Post Amway, direct sellers seek separate policy

R. Ravikumar Chennai | Updated on March 12, 2018

Argue that commercial activity cannot come under Prize Chits Act

Trade bodies and consumers’ associations have urged the Central Government to bring in a policy framework for direct selling business.

The recent arrest of William Pinckney, CEO of Amway India, by the Andhra Pradesh police is unfortunate and highlights the need to define the business in the provisions of the Prize Chits and Money Circulation Scheme Banning Act 1978, says Bejon Misra, former Chairman of the Consumer Coordination Council and international consumer policy expert. This, he says, will ensure that direct selling companies are not penalised, as they do not sell financial products.

Misra says the Government must immediately pass an ordinance to protect the genuine direct selling companies and subsequently enact an exclusive law to protect the interests of consumers who use the products of such companies.

Ajay Khanna, Chairman of India Direct Selling Association and Country Manager, Herbalife (another direct-selling FMCG company), argues that there is a clash between pyramid / Ponzi schemes and the direct selling industry. Direct selling differs both in form and function from such fraudulent schemes. The Prize Chits and Money Circulation law was formed for financial establishments. Direct selling should not be covered under its purview as it is a trade and commerce activity.

No definition

Mohan R. Lavi, Member, Ficci Sub-Committee on Direct Selling, said direct selling has not been defined in any Act.

Because of this, other Acts (such as the Prize Chit and Money Circulation Act) are being misinterpreted and applied to such cases. This, he said, is unfortunate as the PCMC Act is primarily concerned with distribution of monies while in the case of Amway there are underlying products involved. I do not see money being circulated amongst Amway members without the sale of an underlying product, he said.

Published on May 30, 2014

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