CLARIFICATION LETTER OF MINSTRY OF CONSUMER AFFAIRS AGAINST THE LETTER ISSUED BY SHRI WAJAHAT HABIBULLA, THE THEN SECRETARY OF THE MINISTRY ABOUT MULTI-LEVEL MARKETING / NETWORK MARKETING

F.No.21/(22)/IT/2001

GOVERNMENT OF INDIA
Ministry of Consumer Affairs, Food & Public Distribution
Deptt. of Consumer Affairs

Shastri Bhavan, New Delhi.

Dated: 23.9.2003.

TO
Ms. Sunitha Kaila,
Dy. Director General & Joint Secretary,
Ministry of Finance, Department of Revenue,
Central Economic Intelligence Bureau,
6th Floor, 'B' Wing, Janpath Bhavan,
Janpath, New Delhi 110 001.

Sub: Applicability of the Provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 to pyramid marketing structures / schemes - regarding.

Madam,

 I am directed to refer to your D.O. letter no.301/15/200-CEIB (Pt.-II) dated the 22nd September, 2003 adressed to Shri Wajahat Habibbullah, Secretary (Consumer Affairs) on the subject mentioned above and to say that this Department was considering the issue of direct selling / network / multi-level marketing as an alternative form of marketing of goods ad the entire issue was looked from that angle. However, subsequent feed back/response have showed that companies using pyramid structed marketing techniques too sell their products putting forth theri schemes based on the clarification issued vide D.O. letter of even no. dated the 31st March, 2003 claiming that their activities also do not fall within the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. It is clarified that this Department's clarification of even number dated 31st March, 2003 does not cover pyramid structed marketing schemes. That area also does not fall within the purview of this Department.

This issues with the approval of Secretary (CA).

Yours faithfully,

sd/-(Alice Chacko)

Under Secretary to the Government of India.

Copy to:

Chief Secretaries of all States and Uts.