नमस्कार दोस्तों! आज हम उन दो “ज्ञानी” पत्रकारों, शुभांकर मिश्रा और राहुल सिन्हा की बात करने आए हैं, जिन्होंने हाल ही में नेटवर्क मार्केटिंग इंडस्ट्री को बदनाम करने का बीड़ा उठाया है। स्टूडियो में बैठकर, बिना किसी रिसर्च और जानकारी के, इन्होंने पूरी इंडस्ट्री को फ्रॉड और स्कैम घोषित कर दिया। आज इस ब्लॉग में हम इनके फैलाए हुए झूठ का पर्दाफाश करेंगे और सच आपके सामने रखेंगे। WhatsApp 9759999231 for Consultation, Coaching, and Guidance
ज्ञान की कमी या TRP का खेल?
सबसे पहली और मज़ेदार बात तो यह है कि शुभांकर मिश्रा और राहुल सिन्हा में कोई ज़्यादा फ़र्क़ नहीं है। दोनों को ही चीज़ों की पूरी जानकारी नहीं होती, लेकिन बोलना शुरू कर देते हैं। ठीक वैसे ही जैसे कोई सालों से मैकबुक इस्तेमाल कर रहा हो, लेकिन उसे यह तक नहीं पता कि डाउनलोड्स का फोल्डर कहाँ होता है।
ये लोग ट्रेंडिंग टॉपिक पकड़ते हैं और उस पर वीडियो बना देते हैं, बिना यह सोचे कि इसका असर कितने लोगों की ज़िंदगी पर पड़ेगा। इनकी रिसर्च का आलम यह है कि ये “टर्नओवर” और “इनकम” में फ़र्क़ नहीं समझ पाते। एक लीडर ने स्टेज पर कहा कि उसका महीने का टर्नओवर 100 करोड़ है, तो इन महाशय ने झट से वीडियो बना दी कि उसकी इनकम 100 करोड़ है! अरे भाई, थोड़ा तो होमवर्क कर लिया होता!
इनकी पत्रकारिता का असली चेहरा यह है कि ये उन मुद्दों पर कभी नहीं बोलेंगे जहाँ सच में जनता लुट रही है। क्या ये कभी रोडवेज बसों के घटिया ढाबों पर रुकने और वहाँ 10 रुपये की चीज़ 30 रुपये में बिकने पर वीडियो बनाएंगे? नहीं! क्योंकि वहाँ सरकार से पंगा लेना पड़ेगा और इनकी हिम्मत सिर्फ़ उन लोगों पर बोलने की है जो संगठित नहीं हैं।
स्क्रिप्टेड कंटेंट और विक्टिम माइंडसेट का फायदा
ऐसा लगता है कि ये लोग चैटजीपीटी (ChatGPT) से स्क्रिप्ट लिखवाते हैं। अगर आप नेटवर्क मार्केटिंग के पक्ष में प्रॉम्प्ट देंगे तो वैसी स्क्रिप्ट मिल जाएगी, और अगर विपक्ष में देंगे तो वैसी स्क्रिप्ट तैयार हो जाएगी। ये बस उस स्क्रिप्ट को तोते की तरह रटकर कैमरे के सामने बोल देते हैं।
इनकी टारगेट ऑडियंस वो लोग हैं जो “विक्टिम माइंडसेट” के साथ जीते हैं – “हमारा कुछ नहीं हो रहा,” “कोई नौकरी नहीं देता,” “सब हमें लूट रहे हैं।” ये लोग ऐसे ही रोने-धोने वाले लोगों के लिए वीडियो बनाते हैं ताकि उन्हें ज़्यादा से ज़्यादा व्यूज़ और सपोर्ट मिल सके। इन्हें लगा कि नेटवर्क मार्केटिंग के ख़िलाफ़ बोलकर ये एक बड़ी आबादी का दिल जीत लेंगे, लेकिन ये भूल गए कि आज भारत में करोड़ों लोग इस इंडस्ट्री से जुड़े हैं और अपना घर चला रहे हैं।
नेटवर्क मार्केटिंग: जिसे तुम फ्रॉड कह रहे हो, वो एक लीगल इंडस्ट्री है
शुभांकर और राहुल, कान खोलकर सुन लो! नेटवर्क मार्केटिंग भारत में एक लीगल बिज़नेस है। सरकार ने 2016 में इसके लिए गाइडलाइन्स जारी की हैं। जब तुम MLM को फ्रॉड बोलते हो, तो तुम सीधे-सीधे सरकार के फ़ैसले पर उंगली उठाते हो।
रॉबर्ट कियोसाकी और डोनाल्ड ट्रम्प जैसे बिज़नेस टाइकून ने मिलकर “Why We Recommend Network Marketing” जैसी किताब लिखी है। बिल गेट्स और बिल क्लिंटन जैसे लोग इस इंडस्ट्री की तारीफ़ करते हैं। क्या तुम इन सबसे ज़्यादा समझदार हो?
