Legal Principles of Multilevel Marketing - BizBasket's view

Dear BizBasket Viewers,

In accordance with our pursuit of educating masses about the Multilevel Marketing / Direct Selling industry we are writing this article to provide a simple and clear cut understanding about the basic legality governing this industry at large. The one and only Act which govern this business is Mischief Of Prize Chit Fund and Money Circulation (Banning) Act, 1978.

Whether a program is a legitimate multilevel marketing plan or an illegal pyramid depends principally on:

(1) The method by which the products or services are sold; and 

(2) The manner in which participants are compensated. 

Essentially, if a marketing plan compensates participants for sales by their ""enrollees," "recruits," and/or their downline enrollees and recruits, that plan is multilevel. If a program compensates participants, directly or indirectly, merely for the introduction or enrollment of other participants into the program, it is a pyramid.

Broken into individual components, the elements that must be met to establish a multilevel company or multilevel marketing plan include:

Elements of a Multilevel Compensation Plan	Does Speak Asia Meet These Elements?
(1) A person, firm, corporation or other business entity
(2) which (a) sells;or (b) distributes; or (c) supplies
(3) for consideration
(4) goods or services
(5) through independent agents, contractors, or distributors
(6) at different levels
(7) participants may recruit other participants
(8) compensation to participants is paid as a result of (a) the sale of such goods or services; or (b) the recruitment, actions or performance of other participants

Pyramids, endless chain schemes, or chain referral schemes are illegal. Thus, so long as a multilevel compensation plan does not fit within the parameters of the prohibited activities, it is permissible (at least as regards anti-pyramid laws).

Elements of a Pyramid	Does Speak Asia Meet These Elements?
(1) A scheme, plan or program;
(2) For which a participant renders consideration to join;
(3) For the right or chance to receive compensation or other things of value;
(4) Which is contingent upon the introduction of additional participants into the scheme, plan or program.

If any of the elements listed above are absent, the program does not violate anti pyramid legislation.

ANALYSIS OF SPEAK ASIA BUSINESS MODEL BY BIZBASKET:

If we analyse the business model of the Speak Asia Online Pte. Ltd. we find following facts:

1. There is a service involved i.e. "Survey" or "Market Research Activities". 
2. Members are being paid for their "work", i.e. filling up Surveys or participating in Market Research Activities.
3. Referral of new members is "Optional" and "not compulsory". 

If we test this business model to determine the legality we may clearly understand that the points mentioned above makes this model completely legal which dose not violate any law of the land. Having said this whatever is going on these days in various courts, media and government departments, may delay the ultimate legal victory to Speak Asia Online but it cannot stop this Company from doing its business under any circumstance. Only condition is the Company and its 20 Lakh panelist dose not give the fight in between and take this battle to its final conclusion.