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Is MLM Legal? Find out how it will be legal and where you can start your next MLM Business legally.
Unless a particular country has laws that prohibit direct selling, MLM is usually perfectly legal. Some countries, states or provinces have laws or regulations that may limit what you’re permitted to do in your MLM business (such as Not For Retail, cooling-off periods, no products kit sales in the first week or month, or similar), how you conduct your MLM business.
The laws are usually a well-meaning attempt by authorities to prevent unethical conduct. Unfortunately, they’re really an attempt to control motives and attitudes, which can’t be legislated, so they too often end up having the wrong effect on the wrong people.
Table of Contents
Is MLM Legal
Legal Concerns
Legally speaking, MLMs have been legal in Singapore since June 2000, when the government finally recognized them as a method of product distribution, rather than a Pyramid Scheme. The land where MLMs first originated with a links2 called Amway) has slapped a whole list of conditions on an MLM system to set it apart from Pyramid Schemes.
Many MLMs toe a very thin line to Pyramid Schemes. The problem does not lie with the marketing system (which actually represents a very cheap method of product distribution for the parent links2). Rather, it lies with the people who promote the products. In some cases, the way the system is run by the links2 also makes it a form of legalized Pyramid Scheme.
As we work with clients and offer our marketing and strategic advice, there is nothing more important we could recommend than to secure solid legal counsel. If we did nothing else but put our clients in touch with who we consider to be the absolute BEST MLM Legal team and Law firm available today, we would be satisfied that we did our duty to better our client’s chances of survival!
Who can start a multi-level marketing MLM company?
A company or manufacturer or a trading company that has some exclusive and unique products or services to market and wants to tap worldwide customers without setting up expensive shops and showrooms with little effort and patience can start MLM Company.
What is the law for setting up Multi Level Marketing Company in India?
There is no separate law for setting up a Multi-Level Network Marketing MLM Company in India now it was proposed in the Indian Parliament in 2005 but has yet not become law however there are certain acts of India’s constitutions that we need to consider before setting up Multi Level Marketing Company:
- It should not be the only headcount commission modal that falls in Pyramid Scheme which is banned in India and covers the MRTP Act alias Money Rotation Trade Practice Banning ACT 1969.
- It should not be only money involved investment return format which falls in PCMC Act alias Prize Chit and Money Circulation banning Act 1978. It should be a feasible Product selling Business Modal.
What is the best practice to set up a Multi Level Marketing Company?
Firstly we recommend you to set up a Private Limited or Limited Company to set up a Multi Level Marketing Company in India which involved limited risk for directors who are setting up a Multi Level Marketing Company Business.
Apply for IDSA (Indian Direct Selling Association) Member Ship. It’s not a government body but it’s a private body set up by Amway India is trying to govern the whole Direct Selling Companies in India with their problem and to stop unethical and illegal MLM companies and Multi-Level Network marketing Business practices to operate and destroying the MLM Business route.
Apply for Vat/Service Tax/ Tan No and all necessary licenses and registration required for manufacturing and selling your product.
Appoint a Legal Advisor and a Chartered Account to create rules and regulation forms, printing materials, other company-related legal documents, and stationary materials. Please do not cut copy paste other companies’ print materials as they may not be applied to your product or MLM Business modal. It is also advisable to develop exclusive website content and information related to the company written by the legal advisor of the company to counter the legal laws of the Land.