Ban on selling through network marketing will curb commercial fraud in Oman

Muscat: The decision to ban selling, advertising, or promotion of goods and services through network marketing schemes will significantly help in limiting commercial fraud, the Ministry of Commerce, Industry and Investment Promotion (MoCIIP) said on Sunday.

“The decision will help in protecting competition between institutions and companies, and protecting individuals from engaging in such practices,” MoCIIP said.

The Ministerial Decision No (105/2021), recently issued by the MoCIIP, aims at preventing such practices.

Commentating on the issuing of this ministerial decision, Dr Mohammed bin Rashid Al Badi, Acting Director of the Legal Department at MoCIIP said, “Network or hierarchical marketing activity begins with an individual or by a company at the top of the pyramid, who persuade people to buy a product or subscribe into the group by paying a certain amount of money, with the promise of giving him services or a symbolic profit if he/she can convince others to join his/her list, where the biggest beneficiary is the one who is at the top of the hierarchical group.”

“It must be noted that there is a lot of confusion among the public regarding hierarchical or network marketing, as most of these concepts are different components of the concept of direct selling," Dr Maha bint Khamis Al Balushi, Assistant Professor of Marketing and Identity at Sultan Qaboos University, said.

“Indirect sales marketing one sells at a fixed retail site. Despite the popularity of direct selling, there are many types of distributors with different motives. The multi-level marketing is considered as a part of the network marketing and has a multi-level commission reward structure based on the volume of sales of products at competitive prices,” she further added.

Dr Maha Al Balushi emphasised that the decision to ban sales through the pyramid scheme helps to control these types of activities.

“While this decision contributes to regulating the direct sales marketing industry in Oman, as this industry also contributes to the country's gross domestic product (GDP). For example, the legitimate direct sales marketing industry has contributed to developing India's economy with the major initiatives launched by the government such as Made in India, Skill India, Startup India etc,” she added.

Sameh bin Salem Al Adawi said, “The ministerial decision to ban the sale, advertisement or promotion of goods, products and services in Oman is a timely decision and coincides with Oman’s 2040 vision to develop Oman's economy as well as reducing the movement of anonymous funds.”

“It will also contribute to limiting the exit of funds abroad, reducing the transfer of unknown funds through bank accounts, limiting the marketing of unapproved products, and will contribute to controlling the prices and quality of goods in the local market,” he further added.