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Kerala First Indian State to Set Guidelines For MLM firms

Kerala Became first Indian state to set guidelines for MLM firms. All this came after series of MLM scams happened in Kerala. Gullible people lost to the tune of thousands of crore in MLM investment schemes. In one such MLM scam, a company called Tycoon Empire International scammed is said to be around around Rs.1000 crore. After such scams, Kerala Chief Secretary led a committee and probed the activities of multilevel marketing agencies.

  • Registration or Membership
  • The agencies should not charge membership fee or registration fee or force customers to buy any product before enrolling him or her as member.
  • Product, Sales and Commission
  • If customer was not satisfied by the product the agency ought to return the money withing 30 days.
  • The customer should be given freedom to examine the sample of the product prior to making purchase.
  • It will be mandatory on the part of the agencies to give details regarding the organisation and the products to the customers.
  • Commissions paid to direct sellers should be in tune with the quantity product sold.
  • The agencies should take advance permission for selling in various areas. They should issue clear records of the sales to the customer
  • ID Card
  • The agency representatives should carry Photo Identity Card like PAN Card, DL or other Card issued by Government agency.
  • Customer Supports
  • The agency should have a parmanent system to solve complaints or problem related to their products and adequate information should be provided to the customers regarding this facility.
  • Website and Software
  • The agencies should have their own Websites on which they sould put all details regarding their products, services and all detail regarding the business. The agencies should provide all activity's detail to particular customer related to them.
  • They should maintain a regularly updated website giving details of their products, services, price, and other details, besides information on their companies
  • Financial Trasaction
  • All financial transaction of the company should be properly accounted for and the agencies should take prior permission when they engage in business activities in any organisation.
  • Registration
  • The agencies should be a registered firm by any government organisation. They should have trademarks or licences.

Rajasthan Govt. MLM Guidelines

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MLM Legal

INDIAN LAWS AGAINST MLM
In India, money circulation schemes are banned under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. Section 2 (c) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 defines a money circulation scheme as, any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions.

RBI has come with a positive circular given to all banks.

  • The Ministry of Corporate Affairs (MCA) and Reserve Bank of India (RBI) are working closely to frame rules for all MLM companies in India. As per sources there will be strict norms for MLM companies and all MLM companies who are operating in India will have to get their firm register with the government.
  • The Serious Fraud Investigation Office (SFIO) has submitted its analysis on the MLM companies to MCA. According to the SFIO reported that most MLM companies operate via agents.

Make your MLM Legal

Because ther is no law in india against MLM Concept, you must follow few thing in your MLM

  • Registration
  • You must register your company legally. Either it is Pvt. Ltd.,partnership firm, SSI firm with all legal document
  • Product
  • Your must have a own products or services. Your Produce value must be compatible with market or same other products
  • Your product or services should be usefull product for your client.
  • Valid Receipt of Amount
  • You must give a receipt or bill or invoice to your member with authorised signature
  • Online receipt may be acceptable
  • No promise of high return
  • MLM is a concept of selling product, not money generation. So there should be no scheme or offer to return high income without any sale.
  • Your concept must be totall working plan
  • Valid document
  • Identity as also the address proof of the proprietor, such as passport, PAN card, Voter ID card, Driving Licence, Ration Card with photo, etc.
  • Proof of the name, address and activity of the concern, like registration certificate(in the case of a registered concern)), certificate /licence issued by the Municipal authorities under Shop and Establishment act, sales and income tax returns, CST / VAT certificate, Licence issued by the registering authority like Certificate of Practice issued by the Institute of Chartered Accountants of India, Institute of Companies Secretaries of India, Indian Medical Council, Food and Drug Control Authorities, any certificate / registration document issued by Sales Tax / Service Tax / Professional Tax authorities, etc. any two of the documents are to be obtained. These documents should be in the name of the proprietory concern
  • Return Policy
  • Create a concept in which your member is not satisfied with your products or service, he can return product and get his money back.

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