Many people who rely on the income from MLM are worried that the new proposals will outlaw all Multi Lvel Marketing in India. Others feel that MLM can never be banned as is obvious from failed attempts towards it in countries such as UK. They feel that the Government’s attempt is to close the loopholes for Ponzi schemes to operate. Even if enacted, it is not clear how effective an amended law can be in India where enforcement has been a challenge in many other areas. Experts think that even in the US, where MLM is legal, it is very difficult to detect a Pozni scheme masquerading as an ML. Federal Trade Commission recently updated its website with the following clarification
“Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”
The new economy is bringing new ways of making money. But is it all that new? Chit funds have been popular among common folk in India. Can trust be replaced by any piece of law? Even fifty years ago anyone could have run a Ponzi scheme disguised as a chit fund. It probably would not have worked because the informality and sense of belonging among the participants and the owner of the Chit fund. So are Governments everywhere not able to sustain these values anymore?