MLM (Multi-Level Marketing): Is MLM Legal or Illegal in India?

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MLM means multilevel marketing. In other words, MLM is like network marketing. In MLM, salespersons are assigned to sell the Company’s products. The salesperson can assign a new salesperson, as in the chaining system.

So basically, MMultilevelmarketing is network marketing. It uses a chaining system. Forever and Vestige are examples of MLM companies.

About MLM (Multi Level Marketing)

The roots of multilevel marketing are intertwined with those of the Amway Corporation and its Nutrilite product line. The Nutrilite concept is said to have originated during the early 1930s in the mind of Carl Rehnborg, an American businessman who lived in China from 1917 to 1927. At first, MLM was not about the product but money. But that was Illegal because the man on top of the pyramid ran with the collected amount. So basically, that was a financial fraud. So, this practice was declared illegal. After that, MLM, based on product selling and marketing, comes into play. Many companies like AWPL, Forever, and Vestige are popular MLM companies in India.

HOW MLM WORKS

MLM works on network marketing, chain base, and Pyramid infrastructure.

This is the pyramid infrastructure used by MLM.

The owner of the Company recruits some employees. They work as salespeople for the Company and can recruit new employees. MLM enables direct selling. A chaining system like Ram recruits three employees; every employee requires three new employees, and so on.

This is how chaining works in MLM.

Is MLM Legal or Not?

Multilevel marketing is legal in many countries, including India. For some reason, like in MLM, there are no salaried employees, but they have to work without salary to increase their level. Because of this, MLM is banned in many countries. But it is legal in India. However, some companies use products only as a token to circulate money. These are illegal companies and cause losses to their employees.

How To Check Whether MLM Company is Legit Or Not?

A legitimate company wants to sell its products, not focus on increasing the number of employees. Conversely, illegal MLM companies focus on increasing the number of employees in the system instead of selling products. Illegit companies use the products as tokens. Their main task is to take the collected money and run away.

So, if you are willing to work in MLM, you must check whether the Company is legitimate. Here are some points to watch to achieve this before joining the Company.

If a company is legit, then :

  • The Company’s products will be of good quality.
  • Pricing of products will be reasonable.
  • The Company will focus on selling products rather than increasing the number of employees.
  • No fake promises and Fake dreams.

If the Company contains this quality, then we can say the Company is legitimate. And one can join the Company as a direct seller.

Summary

So, this was all about MLM. How it works, its qualities, and other things. First, if you are going to join any MLM company, you must ensure it is legitimate by checking the qualities mentioned in the above list. MLM is a growing infrastructure in India, so one can join and earn money. But the main thing is to ensure the Company is legit. That is all from my side about MLM.

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