3. Is notification to the Fair Trade Commission the only requirement for a multi-level marketing enterprise to be considered lawful?
- Since a MLM enterprise may degenerate into conducting unlawful multi-level marketing, regulation by law and governmental oversight is necessary. Legitimate multi-level marketing enterprise, however, can help other enterprises reduce marketing costs and develop sales channels. Consequently, when the Commission drafted the Multi-level Marketing Supervision Act, it adopted a reporting system. The adoption of this low-grade preventive measure of control was based on respect for freedom of commerce. Once a multi-level marketing enterprise has submitted a report to the Fair Trade Commission prior to commencing multi-level marketing, it may promote and market goods without waiting for a government agency to issue an “approval license.”
- It is of course unlawful for a multi-level marketing enterprise to fail to submit a report to the Fair Trade Commission. Yet an enterprise that has submitted a report is not necessarily completely lawful. When an enterprise reports, it merely reports its sales scheme and manner of operation to the Fair Trade Commission for administrative and supervisory purposes. Only the actual situation can be used to determine whether the enterprise is operating lawfully.
Relevant article(s) of law: Multi-level Marketing Supervision Act, Article 6
Updated at：2016-02-22 16:34:14