यह इंडस्ट्री आज लाखों लोगों को रोज़गार दे रही है, उन्हें पर्सनालिटी डेवलपमेंट, पब्लिक स्पीकिंग और सेल्स की ट्रेनिंग दे रही है। यह लोगों को सपने देखना और उन्हें पूरा करने के लिए मेहनत करना सिखाती है। और तुम कहते हो कि सपने दिखाना ग़लत है?
सफलता से इतनी जलन क्यों?
तुम्हें इस बात से तकलीफ़ है कि नेटवर्क मार्केटिंग लीडर्स स्टेज पर चढ़कर अपनी महंगी गाड़ियों और घरों के बारे में बताते हैं। क्यों भाई? अगर एक इंसान ग़रीब घर से उठकर अपनी मेहनत से मर्सिडीज़ तक पहुँचता है, तो क्या उसे अपनी सफलता दिखाने का हक़ नहीं है? वो लोगों को मोटिवेट करने के लिए अपनी कहानी बताता है, ताकि दूसरे भी यह भरोसा कर सकें कि मेहनत से कुछ भी हासिल किया जा सकता है।
जब कोचिंग इंडस्ट्री वाले अपने टॉपर्स की फोटो बैनर पर लगाकर प्रचार करते हैं, तब तो तुम्हें कोई दिक़्क़त नहीं होती? असल में, तुम्हें उन लोगों से दिक़्क़त है जो थ्री-पीस सूट पहनते हैं, क्योंकि शायद तुमने आज तक ख़ुद नहीं पहना।
निष्कर्ष: पहले रिसर्च करो, फिर बात करो
हम यह नहीं कहते कि नेटवर्क मार्केटिंग में सब कुछ सही है। हर इंडस्ट्री की तरह यहाँ भी कुछ ग़लत लोग और फ्रॉड कंपनियां हैं। हम भी उनके ख़िलाफ़ हैं। लेकिन कुछ गंदी मछलियों की वजह से पूरे तालाब को गंदा कहना कहाँ की समझदारी है?
शुभांकर मिश्रा और राहुल सिन्हा, हमारी सलाह है कि किसी भी इंडस्ट्री पर उंगली उठाने से पहले उसके बारे में ढंग से रिसर्च कर लो। जाकर पढ़ो कि डायरेक्ट सेलिंग क्या होती है, दुनिया भर में यह कैसे काम करती है, और कितने लोगों की ज़िंदगी इसने बदली है।
और जो लोग नेटवर्क मार्केटिंग में फेल हुए हैं, वो अपनी ग़लती देखें। क्या उन्होंने सही कंपनी चुनी थी? क्या उन्होंने सिस्टम को फॉलो किया था? क्या उन्होंने मेहनत की थी? क्योंकि नेटवर्क मार्केटिंग फेल नहीं होती, फेल वो इंसान होता है जो सिस्टम को फॉलो नहीं करता।
नेटवर्क मार्केटिंग एक पवित्र बिज़नेस है और हम इसे करते हैं, धड़ल्ले से करते हैं! और तुम जैसे लोगों के झूठ से यह इंडस्ट्री रुकने वाली नहीं है।
1. Q: Is Network Marketing fundamentally legal in India? A: Yes, Network Marketing, officially referred to as Direct Selling, is a legal business model in India. It is regulated under the Consumer Protection (Direct Selling) Rules, 2021, which were notified by the Ministry of Consumer Affairs. These rules provide legitimacy and a clear operational framework.
