Amagram ~ Amway India - Sep - Oct - 2013

TO BREAK MULTI LEVELS IN MARKETING The Bill Being Finalized By The State Govt Is Aimed At Putting An End To Illegal Practices In The Guise Of Direct Selling The proposed Multilevel Marketing Regulatory Act 2013,the draft of which was finalized by a committee of senior bureaucrats here on Tuesday,will sound a death knell to the existing model of multi-level marketing practiced by agencies such as Amway,Modicare and MonaVie in the state.Sources in the committee said that the proposed act would prevent the concept of marketing chain and only allow the model of direct sale. The direct sale model allows one distributor to enrol a group of sub agents and sell products through them while the MLM allows each sub agent to enrol agents under them,so that the commission of sales at the lowest link of the chain will reach the first link.This is nothing but a form of money chain and is banned even under the provisions of Prize Chits and Money Circulation Banning Act 1978.What we have done is to interpret the clauses in PCMC act in accordance with the present social circumstances,said an official who took part in Mondays meeting. Sources in the law ministers office said the Law department is examining the competency of such a piece of legislation,before sending it for approval of the cabinet and the legislative assembly.Once that process is over,probably in three to four weeks,it will be notified either as an ordinance or be placed for the consideration of the assembly. The stringent terms of the new piece of legislation havent gone down well with the Indian Direct Selling Association (IDSA).In a press statement,it complained that the bill in its current form inhibits the spirit of entrepreneurship in the business of direct selling.Chavi Hemanth,secretary general of IDSA said,the draft is very rudimentary and it doesnt incorporate the fundamental principles of direct selling business model which helps to promote entrepreneurship and building your own sales organization. According to the leaders of the multilevel marketing distribution protection council,the proposed act will render around five lakh entrepreneurs jobless.The government only has to check whether any company is committing fraud.What if the distributor decides to sell the product through 10 people or 1000 people,asked advocate Antony Sebastian,president of MLM distributors protection council.He said the provisions of MCPC act was aimed at protecting the interest of investors;in the case of MLM business,there are no investors but only customers. Advocate Rajesh Kumar,who is representing a group of MLM distributors in the ongoing cases in the high court,hinted at legal battles which might follow if the new legislation comes into force.Amway has already challenged a charge sheet filed in the lower court by filing a petition to quash the same in the high court,he said.So far,nobody has informed the court about the details of the proposed legislation.It is time to do it so that the court can clear the air, he said.