F.No.

21/(22)/IT/2001 Government of India Ministry of Consumer Affairs, Food & Public Distribution Dept of Consumer Affairs Shastri Bhavan, New Delhi Dated 23.09.2003 To Ms. Sunitha Kalla, Dy Director General & Joint Secretary Ministry of Finance, Dept of Revenue, Central Economic Intelligence Bureau 6th Floor, B Wing Janpath Bhavan Janpath, New Delhi Subject: Applicability of the Provisions of the Prize Chits & Money Schemes (Banning) Act, 1978 to pyramid marketing structure/schemes - Regarding. Madam, I am directed to refer to your D.O. Letter No. 301/15/200-CEIB (Pt-II) dated 22nd September 2003 addressed to Shri Wajahat Habibullah, Secretary (Consumer Affairs) on the subject mentioned above and to say that this department was considering the issue of direct selling/network/multilevel marketing as an alternative form of marketing of goods and the entire issue was looked from that angle. However, subsequent feedback/response have showed that companies using pyramid structured marketing techniques to sell their products putting forth their schemes based on the clarification issued vide D.O. letter of even no dated the 31st March, 2003 claiming that their activities also do not fall within the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. It is clarified that this Department's clarification of even number dated 31st March, 2003 does not cover pyramid structured marketing schemes. That area also does not fall within the purview of this Department. This is issued with the approval of Secretary (CA). Yours faithfully (Sd) Alice Chacko Under Secretary of Govt of India Copy to : Chief Secretaries of all States and Union Territories. Circulation