Model framework for regulating Direct Selling and Multi-Level Marketing (MLM) businesses in India. Protecting consumer rights while enabling legitimate business growth.
Rights & Safety
No Pyramid Schemes
Clear Contracts
Regulatory Standards
Download official regulatory documents and guidelines for Direct Selling and MLM compliance
The Direct Selling Guidelines 2016 were issued by the Government of India to regulate Direct Selling and Multi-Level Marketing businesses, preventing fraud while protecting consumer rights.
These guidelines provide a framework for State Governments to strengthen regulatory mechanisms and ensure legitimate business operations.
SoftBuilders is a specialized software provider. Our platform is engineered with built-in compliance tools, transparency features, and automated reporting systems to facilitate regulatory adherence.
While our technology enables compliance, it is the Direct Selling Entity's sole responsibility to ensure their business model, compensation plan, and ground operations strictly adhere to the Direct Selling Guidelines 2016 and all local laws.
Strict prohibition with clear definitions to prevent fraudulent structures
Clear terms and conditions for all participants with material terms defined
Right to cancel participation without penalty during specified timeframe
Product return guarantees at reasonable terms for marketable goods
Mandatory complaint mechanisms with tracking and resolution timelines
A person appointed by a Direct Selling Entity through a written contract to undertake direct selling business on principal to principal basis.
An entity not engaged in pyramid schemes, which sells or offers to sell goods/services through direct sellers.
A network of direct sellers at different levels who may recruit further levels, including multi-level marketing distribution.
A multi-layered network where subscribers receive benefits for enrolling others, rather than from sale of goods/services. Strictly Prohibited!
The compensation system that must derive from sale of goods/services, not from recruitment of participants.
Duration during which a direct seller may repudiate the agreement without penalty for breach of contract.
Every Direct Selling Entity must comply with these mandatory conditions to operate legally in India
Company must be registered under Indian laws with proper documentation
Provide fair and accurate information on all aspects including remuneration system
Full refund within 30 days of product distribution to sellers
Identified jurisdiction in the state for consumer support and grievance redressal
With all relevant details, products, income plan, and complaint redressal mechanism
Issue proper ID cards to all direct sellers with company branding
Maintain complete details with verified proof of address, identity, and PAN
Promoters/management must not have criminal convictions in last 5 years
Our MLM software is built with regulatory compliance at its core, helping you meet all requirements automatically.
Built-in contract management system with all material terms clearly defined and digitally signed.
Automated register of direct sellers with verified KYC, PAN, address proof, and activity tracking.
Remuneration system designed to derive from product sales only, not from recruitment.
Automated cooling-off period tracking and buy-back policy management with refund processing.
Built-in complaint management system with tracking, escalation, and resolution workflows.
Complete transaction logs, income reports, and audit trails for regulatory compliance.
Our software handles all regulatory requirements automatically, so you can focus on growing your business.