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 05-SEP-2013, KeraLa : As discussions are going on to draft a bill to regulate multi-level marketing (MLM) schemes in the state, Former Finance Minister and MLA T M Thomas Isaac took strong exception to the conditions for direct marketing listed out in the proposed draft bill.

He was responding to an article published by Express on widespread criticism that the conditions for direct marketing suggested in the proposed draft bill prepared by an expert committee led by Industries Department Secretary K S Srinivas entertain ‘endless chain’ business model, which would result in an illegal pyramid plan.
Terming it a toothless set of guidelines, Isaac said: “There are so many ways of getting round these conditions. The companies can have bonus system, can offer prizes based on selling or give away awards by arranging a convention and the like. So, this is insufficient to check fraudulent schemes.”
The draft bill states: “It shall not restrict the number of distributors that can be registered or enrolled by direct sellers under this Act or require them to enroll any fixed number of distributors for receiving any type of commission, incentive or other benefits.”
Isaac suggested that such a bill should not be brought in without proper public discussion. “It has to be discussed with organisations of traders. The government should look into the norms and regulations being followed by other countries, where MLM companies are functioning. A comparative statement of these rules should be presented. Then only, we can devise a stringent legislation,” he said.
Stating that there is hardly any comparative advantage for direct selling business, Isaac said, “we are not against direct marketing as such. But, in course of time, they acquire the nature of a ponzi scheme. And, these model will definitely collapse on some day. Besides, the products are exorbitantly priced. If we enact a piece of legislation in this way, it would be like legalising such unjust economic practices.”
Former Finance Minister T M Thomas Isaac criticised the claim of MLM companies that they rope in investment to the country. “It’s not true. In fact, such an amount can be mostly raised from within the country itself. Unfortunately, the UPA Government has always shown least resistance to foreign capital,” he said. 

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