines was started in 2013 by the government after the police arrested the then Amway’s India Chairman William S Pinckney and two company directors over allegations of fraud in Kerala under the Prize Chits and Money Circulation Schemes (Banning) Act.
The Ministry of Consumer Affairs issued the guidelines for states to regulate direct selling and multi-level marketing (MLM), that prohibited pyramid scheme as well as money circulation schemes under the garb of direct selling business.
The ‘Direct Selling Guidelines 2016’ framework was released by the Consumer Affairs Minister Ram Vilas Paswan and has been sent to the states/Union Territories for adoption.
The industry welcomed the move saying that it will bring clarity in the Rs 7,500 crore-sector and end regulatory conflicts, leading to future growth in direct selling segment.
The government has defined legitimate direct selling and differentiates it from pyramid and money circulation schemes to help investigating agencies identify fraudulent players.
“We are sending the model guidelines to all state governments. States can make some changes as per their localised requirements. The guidelines were necessary for better growth in the direct selling business,” Consumer Affairs Secretary Hem Pande told reporters here.
The Centre asked state governments/UTs to implement the guidelines and also set up a mechanism to monitor the activities of direct sellers, direct selling entity regarding compliance of the guidelines.
Direct selling industry welcomes to the decision to bring guidelines by the centre.Once guidelines implemented genuine companies can get benefits with this guidelines.Also it is useful to Direct sellers to do business without any hassle.Industry thinks this will help to grow industry revenue and benefit to direct sellers.