2. Q: How does legal Network Marketing differ from an illegal Pyramid Scheme? A: The core difference lies in the source of income. A legal Network Marketing business bases commissions on the sale of genuine products or services to consumers. In contrast, an illegal Pyramid Scheme primarily generates revenue by charging high fees to recruit new members, with little to no focus on actual product sales. If money comes mainly from recruitment, it’s likely an illegal scheme.
3. Q: What is the primary law governing Network Marketing in India? A: The primary legal framework is the Consumer Protection (Direct Selling) Rules, 2021. These rules are comprehensive and define the duties and obligations of both the direct selling companies and the individuals who act as their direct sellers, ensuring consumer rights are protected.
4. Q: Do I need a special license to work as a network marketer in India? A: No, you do not need to obtain a personal license from the government. However, you must sign a formal, legally binding contract with a registered direct selling company that complies with all Indian laws and regulations before you can start operating as their direct seller.
5. Q: Is Network Marketing a legal and accepted business model globally? A: Yes, it is legal and regulated in most major economies, including the USA, Canada, the UK, Australia, Japan, and across the European Union. Each country has its own regulatory bodies, like the Federal Trade Commission (FTC) in the US, to prevent fraudulent activities.
6. Q: What is the Prize Chits and Money Circulation Schemes (Banning) Act, 1978? A: This is a crucial Indian law that explicitly bans money circulation schemes. These are schemes designed for making quick money by enrolling members, where the benefit depends on the contingency of further enrollments, not product sales. This Act is the primary legal tool used to prosecute illegal pyramid schemes.
7. Q: How can I check if a network marketing company is legitimate in India? A: To verify a company’s legitimacy, check if it’s on the list of registered direct selling entities on the Ministry of Consumer Affairs portal. Also, ensure it has a physical office in India, offers quality products, has a transparent compensation plan based on sales (not recruitment), and provides a clear refund and grievance policy.
8. Q: What is a “cooling-off period” in network marketing? A: The cooling-off period is a mandatory consumer protection feature. It grants the consumer the right to return the products or services purchased from a direct seller within a specified time (as stated in the contract) for a full refund without any penalty.
9. Q: Must a network marketing company sell only physical goods? A: Not necessarily. While most companies sell physical products like wellness supplements or cosmetics, a legitimate network marketing business can also offer valuable services or digital products. The key is that the offering has genuine market value and sales are made to actual consumers.
10. Q: Is there a worldwide organization for network marketing? A: There is no single global government regulator. However, the World Federation of Direct Selling Associations (WFDSA) is a prominent international non-governmental organization. It represents national Direct Selling Associations (DSAs) and sets global standards for ethical conduct in the industry.
11. Q: Can a government employee legally join a network marketing business in India? A: This is restricted. The Central Civil Services (Conduct) Rules, 1964, generally prohibit government servants from engaging in any trade or business without prior sanction. Joining a network marketing company would require official permission, which is often not granted.
12. Q: Is there a legal limit on the joining fee for a network marketing company? A: While no specific amount is fixed by law, the Direct Selling Rules, 2021, forbid companies from charging unreasonable entry or registration fees. Any initial payment must be for a starter kit or products at a fair cost, not a large, mandatory investment to simply join the scheme.
13. Q: What is the IDSA (Indian Direct Selling Association)? Is it a government body? A: The IDSA is a non-governmental, self-regulatory industry association for direct selling companies in India. Membership is voluntary but signifies a company’s commitment to adhering to a high standard of ethical conduct.
14. Q: Is the income earned from network marketing taxable in India? A: Yes, absolutely. All earnings from network marketing are considered taxable income. You must declare this income in your tax filings, and the company is required to deduct TDS (Tax Deducted at Source) as per the Income Tax Act.
15. Q: Is it legal for a company to operate both as a direct selling entity and a franchise? A: No. The Direct Selling Rules, 2021, explicitly state that they do not apply to franchise models. The legal and operational structures are distinct and cannot be mixed.
16. Q: What legal action can I take if a network marketing company scams me? A: You can file a grievance with the National Consumer Helpline (NCH) or approach the District Consumer Disputes Redressal Commission (Consumer Court). You can also file a police complaint (FIR) under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, if it operates as a pyramid scheme.
