Network marketing / Direct selling / Multilevel marketing operations the grip tightens on Ponzi schemes (And “Direct selling companies”)

In your mind you might not be operating, or involved with a Ponzi scheme.

But in the mind and eyes of the authorities if they believe you to be involved with, or running a Ponzi scheme then what ever you say or think does not matter.

On the face of it those words might appear to be too strong and harsh but as more and more companies take advantage of the unsuspecting public, so law makers are forced to take action to punish promoters of such schemes at the same time as protecting the public.

India has become a breeding ground for such schemes the majority of which are being promoted by organizations operating outside of India who believe that by so-doing that they can navigate Indian rules and regulations.

The India’s Ministry of Finance’s “Standing Committee on Finance” (SCF) have just completed its report on “Efficacy of Regulation of Collective Investment Schemes (CIS), Chit Funds, etc. in which it has made a number of observations / recommendations to strengthen the regulatory framework for unauthorized deposit taking activities. This 97-page report can be accessed through the official website of Lok Sabha –

This is a highly in-depth and complicated report to read but suffice it to say the main elements are:

  1. If you knowingly operate an illegal MLM/Direct selling/online company that falls foul of this proposed legislation all members of staff stand the risk of being imprisoned for a minimum of 5 years.
  2. If you promote such scheme as an independent operator enticing people to join, then you too will face similar punishment.

The question therefore that needs to be asked is are you prepared to sacrifice your freedom in the pursuit of short term financial gain.

As mentioned at the top of this article, regardless your opinion or argument if the authorities believe your scheme is a Ponzi scheme – Then it is!

The next question is - How to protect yourself?

As a company, verify that your documentation, policies and procedures, code of conduct, direct seller agreement, compensation plan and long form description comply to the existing laws in India + Are the terms and policies fair for all stakeholders? + Does your company ensure firm obedience of the policies, code of conduct, etc.

As a direct seller, check with the professionals on the ground in India.

Don’t take the word of your up line, or leader, as you are responsible for your own decisions and freedoms.

Strategy India, specializes in development of fair and ethical policies for customers and direct sellers to ensure a win-win situation for all.

For more information: [email protected]

Reference: Banning of unregulated deposit schemes and protection of depositors’ interest Bill 2015. Download