MLM Product Labelling Laws

Why Most Direct Selling Companies Get Penalized Without Realizing It

In India, selling products through a direct selling company or MLM company does not mean product laws are relaxed. In fact, product compliance is one of the most sensitive legal areas for every direct seller and direct selling company. Most government action against MLM companies today is triggered not only by compensation plans but by wrong, missing, or misleading product labels.

Under Indian law, every product sold by a direct selling company must comply with multiple labeling laws including the Legal Metrology Act, Consumer Protection Act, FSSAI Regulations, Drugs & Cosmetics Act, and AYUSH Rules. A single mistake on a product label can lead to seizure, fines, product bans, and even criminal prosecution.

Why Product Labeling is So Important for MLM Companies

Unlike retail stores, MLM companies sell products through thousands of direct sellers who interact directly with consumers. This makes regulators extra strict. If a consumer files a complaint about misleading claims or missing information, the direct selling company becomes legally responsible even if the mistake was unintentional.

That is why proper labelling is not a formality — it is a survival requirement for every MLM company.

Mandatory Information on MLM Products

Every product sold by a direct selling company must clearly display:

• Product name
• Net quantity
• MRP (Maximum Retail Price)
• Manufacturer & marketer details
• Batch number
• Date of manufacture & expiry
• Customer care details
• Country of origin
• All ingredients or composition
• Usage instructions and warnings

If any of this is missing or incorrect, the MLM company violates Legal Metrology and Consumer Protection law.

Health, Ayurveda, Nutrition & Cosmetic Claims

Most MLM companies sell health, ayurvedic, cosmetic, and nutrition products. These are the most heavily regulated categories. A direct selling company cannot make claims like “cures diabetes”, “treats cancer”, “guaranteed weight loss”, or “medical replacement” unless approved by law.

When a direct seller makes such claims on social media or in meetings, the MLM company becomes legally liable. Product labeling must match what is allowed by FSSAI, AYUSH, or Drugs authorities.

Misbranding Can Shut Down Your MLM Company

If a product label is misleading, incomplete, or exaggerated, it is considered misbranding. Authorities can seize stock, block sales, and order recalls. This has destroyed many direct selling companies that were otherwise legally structured.

Import & Third-Party Manufacturing Risks

Many MLM companies import products or use third-party manufacturers. Even then, the direct selling company is responsible for labeling compliance. You cannot blame the manufacturer if labels are wrong.

Why Product Law Is the Weakest Link for MLM Companies

Most MLM founders focus on software and commissions but ignore packaging laws. This creates massive legal risk. A single inspection can wipe out an entire direct selling company.