Invariably, companies offering financial products follow the traditional pyramid scheme. Meaning, as a new network marketer, you are at the top of the pyramid. You are required to enlist two or more new network marketers. Once again, you are paid a commission or incentive for these new recruits. Your new recruits get more subscribers to the pyramid scheme and get commissions or incentives too. Further, you also get a small portion of the commissions paid by your new recruits and any new members they enlist. Unfortunately, such companies pay you from membership fees received from new recruits. These payments cease the instant any part of this human pyramid fails. Pyramid schemes are also called Ponzi schemes. It gets its name from Carlo Ponzi, a swindler from Italy. Ponzi schemes involve paying older investors from membership fees paid by newer members. There are no legitimate business activities. Pyramid and Ponzi schemes are destined to doom. The moment a few members cannot enroll new recruits or pay membership fees, the pyramid collapses.
Great MLM/ network marketing companies in India
● Amway: This is perhaps the most reputed network marketing companies of India. Amway offers home, beauty and nutritional products.
● Herbalife: A popular brand in beauty and nutritional supplements, Herbalife ranks as the second most popular MLM company in India.
● Forever Living: Also locked in the fray for India’s huge body and healthcare products is Forever Living. This company has made forays into rural India too, thanks to depots opened at strategic places to keep network marketers well stocked and faster deliveries.
● DXN: A South Korean company that offers exclusive, traditional products from hitherto unknown formulae and recipes. DXN has recently entered herbal beverages market in India through its network marketers.
● Avon: The oldest company and pioneer of MLM is also present in India through its wide base of network marketers. Avon cosmetics and beauty products are in great demand in the local market.
Although these are popular and recommended in India but you can join these companies from any part of the world.
Legality of MLM companies in India
In recent months, all nutritional supplements offered by foreign-based MLM companies are under the scanner of FSSAI (Food Safety and Standards Authority of India) and Food and Drug Administration. The Ministry of Ayush plans to regulate import, distribution and sale of these products, based on proven medical values and benefits. The move comes in wake of hundreds of complaints from Indian consumers. Apparently, some unscrupulous MLM firms had dumped substandard nutritional supplements in the local market. They are alleged to have caused varying degrees of harm to consumers. Several Indian states including Kerala and Rajasthan have specific laws governing MLM/ network marketing companies and activities. Also note, MLM schemes offering financial products are outlawed in India under the Prize Chit and Money Circulation (Banning) Act 1978. Offering any products that contravene Indian laws is thus a criminal offense. Following adoption of Goods and Services Tax (GST) across India from July 1, 2017, all network marketers are mandatorily required to switch to the new taxation system. Some nutritional and beauty products from abroad offered by MLM firms have already become expensive. India is moving towards a new Maximum Retail Price (MRP) system post-GST. Hence, all MLM firms are now required to display MRP of their products clearly on their labels.
Obviously, network marketing business is a great way to get rich quickly. However, you need to get associated with a great company. Before entering into any network marketing/ Multi Level Marketing/ Pyramid or Ponzi scheme, it is better to take a few precautions.
● Ensure that the scheme is legal in your country.
● Verify credentials of the MLM company and its officials.
● Network marketing financial schemes that offer high returns on low investments can be frauds.
● Read testimonials and reviews about the company.
● Do not invest or sell in any products offered by dubious network marketing companies.
