New Delhi:The Government has set up an Inter Ministerial Committee for considering the requirement of separate legislation in respect of Direct Selling / Multi Level Marketing. This information was given by the Minister of State for Consumer Affairs, Food and Public Distribution, Shri Raosaheb Patil Danve in a written reply in Lok Sabha On 23 December 2014.
He said that at present in the absence of any separate regulatory framework business models like Direct Selling/ Multi Level Marketing come under the purview of the Prize Chits & Money Circulation Schemes(Banning) Act, 1978 administered by Department of Financial Services. As part of amendment to the Act, Department of Financial Services had examined the feasibility of incorporating specific guidelines for these business models. It has been suggested by them that instead of incorporating theses models into the PCMCS Act, the need for a separate legislation may be examined by Department of Consumer Affairs in consultation with all stakeholders concerned including global practices in operation.
Terms of Reference of the committee are as under:
• To examine the nature and growth of Direct selling/MLM companies in the country over last 5 years.
• To examine the factors/features that distinguishes the above models of business strategy from Pyramid, Money Circulation Schemes.
• To examine whether or not standalone legislation is now required to regulate the above business models.
• If so, the possible framework for such legislation based on the existing laws and regulations including that in other countries.
• Identification of goods, services and operational issues to be covered under the new legislation.
• The committee will be free to record evidence of other stakeholders such as IDSA, Consumer Groups etc.
• Any other related issue.