Friday, January 22, 2010

Ministry proposes amendments to Direct Selling Act

PETALING JAYA: Amendments to the Direct Selling Act 1993 aimed at preventing scams in the industry will be tabled at the next Parliamentary sitting this March.

The amendments would be necessary to clarify the definitions of direct sales so there can be a clear distinction from legitimate direct selling methods and scams by certain people who operate pyramid-scheme type of recruitment, said Domestic Trade, Cooperatives and Consumerism minister Datuk Seri Ismail Sabri Yaakob.

"At the moment there is a thin line between direct sales and pyramid scheme. The revision will not only help us distinguish the two, but also empower the ministry to take effective actions against these (irresponsible) companies," he said at the official opening of the Amway headquarters here on Friday, Jan 22.

Previously, Ismail Sabri said direct selling was used as a front for get-rich-quick schemes, and there was a proliferation of such scams on the Internet.

He added that aspects of enforcement would be improved so that people who conducted pyramid schemes could be booked with higher penalties.

Despite the current revision to the act, the ministry approved licences for 32 new direct selling companies last year.

"We are still awarding licences to these companies but only after we have reviewed their business model and have found no discrepancies. Even then, we only approve new companies with licences of one year period, while established companies such as Amway can renew their licences for five years," he said.

He said that there are currently 497 licensed direct sales companies in Malaysia.

The Direct Sales Association of Malaysia (DSAM) reported that the direct selling industry was worth RM5.6 billion in 2008 with RM3.15 billion being contributed by 55 multinational and local companies who are members of DSAM.

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