DIRECT SELLING AND PYRAMID SCHEME
“Direct Selling” means marketing, distribution and sale of goods or providing of services as a part of network of Direct Selling other than under a pyramid scheme.
“Pyramid Scheme” means:
A multi layered network of subscribers to a scheme formed by subscribers enrolling one or more subscribers in order to receive any benefit, directly or indirectly, as a result of enrolment, action or performance of additional
subscribers to the scheme. The subscribers enrolling further subscriber(s) occupy higher position and the enrolled subscriber(s) lower position, thus, with successive Enrolments, they form multi-layered network of subscribers.
Provided that the above definition of a “Pyramid Scheme” shall not apply to a multi layered network of subscribers to a scheme formed by a Direct SellingEntity, which consists of subscribers enrolling one or more subscribers in order toreceive any benefit, directly or indirectly, where the benefit is as a result of sale ofgoods or services by subscribers and the scheme/financial arrangement
complies with all of the following:
a) It has no provision that a Direct Seller will receive remuneration orincentives for the recruitment / enrolment of new participants.
b) It does not require a participant to purchase goods or services:
i. for an amount that exceeds an amount for which such goods or
services can be expected to be sold or resold to consumers;
ii. for a quantity of goods or services that exceeds an amount that can
be expected to be consumed by, or sold or resold to consumers;
c) It does not require a participant to pay any Entry/ registration fee, cost of sales demonstration equipment and materials or other fees relating to
participation;
d) It provides a participant with a written contract describing the “material terms” of participation;
e) It allows or provides for a participant a reasonable cooling-off period to participate or cancel participation in the scheme and receive a refund of any consideration given to participate in the operations;
f) It allows or provides for a buy-back or repurchase policy for “currently marketable” goods or services sold to the participant at the request of the participant at reasonable terms;
g) It establishes a grievance redressal mechanism for consumers, more
“Pyramid Scheme” means:
A multi layered network of subscribers to a scheme formed by subscribers enrolling one or more subscribers in order to receive any benefit, directly or indirectly, as a result of enrolment, action or performance of additional
subscribers to the scheme. The subscribers enrolling further subscriber(s) occupy higher position and the enrolled subscriber(s) lower position, thus, with successive Enrolments, they form multi-layered network of subscribers.
Provided that the above definition of a “Pyramid Scheme” shall not apply to a multi layered network of subscribers to a scheme formed by a Direct SellingEntity, which consists of subscribers enrolling one or more subscribers in order toreceive any benefit, directly or indirectly, where the benefit is as a result of sale ofgoods or services by subscribers and the scheme/financial arrangement
complies with all of the following:
a) It has no provision that a Direct Seller will receive remuneration orincentives for the recruitment / enrolment of new participants.
b) It does not require a participant to purchase goods or services:
i. for an amount that exceeds an amount for which such goods or
services can be expected to be sold or resold to consumers;
ii. for a quantity of goods or services that exceeds an amount that can
be expected to be consumed by, or sold or resold to consumers;
c) It does not require a participant to pay any Entry/ registration fee, cost of sales demonstration equipment and materials or other fees relating to
participation;
d) It provides a participant with a written contract describing the “material terms” of participation;
e) It allows or provides for a participant a reasonable cooling-off period to participate or cancel participation in the scheme and receive a refund of any consideration given to participate in the operations;
f) It allows or provides for a buy-back or repurchase policy for “currently marketable” goods or services sold to the participant at the request of the participant at reasonable terms;
g) It establishes a grievance redressal mechanism for consumers, more
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I have found many senior people inadvertently got trapped into such scheme and later run helter-skelter to recover their lost money. When explained to them about the scheme that they are in they got disappointed. People have faith and some take undue advantage of it. It is advised that any such scheme please don't get involved immediately, always take some time and discuss with your dear and near one about the scheme and I am sure someone will catch up the underlying factors and advice you to keep away. As the economy says there is no free lunch in the economy. one cannot make money on others effort whatever may be the scheme. Thanks more
Apr 05
