Committee formed to regulate issues of direct selling industry

NEW DELHI: The Consumer Affairs Ministry has constituted an inter-ministerial committee to regulate functioning and suggest legal action against companies engaged in direct selling/network/multi-level marketing.

The committee to be headed by Rajiv Agarwal, Secretary, Department of Food and Consumer Affairs, will have representatives of department of Finance Services, department of Revenue, Ministry of Corporate Affairs and Reserve Bank of India as its members, an official statement said today.

It will consider enactment of legislation to regulate the direct/multi-level marketing companies.

They will also organise an awareness campaign under "Jago Grahak Jago" to protect the interest of the consumers in respect of such multi-level marketing schemes and study international best practices to protect consumers.

The committee shall submit its report by August 2012. Direct selling is the sale of a consumer product or service, person-to-person, away from a fixed retail location, marketed through independent sales representatives who are sometimes also referred to as consultants, distributors or other titles.

Direct sellers are not employees of the company. They are independent contractors who market and sell the products or services of a company in return for a commission on those sales.

However, many MLM companies, such as Speak Asia and Gold Quest, have been accused of money laundering by some of the people who invested in them.

Top multi-level marketing companies operating in India include Amway, Oriflame, Avon and Tupperware.