New Delhi: Direct selling companies on Friday sought a separate regulatory framework for the sector in order to demarcate it from fraudulent pyramid and ponzi schemes in the wake of arrest of Amway India top officials, including CEO William Scott Pinckney.
The representative body of direct selling companies, including Amway, Oriflame and Tupperware, the Indian direct Selling Association (IDSA), also condemned the arrest of Pinckney and the two directors of the company Sanjay Malhotra and Anshu Budhraja in Kerala.
"We want definitional clarity and operational framework under which the direct selling industry can operate. Prize Chits and Money Circulation Scheme (Banning) Act (PCMC) of 1978 is inapplicable for direct selling industry and we want a clear exclusion from it," IDSA Chairman Amarnath Sengupta told the agency.
He was speaking on the sidelines of an event organised by the industry body on 'Regulatory Challenges and Operational Ambiguities on Direct Selling Industry'.
"IDSA has been continuously advocating with the Government of India since last many years and we as an industry body association would want to emphasise on separate regulation that should govern this industry," he added.
This lack of clarity in regulations for the sector, which has generated revenues of Rs 6,000 crore, and events such as unwarranted arrest of Amway officials, will dampen the spirit and confidence level of 50 lakh distributors, he said.
"There should be clear distinction between the direct selling industry and the fraudulent financial pyramid and ponzi schemes," Sengupta said.
Direct selling does not envisage promoting or conducting any scheme for making of money by enrolment of distributors as mentioned in the Section 2(C) of PCMC Act. The revenues for the direct selling industry comes from selling of products and services, he claimed.
Voicing concerns of the sector, IDSA Secretary General Chavi Hemanth said: "The focus of regulation should be to identify which practises are fraudulent and it should lay down certain specifications for the protection of consumers, distributors as well as the direct selling entity."
There is need to take into consideration the global best practises while designing a comprehensive legal framework to regulate the direct selling in the country, she added.
First Published: Friday, May 31, 2013, 17:02