Multi-level marketing vs Ponzi schemes

Two recent developments, the collapse of the Saradha group in West Bengal and the arrest of senior executives of Amway India in Kerala, have highlighted serious shortcomings in the Indian legal framework. One, the main legal weapon available to the government in this regard, the Prize Chits and Money Circulation Schemes (Banning) Act of 1978, is unable to stop early enough operations that defraud large numbers of poor people. Two, there is no clarity on whether provisions of this law are applicable to multi-level marketing operations like Amway.

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