MLM Bill in Limbo, Money Chain Biz Flourish

Admin   |   12 June, 2015   |   770   |   3980

KOZHIKODE: With the drive initiated against multi-level marketing (MLM) companies across the state coming to a standstill, several such firms have become active again, police officials said.

The proposed Kerala State Multi-level Marketing (Control and Regulation) Bill, 2013, to regulate MLM business in the State has been rendered to cold storage and the probe into several high profile cases are facing  roadblocks because of interference, sources pointed out.

 “This include cases against Amway, RMP, Nano Excel, Tycoon Empire and Orbit 9X etc, which siphoned off crores from the State,” said  a senior official who investigated the cases in Kozhikode.

The crux of the Bill is that it restricts the “distributor from appointing or entrusting any person with the task of doing the business on behalf of himself or a direct seller or an MLM entity” to prevent money chain model of operation. “If the Bill is implemented, all MLM companies would have to shut shop,” he said.

The State Government had invited suggestions from trade union leaders regarding the Bill. All India MLM Employees’ Federation is now suspicious of the delay in framing the legislation.

“The Government first banned flex boards in the State and then rolled back the decision. The same is happening with MLM companies,” alleged Kalathingal B Suresh Kumar, general secretary, All-India Multi-level Marketing Employees’ Federation.

The company Orbit 9X had recently swindled crores from people in Kozhikode, Wayanad and Palakkad districts. Though Kunnamangalam police registered a case and arrested some of the accused, there is no headway.

As per the proposed Bill, a registered ‘MLM’ or ‘direct selling’ company can appoint ‘direct sellers’ and each ‘direct seller’ can have ‘distributors’ under him. However, the distributor cannot appoint any person to work under him. It clearly points out that the income plan of a MLM entity shall not be based on the registration or enrolment of new direct sellers.

The draft bill proposes the constitution of a Multilevel Marketing Regulatory Authority for the registration, monitoring and supervision of MLM business in the State.

It also clearly distinguishes a direct seller from a distributor and states that the relationship among direct-level marketing entity, direct seller, distributor and consumer or customer will be that of  principal, agent, sub-agent and third parties, respectively.

The Bill further says that the Director of Industries and Commerce will be the controller of the authority with powers to give or refuse registration to MLM companies, direct sellers and distributors, issue identity cards to direct sellers and distributors, to monitor the payment of taxes and to receive complaints from direct sellers, distributors and customers against the MLM companies.

As per the Act, no MLM entity can do business in the state without a valid registration under this Act.