The Hindu newspaper in India has today reported on some proposed new guidelines from the Indian Government for State legislation regarding the “Prize Chits & Money Circulation Schemes” (PCMCS). The PCMCS law is, to say the least, not clear and this lack of clarity has allowed pyramid and other scams to flourish in India.
Unfortunately, critics of the multilevel marketing business model have convinced some in India that it too should be made illegal. Incredibly, news articles even in reputable media talk about how pyramid schemes are banned around the world, and then go on to talk about companies like Amway as if they are pyramid schemes (and thus illegal everywhere). Amway is not banned anywhere. These draft guidelines would do so, however in India –
5. No individual or Company or firm or business association, in any form, shall run a scheme that induces enrolment of new members by offering benefits or commission, by whatever name called, to upline members in the pyramid out of the action or performance like sale or purported sale of goods or services by the downline members.
This guideline, if implemented as law, clearly would ban all multilevel marketing in India, with an outright ban on earning commissions based on sales through agents you recruit and train. I’ve received a copy of the proposed guidelines as well as accompanying background notes and will be posting a series of articles over the next few days. In the meantime, if you’re involved with network marketing in India, you need to get in contact with your local political representatives and ensure they are aware of these guidelines and the damage they’ll do to Indian enterprise and India’s reputation.