Many people, when approached by Network Marketers, also known as Independent Representatives or Sales Representatives, to join their Multilevel Marketing (MLM) business think that they are being trapped in some money business. At the same time, others believe it to be illegal. So, what is the truth? In India, Network Marketing is legal with a few exceptions where businesses maliciously try to trap innocent customers. This article tries to clear the air about the legitimacy of Network Marketing.
Network Marketing – Not a Pyramid Business Model
One needs to be very clear that Network Marketing is not a Pyramid Scheme. Unlike Pyramid schemes that involve people investing money with quick return promise, Network marketing is a legitimate business that involves people selling real and legitimate products of a company. People associated with Network Marketing make money depending on their dedicated sales efforts.
Network Marketing – Not a Get-Rich-Quick Business
Network Marketing is a home-based people-to-people business that does not involve any big capital investment. It has no geographical boundaries and does not require any special qualifications or skill. It enables you to travel and expand your friends’ circle. Further, gaining success helps you enjoy the luxuries of life with that extra income! Earning in Network Marketing is not akin to winning a lottery! Though many people in MLM business make money rather quickly, success is not based on luck. Network Marketing business is a serious proven system based on following basic principles.
The Legality of MLM Business in India
Multilevel Marketing is a legal business in India. However, there are exceptions to it – certain businesses that aim maliciously to trap innocent customers as categorized as illegal Multilevel Marketing businesses, and rightly so. Schemes that are illegal in India include Money Circulation schemes, Pyramid schemes, Chit Funds, and Ponzi schemes.
A distributor network system carries out Multi-level Marketing in India. Under the Direct Selling Guidelines- 2016, companies employ direct sales strategies that encourage their Sales Representatives to recruit more by giving the existing distributors to earn commission on even their recruits’ sales – commonly called the downline. It is a very cost-effective method of earning that is slowly opening the doors for opportunities in India. MLM works on the direct selling model with no involvement of any intermediaries, middleman or retailers. Consumers purchase products or services directly from the company.
Beware of Fraudulent MLM Companies
You must always beware of fraudulent companies that trap individuals in the guise of an MLM business. Such companies either do not sell a legitimate product or a service. Or do not have a nationalized bank account or do not pay their taxes. Further, such companies may not have a refund policy or have a local registered office. It is not listed as legitimate businesses with the government. Therefore, you should always make an informed decision. Learn before collaborating with a Direct Selling company.
Conclusion: Safeguard Your Interests Before Collaborating with an MLM Company
Multi-level Marketing is a thriving business around the world, having its pros. However, in India, the weak regulatory framework has often been the reason for many fraudulent practices or schemes. This brought negativity to the entire sector. Multilevel Marketing schemes have existed in India for more than two decades. Like how the Securities and Exchange Board of India (SEBI) oversees devising policies and regulating mutual funds to take care of the interests of the investors. Compulsory registration of Direct Selling businesses and the regulatory framework will clarify the legitimacy of an MLM Business in India. Until this is in place, you should not get lured by big promises but always make an informed decisions. Ensure that the MLM company you are collaborating with is a legal business.
