Through new Consumer Protection Rules, MLM pyramid schemes are now prohibited in India.
After the regulations were put into effect in 2021, MLM firms had 90 days to comply.
according to MoneyLife;
According to the new regulations, it is now against the law for any direct selling businesses and sellers to advertise pyramid schemes, sign up new members for them, or engage in any other arrangement resembling a pyramid scheme while purporting to be in the direct selling industry.
States are required to “watch and control” the operations of MLM businesses and require them to register with the government.
Additionally, it is now necessary for a direct selling business to self-certify that it has complied with the direct selling laws and to have at least one physical location in India serving as its registered office.
Additional consumer rights regarding refunds and marketing are also included in the new regulations.
It’s interesting to note that if you leave an MLM business, the business is obligated to put your name on a list on its website.
According to my understanding, the Prize Chits and Money Circulation Schemes (Banning) Act, which was passed in 1978, already makes MLM pyramid schemes illegal in India.
Similar to many other nations, India’s regulation of MLM schemes isn’t so much a legal issue as it is the absence of enforcement that leads to the proliferation of illicit schemes.
It remains to be seen if the new rules would encourage Indian governments to step up their regulation of MLM pyramid schemes.
Even if the new rules had an impact, I believe that the majority of MLM firm failures would still be in the “conventional” sector. The laws don’t appear to target the expanding MLM cryptocurrency sector in any way.