The government is taking steps to regulate multilevel marketing (MLM) to protect consumers from deceptive business practices, especially the growing issue of pyramid schemes disguised as MLM, according to the Minister of Trade and Industry, Prudence Sebahizi.

Regulation of multilevel marketing is one of the proposals in the draft law relating to competition and consumer protection which is in Parliament for consideration.

Multilevel marketing is the practice of selling goods or services on behalf of a company in a system whereby participants or distributors receive commission (variable-pay remuneration or compensation) on their sales as well as the sales of any participants they recruit.

Understanding multilevel marketing and pyramid schemes

Sebahizi told The New Times multilevel marketing is distinct from pyramid schemes in several ways. In MLM, revenue is mainly generated through the sale of products, while pyramid schemes rely on recruitment fees, Sebahizi said.