17. Q: Is it legal to sell financial services like insurance or investments through network marketing in India? A: Generally, no. Financial products are governed by specific regulatory bodies like IRDAI (for insurance) and SEBI (for investments). These products must be sold by licensed individuals and cannot be distributed through a multi-level marketing compensation plan.
18. Q: What is a “binary plan” and is it legal? A: A binary plan is a compensation structure where a distributor can only recruit two people on their “front line.” The legality of a binary plan depends entirely on its focus. If commissions are paid based on the volume of product sales within the two “legs,” it can be legal. If payments are primarily for filling spots or recruiting people, it becomes an illegal pyramid scheme.
19. Q: Why is network marketing banned or heavily restricted in some countries? A: Countries like China have imposed severe restrictions or outright bans due to past experiences with massive, disruptive pyramid schemes that led to widespread financial loss and social unrest. Their strict laws are a measure to prevent the recurrence of such scams.
20. Q: Is it legal for a network marketer to promise a fixed salary or a “job”? A: No, it is illegal and a major red flag. Legitimate network marketing is a business opportunity, not a job. Income is based on sales commissions and is variable. Promising a fixed salary or guaranteed returns is a deceptive practice prohibited by law.
21. Q: What are a direct seller’s main responsibilities under Indian law? A: A direct seller must have a written contract with the company, accurately identify themselves, provide truthful information about the products and the opportunity, not make misleading income claims, and offer consumers an order form with all necessary details, including the cooling-off period.
22. Q: Can products in a network marketing plan be significantly overpriced? A: While pricing is up to the company, products must have genuine value. If they are drastically overpriced with no clear justification, regulators may view it as a tactic to disguise recruitment fees, which is a hallmark of an illegal pyramid scheme.
23. Q: Is it legal to promote a foreign MLM company not registered in India? A: No, it is illegal. Any direct selling company operating in India must be registered as a legal entity in the country and comply with all local laws, including the Direct Selling Rules, 2021. Promoting unregistered foreign schemes is a violation.
24. Q: What is “inventory loading” and is it legal in India? A: “Inventory loading” is the practice of pushing distributors to buy more products than they can reasonably sell, just to qualify for commissions. This is an illegal and unethical practice under the Direct Selling Rules, as it shifts the focus from retail sales to compulsory purchasing by distributors.
25. Q: Are MLM schemes based on cryptocurrency legal in India? A: These operate in a high-risk, legal grey area. As cryptocurrencies are not legal tender and are largely unregulated, any scheme promising high returns through crypto-based recruitment is extremely suspect. Authorities often classify them as illegal money circulation schemes.
26. Q: Can a network marketing company charge for training and seminars? A: Yes, but the fees must be reasonable and not a hidden cost of entry. If expensive training is made mandatory to join or advance in the compensation plan, it can be considered an illegal practice. The primary business must remain product sales, not selling training materials.
27. Q: What are the legal requirements for a network marketing company’s website in India? A: The company’s website must clearly display its registration number (CIN), contact details, information about its management, product details, compensation plan, and its grievance redressal mechanism. This transparency is mandatory under the rules.
28. Q: Is it legal to sell services like educational courses or travel packages through network marketing? A: Yes, it is legal, provided the services are genuine, have demonstrable value, and are actually delivered to the consumer. The legality depends on whether the business revolves around the sale of these services, not just recruiting people to buy the packages.
29. Q: Do the Direct Selling Rules of 2021 apply across all states in India? A: Yes. The Consumer Protection (Direct Selling) Rules, 2021 are central government rules, making them applicable across all states and union territories of India. States are mandated to enforce these rules.
30. Q: If a network marketing company shuts down, can I get my money back? A: Recovering money can be difficult. If the company declares bankruptcy, you become an unsecured creditor, and recovery is unlikely. If it was a fraudulent scheme, you can file a police complaint and participate in legal proceedings, but recovery of funds is not guaranteed.
Of course. Here is the fourth batch of 10 FAQs.
