The biggest challenge the Indian direct selling industry faces today is that of regulatory uncertainty and lack of legislative support in expressly recognizing the industry as falling outside the prohibitions of the PCMC Act.
The PCMC Act is a ‘banning’ act and not a ‘regulating’ act. It sets out a framework to ban certain activities, which come under the purview of ‘Prize Chits’ and ‘Money Circulation’. QNET’s business, in the definition in the said Act, is neither prize chits nor money circulation. The Act deals with the banning of a scheme, which is aimed at making quick or easy money and on the happening of a contingent event. In the case of QNET, we neither fall under the category of making quick and easy money, nor is there any event which is contingent in nature. Also, there is no ‘entry fee’ or periodical subscription required here pursuant to Section 2(c) of the Act.
Section 2(c) the PCMC Act defines “money circulation schemes” as:
“… any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions”
The Act bans all illegal money circulation schemes. It does not regulate the direct selling or MLM industry.