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New Delhi , Sept. 25

AFFECTED by unscrupulous players in the segment, direct selling companies on Thursday asked the Government to formulate legislation to weed out fly-by-night operators.

"Our biggest challenge is to put an end to the unethical practices being adopted by such companies which in turn damage the credibility of the genuine companies," the World Federation of Direct Selling Association Chairman, Mr Dick DeVos, said at a news conference here.

"We are particularly concerned about the re-emergence of pyramid companies or money circulation schemes that masquerade as genuine direct selling ventures," the Indian Direct Selling Association (IDSA) Chairman and Managing Director of Avon Beauty Products, Mr Harmeet Pental, said.

Though such schemes are prohibited under the Prize Chits and Money Circulation Scheme (Banning) Act, these activities are still being carried out under various disguises, he said.

In India, the direct selling market has a turnover of Rs 2,300 crore. IDSA has a membership of about 15 companies, while there are about 300 direct selling companies in India in the organised and unorganised market collectively. Some of the major players in the segment include Amway, Oriflame, Tupperware and Avon.

The direct selling industry has been growing at 25 per cent annually over the last six years and has emerged as a lucrative `venture' for fraudulent operators who are peddling `get rich quick' schemes in the name of direct selling, Mr DeVos said.

"Lack of adequate regulatory mechanism makes it much easier for these elements," he said.

Countries such as the US, the UK, Hong Kong, Thailand and Japan, among others, have separate laws for the direct selling industry.

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