Direct Selling Compliance

Regulations in an ever-growing MLM Industry

According to estimates the Direct Selling industry will become a 15,000+ Crore industry by the end of 2021 and it will employ approximately 1.81 Crore people by 2025

Call us to know more
title
image
Direct Selling

Industry Regulation

Governments are taking steps to regulate this industry

Regulating Measures
  • As Direct Selling or MLM Industry grows in size and becomes a significant part of the economy, central and state government agencies find it necessary to regulate and monitor the industry
  • To save public from Fraudulent Companies that promote themselves like MLM Companies in the market have also contributed to the rising need of regulating this industry
  • In Sep. 2016, Central Government has issued Direct Selling Guidelines and made it compulsory for Direct Selling Companies to comply with these guidelines
  • With time regulating agencies have become more aware & vigilant towards; and they are taking appropriate actions to make sure that Direct Selling Companies operate according to guidelines
image
Effects on your

MLM Business

What this means for your Direct Selling Company ?

Legal Recognition
  • Prior to these efforts by the Government it was very difficult and expensive for a Direct Selling company to show / prove that it is not a fraudulent company
  • By issuing Guidelines & including direct selling in the Consumer Protection Act 2019, Government is recognizing this industry & supporting genuine Direct Selling Companies
  • Compliance with Guidelines is clarifying the difference between Direct Selling Companies and Fraudulent (money circulation, prize chits, ponzi scheme, pyramid scheme) Companies
  • Guidelines give public a certain level of confidence that if a given Direct Selling Company is complying with the guidelines then it it safe to be associated with the Company
Direct Selling Guidelines

Consumer Affairs Compliance

Why your MLM Company must comply with Direct Selling Guidelines

service

It’s Compulsory

Ministry of Consumer Affairs requires every Direct Selling Company operating in India to comply with Direct Selling Guidelines 2016

service

Better Sales

When you comply with the Guidelines and operate according to them, your Direct Sellers can confidently promote your company

Call Now to Know More

(+91) 76 0000 7036
step by step guide

How to comply with Direct Selling Guidelines 2016

If you are operating your MLM Business in India, it is mandatory to comply with MLM Guidelines

1
Understanding Direct Selling Compliance : Statutory & Guideline Specific
2
Define Direct Seller’s Responsibilities and prepare its legal standing
3
Define Company’s Responsibilities and prepare its legal standing
4
Prepare your Compensation Plan : Compliant, Attractive & Sustainable
5
Prepare Policies, Agreements and various other required documents
6
Submit Declaration stating you are complying with Guidelines
7
Address Queries, Resolve / Correct discrepancies and Submit Answers
8
Understand and Comply with State Government's Guidelines / Rules
9
Operate your Company According to the Direct Selling Guidelines / Rules
image
Understanding Direct Selling Compliance

Statutory & Guideline Specific

  • To get started you have to understand various regulatory and statutory compliances that you will have to perform on a time to time basis.
  • The language of the Direct Selling Guidelines 2016 is quite simple and straight forward still there are a lot of legal references and some complex terminologies that you have to understand carefully
image
Define & Prepare Direct Seller’s

Responsibilities & its legal standing

  • You have to define responsibilities you want to be fulfilled by the Direct Sellers
  • These responsibilities must be according to the Direct Selling Guidelines 2016
  • You have to prepare these in a properly enforceable and legally binding format
image
Define & Prepare Company’s

Responsibilities & its legal standing

  • You have to define your responsibilities as a Direct Selling Entity
  • Such responsibilities must include those required by Direct Selling Guidelines 2016
  • You have to prepare these in a properly enforceable and legally binding format
image
Prepare your Compensation Plan

Compliant, Attractive & Sustainable

  • As per the Direct Selling Guidelines 2016 you have to prepare a Compensation Plan which incentivise your direct sellers based on sales of products or services
  • You must not provide any incentive / income whatsoever based on the recruitment of distributors
image
Prepare required documents

Policies, Agreements & others

  • There are some mandatory documents (ie. various policies and agreements) which you need to submit along with your declaration
  • Apart from these documents you may need to submit other supplementary documents depending upon your undertaking
LET'S WORK TOGETHER

We Love to Help You Start & Grow Your MLM Business

Request a call back

Or call us now (+91) 76 0000 7036

shape
shape
shape
shape
image
Submit Declaration stating

You are Complying with Guidelines

  • Once you prepare everything you have to submit an undertaking declaring that your Company complies with the Direct Selling Guidelines 2016 to the Government
  • This submission is not a registration, its a mandatory declaration which states that your MLM Company is in compliance
image
Address, Correct & Resovle

Queries / Discrepancies and Submit Answers

  • After you submit your undertaking, some issues, mistakes or discrepancies may arise in your submission which will be raised & provided to you by the department
  • You need to address, understand & resolve those queries then you have to submit the amendments / answers to properly rectify lackings in your submission
  • Failing to do so might indicate that your undertaking is withdrawn
image
Understand and Comply with

State Governments' Guidelines and Rules

  • As per the Direct Selling Guidelines 2016, the Department(s) appointed by the State Governments are the authority overseeing the Direct Selling Guidelines Compliance in that State, each state has their own implementation of Guidelines / Rules which needs to be followed
  • Once the submission is completed with the Central Government, you should understand the compliance requirements of specific states and fulfil them to comply with State Guidelines / Rules
image
Operate your Company

According to Guidelines / Rules

  • What most people don’t realize while Starting their company is that Direct Selling Guidelines are not just paperwork & submissions, it's a framework and principles to be followed when you run your company
  • You will not be able to run your company if you do not understand the Guidelines yourself, so it is very important that you yourself and the Key management personnel of your company clearly understand the guidelines in depth to make sure that you become and remain compliant with the Guidelines
  • The Direct Selling Guidelines are published in English & Hindi languages, a lot of the clauses and sub-clauses are quite clear and easy to understand, however there are a lot of details which may be hard to understand. And moreover you also have to understand the implications of these clauses and sub-clauses in your day to day operations

Risks associated with delayed Guidelines Compliance

Not complying with Direct Selling Guidelines 2016 comes with risks which may result into a long-term disadvantage for your MLM Company

Required by the Ministry of Consumer Affairs
Your company may lose credibility in the Market
Starting with a plan which may not be compliant
Bad Reputation associated with non-compliant plan
Lack of trust & confidence among Consumers
Lack of Clarity among your Direct Sellers
Costs of changing Compensation Plan
Long-term disadvantages of non compliance
Contact Now

Write a Message

We hate spam and we respect your privacy.

enquire
We Help MLM Businesses To Succeed
x
Starting NEW MLM Company?
Click here to Start Now
//