Economic Reporter :
A number of name-based Multi Level Marketing (MLM) companies are cheating in the name of direct selling business and embezzling money from the people as there are no specific rules.
Multi Level Marketing (MLM) Control Act-2013 was formulated to stop cheating with the clients. As per the law, maximum 10 years imprisonment or Tk 50 lakh penalty or both will applicable, if any company is being found guilty.
A provision has also been made for the appointment of administrator and the companies are required to obtain a certificate within 90 days. But no company have not receive license in the last eight years.
According the Commerce Ministry sources, the MLM companies have not been given license since the law was passed in 8 years ago as some of the rules of the law were supposed to be amended.
Commerce Ministry Secretary Dr Md Zafar Uddin said, “We have drafted a revised rule and there have been several review meetings in this regard, but yet to be completed.”
“It will be published in the form of gazette notification after the vetting of the law ministry,” he added.
It is learnt that several name-based MLM companies are conducting their activities, despite the courts ban and cheating the people as there is no specific rules in this regard.
Sources said that several companies had started their business before the law was passed. After enacting the law, their business was almost shut down as the commerce ministry does not issue any license.
The non-issuance of new licenses is creating obstacles in conducting business of the previously licensed companies.
Various countries including India, Malaysia, USA and UK have legally allowed the MLM business in their countries. If MLM business is allowed in our country, the government’s revenue will increase through collecting Value-Added Tax (VAT). On the other hand, employment opportunities will be created for many unemployed people.
Direct selling is a business model in which a company utilizes person-to-person interactions to sell products.
Typically the process involves an independent seller buying the goods from the parent company and then selling them to other individuals, sometimes recruiting them to also become independent sellers.
Direct selling companies can specialize in anything from wellness supplements to cosmetics to household items.
The direct selling market is controversial, with several major companies being accused of forming “pyramid schemes”, an unsustainable business model in which sellers receive money for recruiting other sellers, who must also recruit their own sellers in order to turn a profit, creating a business structure that resembles a pyramid.
Since 2015 the global retail sales from direct selling have increased from about 184 billion US dollars to approximately 192 billion dollars in 2018.
Direct selling companies specializing in wellness products make up a 33 percent share of sales in this industry, making it the largest direct selling product category.