Network Marketing Legality: FAQs (31-40)
31. Q: Are MLMs promising daily returns from “AI/Robo trading” legal? A: No, these are illegal. Any scheme guaranteeing fixed daily or monthly returns from an investment is typically a Ponzi or money circulation scheme, not legitimate direct selling. Such schemes are banned and often prosecuted as financial fraud.
32. Q: What’s the legal difference between single-level and multi-level marketing? A: In Single-Level Marketing, you earn commission only on your direct sales. In Multi-Level Marketing (MLM), you earn on your direct sales and on the sales of the distributors you recruit. Both are legal in India, provided they are product-focused and follow all rules.
33. Q: Can a network marketing company legally change its compensation plan? A: Yes, companies can update their plans. However, they must provide proper and prior notice to all distributors as per the contract. The changes cannot be made arbitrarily to deny commissions that have already been rightfully earned.
34. Q: Do I need to pay GST on my network marketing income in India? A: Yes, if your turnover exceeds the prescribed limit. If your total annual commission exceeds the GST registration threshold (currently ₹20 lakhs for service providers in most states), you must register for GST and pay tax on your earnings.
35. Q: What is the difference between a Ponzi Scheme and a Pyramid Scheme? A: A Ponzi Scheme is an investment fraud, paying early investors with money from new investors. A Pyramid Scheme is a recruitment fraud, where money is made by signing up new people. Though often linked, a Ponzi is disguised as a financial investment, while a pyramid is disguised as a business opportunity. Both are illegal.
36. Q: Can I return products if the packaging has been opened? A: This depends on the company’s policy. Legally, companies must have a “buy-back” policy for unsold, marketable-quality products. An opened product is usually not considered marketable. However, many companies have a separate “customer satisfaction guarantee” which might allow for returns.
37. Q: Are there any educational requirements to become a network marketer? A: No. There are no legally mandated academic qualifications to join a direct selling business. The opportunity is open to any adult eligible to enter into a contract.
38. Q: What is the role of the Ministry of Corporate Affairs (MCA) in regulating MLMs? A: The MCA is responsible for the registration and incorporation of all companies, including direct selling ones, under the Companies Act, 2013. However, the specific day-to-day operational rules of direct selling are governed by the Ministry of Consumer Affairs.
39. Q: Can my network marketing distributorship be inherited? A: Yes, in most legitimate companies. A distributorship is considered a business asset and can typically be passed on to a legal heir or nominee as per the terms and conditions outlined in the original contract.
40. Q: Is it legal to claim a wellness product can “cure” a disease? A: No, it is strictly illegal. Making unsubstantiated medical claims that a product can diagnose, treat, or cure any disease is a violation of the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954. All product claims must be approved and verifiable.
41. Q: Do any advertising standards apply to network marketers in India? A: Yes. The code set by the Advertising Standards Council of India (ASCI) applies. All claims about products and earnings must be truthful, verifiable, and not misleading. This is an ethical standard that all direct sellers are expected to follow.
42. Q: Can a person under 18 years of age join a network marketing company? A: No. As per the Indian Contract Act, 1872, a minor cannot enter into a legally binding contract. Since joining requires signing such a contract, it is illegal for anyone under 18 to become a direct seller.
43. Q: Is it legal for a company to have a different price for distributors and customers? A: Yes, this is a standard and legal business practice. Companies offer products at a lower “Distributor Price” (DP) to their partners, who then sell them to customers at the Maximum Retail Price (MRP). The difference is the distributor’s retail profit.
44. Q: What is the “70% Rule” in the direct selling industry? A: The “70% Rule” is an industry best practice, not a law in India. It suggests that distributors should sell or consume at least 70% of their previously bought inventory before making a new purchase. This helps prevent inventory loading.
45. Q: Can I work for more than one network marketing company at the same time? A: This depends on the specific company’s policy. Many companies include a non-compete clause in their contract that prohibits their distributors from joining another direct selling company. Breaching this clause can lead to termination of your contract.
46. Q: Are “cashback” MLMs based on e-commerce shopping legal? A: This is a grey area. If the model is based on genuine product sales at fair market value, it might be legal. However, if it involves a significant joining fee and the “cashback” is mainly funded by new recruitments, it would be considered an illegal money circulation scheme.
