- by Super User
The benefits and consequences of the law
By Damien Lee
In the past, network marketing companies that are not genuine in helping people achieving financial freedom often gets away by avoiding being question. This has left many consumers upset, and loses even more money than they ever were. In order to prevent such companies from causing injustice to the consumer, the government have setup a law to prevent them from happening again.
Networking marketing companies not only have to apply for their business license, there is an act and license that all network marketing company needs to adhere to and apply. It’s called Direct Sales and Anti-Pyramid Scheme Act 1993 also known in Bahasa as Akta Jualan Langsung Dan Skim Anti Piramid 1993 [Akta 500].
Network marketing company that have this license can buy their end user’s confidence as it’s been approved by government for its operation. Having this license means that their products, compensation plan and the company has been reviewed by the Ministry of Domestic Trade, Co-operatives, and Consumerism, also known in Malay as Kementerian Perdagangan Dalam Negeri, Koperasi Dan Kepenggunaan (KPDNKK).
The application for an AJL license would take about 6 months or more as per local representatives due to the preparation of the documents, and careful review by the ministry. The on-going resubmission of the documents are the time consuming parts. Therefore the network marketing business owners need to prepare as many detailed documents as possible to get it reviewed without much revision. The AJL consultant will assist in applying this AJL license.
The revisions and resubmissions are caused by quality control. Ministry of health have to ensure that the product consumed by the end user are not harmed, therefore lab test results are required to pass. This affects companies that deals with supplements and cosmetics.
The marketing plan also need to adhere to the Anti Pyramid Scheme Act. The ministry’s mission is to ensure that the consumers are not cheated in purchasing their membership, protecting the consumer. Therefore the board will review if there is any element of pyramid scheme in the marketing plan. As long as there is justification on the source of the income, not by the means of directly paying previous members with new member’s investment, then the marketing plan will have a smoother process.
Without this license the network marketing company can be assumed as non-legal, where mature end users will cast doubts on the whole company. Thus hindering the process of converting prospects to consumers.
There are events where government enforcersraided the offices where Business Opportunity Presentation that are taking place, claiming that the company is not a registered networking marketing company thus asking the crowd to disperse and forced the office to stop its operation. One of the prominent news was in 2014 where Zhang Jian’s premises were sealed.
One of the question they had in mind was that should they start the business operation first before getting the AJL license? There is no definite answer, however they should start the business first by doing their own selling, doing presentation to a small group of customers until there is a proven financial income and consult the AJL consultant on getting the license. Over the course of selling, the owners should have known how to operate within the law.
Talk to your current vendors as they have close connections with the industry players.