Indian MoCA: Newspapers should be MLM police
To be honest I’m not really sure what’s going on in India at the moment regarding MLM regulation.
Last we checked in the Department of Financial Services had recommended amending the 1978 Prize Chits and Money Circulation Act to “ban multi-level marketing companies“.
At the time this seemed like a bit of a knee-jerk reaction, as last July the Department of Consumer Affairs (DoCA) established a committee ‘to establish guidelines to separate legitimate MLM companies from the scams‘.
After missing a self-imposed deadline in early 2013 that came and went, a new deadline was set for April 30th that then also passed without comment from DoCA.
Finally breaking the department’s silence, Corporate Affairs Minister Sachin Pilot made an announcement yesterday on the matter.
The problem? By all accounts the DoCA and the Department of Financial Services appear to be well at odds with each other.
Speaking to the Press Trust of India, Pilot stated
While we must take strong action against the companies that are misusing the laws and duping investors, reputed companies that are doing good work and did not violate any Indian laws should be allowed to operate without any fear. They must be given confidence.
My Ministry (Corporate Affairs) and Ministry of Consumer Affairs are now working on clarifying these guidelines (for multi-level companies).
Glad to hear it although one can’t help but wonder why it’s taken so long (we’re going on a year since DoCA established their committee).
How DoCA’s guidelines are going to fit in with the Department of Financial Services’ recommendations is unclear. One department is calling for the wholesale banning of MLM while the other seeks to establish guidelines for legitimate MLM companies to follow.
In the meantime, you’ve got the whole Indian MLM industry caught in the crossfire. Ultimately I suspect some sort of compromise is going to be reached, with MoCA’s guidelines being passed into law and any MLM company (legitimate and scams alike) failing to abide being taken down by Indian regulators (who are hopefully given increased policing powers in related matters).
One particular comment I thought was strange though from Pilot was his criticism of Indian newspapers:
The Minister said the newspapers also have a larger role to play as watchdogs and should not entertain paid advertisements from illegal companies.
“Sometimes newspapers publish advertisements placed by companies running illegal schemes to dupe the investors.
The newspapers have a larger role to play in being watchdogs of investors and refuse such paid advertisements in the best interest of readers. Companies must deliver what they promise.”
Newspapers are now to determine whether or not MLM companies are legit? How’s that going to work when the regulating authorities don’t even have any guidelines to currently follow?
Ultimately if clear-cut guidelines are in place and Indian regulators have the policing powers required to take down scams targeting the Indian market, the problem of advertisements in newspapers should fix itself.
Asking newspapers to determine which companies are legit (purely on an advertising level) just seems silly. Any more so than the media having to investigate the legitimacy of any company they carry advertising for.
The problem lies with the companies themselves, not how and where they are marketed.
No way this idea will work.
Newspapers will get sued left and right by everybody remotely related to the scheme.
SpeakAsia already sued a comedy skit TV parody of itself, and plenty of SpeakAss’es tried to claim that “newspapers are against us” bull****.
That’s probably about publishing rules / publishing guidelines.
Most publishers have internal rules for what they can and will publish, and external professional rules of conduct. They will also need to follow other laws directly or indirectly related to the material they’re publishing, e.g. marketing laws and commercial laws.
And that’s a part of the point. They don’t need to determine whether a company is legal or illegal, they can simply evaluate the material they’re about to publish. They can simply reject to publish an advertisement if there’s serious doubts about it, or they can ask for more information if there’s minor doubts.
Shyam Sunder of corporate frauds watch is very agitated these days as his career of corporate blackmail seems headed downhill. As such, he’s having a go at poor little sachin pilot, who is just about learning to reach his office at MOCA alone without getting lost .
for more fun read the article at corporatefraudswatch.blogspot.in
sachin pilot is going to make a very good minister one day, and we need more intelligent, educated, savvy younger guys like him.
but dear sachin, please make those guidelines first and everything else will fall into place. it’s irresponsible to ask newspapers to make the call on legality of companies. it’s your job, do it.
For some strange reason shyam sunder of corporate frauds watch thinks direct marketing in india should be governed by the archaic PCMC banning act of 1978 and hence the MLM industry should be banned. Currently he’s pissed that little sachin pilot, minister, MOCA, will NOT tow his line and so he shot off a legal notice to him.
Well, judgments of the high courts will naturally be based on current law, the courts cannot create law on their own , so using the excuse of court judgments which are based on archaic laws is an argument with no merit.
But the drama is nice, and cant wait for sachin’s response. DSA, india, if it is really alive, should file a PIL demanding to know the govt’s take on MLM once and for all. if they wont, AISPA will. We want new legislation and if the govt wont act, the courts will have to force them.
meanwhile read shyam sunder’s antics at :
http://corporatefraudswatch.blogspot.in/2013/06/union-minister-sachin-pilot-served.html