47. Q: What are my legal options if my distributorship is terminated unfairly? A: Your contract is your primary legal protection. If the termination violates the agreed-upon terms, you should first use the company’s grievance redressal system. If unresolved, you can file a civil lawsuit for breach of contract.
48. Q: How does the Consumer Protection Act, 2019 affect network marketing? A: It has a major impact. The Direct Selling Rules, 2021, were created under this Act. It empowers consumers and holds both companies and individual sellers liable for unfair trade practices, misleading claims, and defective goods.
49. Q: Can religious or political groups legally operate an MLM scheme? A: This is legally problematic and highly irregular. Such organizations would have to register as a for-profit commercial entity and comply with all business and tax laws, which could conflict with their primary status and attract intense regulatory scrutiny.
50. Q: What is the future outlook for network marketing laws in India? A: The trend is towards stricter regulation and greater consumer protection. We can expect more robust enforcement of the 2021 Rules, better state-level monitoring, and clearer legal distinctions to weed out scams, thereby building more trust in the legitimate direct selling industry.
Of course. Here is the sixth batch of 10 FAQs.
Network Marketing Legality: FAQs (51-60)
51. Q: Are there specific rules about how MLM commission plans must be structured? A: The law doesn’t favor any particular structure (like binary, unilevel, etc.). The one non-negotiable rule is that all commissions must be directly linked to the sale of products or services. A plan that pays a direct fee for the act of recruiting someone is illegal.
52. Q: Why is the Amway India case significant for network marketing in India? A: The legal actions against Amway, including asset freezes by the Enforcement Directorate (ED), are significant because they highlight intense regulatory scrutiny. The case revolves around allegations that the company’s business model was a pyramid scheme disguised as direct selling, involving overpriced products. It serves as a strong warning that even established companies are not immune if their practices are deemed non-compliant with anti-pyramid scheme laws.
53. Q: Can a network marketing company legally force distributors to pay for events? A: No. If attending a paid event or training is made mandatory to qualify for commissions or maintain your position, it is an illegal practice. Optional, paid events are allowed, but they cannot be a compulsory requirement of the business model.
54. Q: Can I, as an Indian distributor, sell products to customers in other countries? A: This depends on the company’s policies. You can only sell internationally if the company has an official presence and a system for cross-border commerce in that specific country. Independently shipping products abroad would violate tax, customs, and international trade laws.
55. Q: How is network marketing regulated specifically in Uttar Pradesh? A: In Uttar Pradesh, including cities like Aligarh, network marketing is governed by the central Consumer Protection (Direct Selling) Rules, 2021. The UP state government and its district-level consumer forums are responsible for the on-ground monitoring and enforcement of these central rules.
56. Q: What is a “Cooling-Off Period” for a new direct seller? A: This is a crucial right. It allows a person who has just joined as a direct seller to exit the business within a specified timeframe (as mentioned in the contract) and return their initial starter kit/products for a full refund. This prevents high-pressure recruitment tactics.
57. Q: Are there any products that are legally banned from being sold via network marketing? A: Yes. Any product or service that requires a specific professional license to sell cannot be distributed through network marketing. This includes prescription drugs, regulated financial instruments like insurance or mutual funds, and liquor.
58. Q: Can a customer take legal action against an individual distributor? A: Yes. Under the Consumer Protection Act, a consumer can file a complaint against both the direct selling company and the individual direct seller. Both can be held liable for issues like misleading claims, unfair practices, or defective products.
59. Q: What are the legal consequences for a company found running a pyramid scheme? A: The consequences are severe and can include the immediate freezing of bank accounts, seizure of company assets, and criminal prosecution of the owners and top promoters. They can face imprisonment and heavy fines under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.
60. Q: As of October 2025, what is the Indian government’s general stance on direct selling? A: The government’s stance is to support and provide clarity for legitimate direct selling while actively cracking down on fraud. The 2021 Rules were designed to protect consumers and separate genuine businesses from illegal schemes, indicating support for the industry’s potential for job creation when operated ethically.
Of course. Here is the final batch of 15 FAQs to complete the set.
Network Marketing Legality: FAQs (61-75)
61. Q: Can a company require me to make a minimum monthly purchase to earn a commission? A: This is a grey area. If a mandatory monthly purchase (repurchase) is required regardless of your retail sales, it is illegal inventory loading. However, if commissions are tied to achieving a certain sales volume—which can include personal consumption—it is generally legal, provided the focus remains on sales to end-users.
62. Q: Is it legal for senior distributors to sell their own training systems or tools to their team? A: This is illegal if it’s coercive or presented as a requirement for success. The company is responsible for providing all necessary sales information. When leaders profit from selling their own mandatory “systems,” it’s often viewed as exploiting the downline, a prohibited practice.
63. Q: What is the legal status of “Crowdfunding” based MLMs? A: They are illegal. When crowdfunding is mixed with an MLM structure where people earn money for recruiting others to “donate,” it becomes a classic money circulation scheme with no real product sale, which is banned.
64. Q: Can I operate my network marketing business under a registered company name? A: Often, yes. You can usually register your own firm (e.g., a proprietorship or LLP) and have that entity sign the direct selling contract. However, you must check the specific policies of the direct selling company regarding entity-based distributorships.
65. Q: What is the legal difference between an Affiliate Program and Network Marketing? A: An Affiliate Program is single-level; you earn a commission only when someone you refer makes a purchase. Network Marketing is multi-level; you earn commissions on your personal sales and on the sales made by the network of distributors you have recruited.
66. Q: If I quit the business, must the company refund my starter kit fee? A: Yes. The “cooling-off” period rules grant you the right to a full refund if you quit within the specified initial timeframe. Even after this period, the company’s mandatory “buy-back” policy ensures you can return unsold, marketable products for a refund.
67. Q: Is it legal for an MLM to operate with purely digital products in India? A: Yes, but they face high scrutiny. Selling valuable digital products (like e-learning courses or software) is legal. However, regulators are cautious as low-value digital goods can easily be used to disguise illegal pyramid schemes. The product’s genuine utility is critical.
68. Q: Is it legal to use screenshots of bank statements to promote the business? A: No, this is an illegal and misleading practice. The Direct Selling Rules prohibit making income claims that are not representative of what a typical distributor achieves. Using the high earnings of a few top leaders to entice new recruits is a deceptive practice.
69. Q: Are there specific legal protections for women in network marketing in India? A: The Direct Selling Rules apply equally to all genders. Additionally, women are protected by general laws like the Sexual Harassment of Women at Workplace Act, 2013, which requires companies to provide a safe working environment and a robust grievance redressal system.
70. Q: What does “marketable quality” mean for the product buy-back policy? A: It means the product is in its original condition: unopened, unused, undamaged, and not past its expiration date. Essentially, it must be in a state where the company can resell it to another customer.
71. Q: Is a very complicated compensation plan a legal red flag? A: Yes, it can be. While plans can be detailed, a legitimate company should be able to explain its compensation structure clearly. A plan that is intentionally confusing or opaque is a major red flag, as it may be designed to hide a pyramid structure.
72. Q: Can a company legally terminate my contract for being inactive? A: Yes, if this is clearly stated in the terms of your contract. Most companies have an “inactivity clause” allowing them to deactivate distributorships that show no sales activity over a prolonged period (e.g., 6 or 12 months).
73. Q: Are MLMs based on selling “travel points” or “airline miles” legal? A: These are extremely high-risk. If the points offer real value and are redeemable, the model might be legal. However, most of these are disguised schemes where people are sold overpriced, low-value travel packages, and the only real way to earn is by recruiting others.
74. Q: Does the Indian government endorse or approve any specific network marketing company? A: No. The government and its ministries do not endorse or promote any private direct selling company. Their role is only to regulate the industry as a whole. Any company claiming to be “government-approved” is making a false statement.
75. Q: As of late 2025, what is the most critical question to ask to determine if a company is legal? A: The most critical question is: “Where does the money come from?” If the money primarily comes from selling valuable products and services to actual customers, it’s likely legal. If it comes from recruitment fees, compulsory self-purchases (inventory loading), or selling overpriced tools, it’s likely an illegal scheme.
Guruji Sunil Chaudhary, Leading Digital Coach India,
WhatsApp 9759999231 for Consultation, Coaching, and Guidance
