New Delhi: The Centre has notified new rules direct selling industry which prohibit both direct selling entities and direct sellers from promoting any pyramid scheme or money circulation scheme.
The rules entail duties and obligations for both direct selling entities and direct sellers to safeguard the interests of consumers.
A Ministry of Consumer Affairs, Food and Public Distribution release on Tuesday said the direct selling entities would be liable for the grievances arising out of the sale of goods or services by its direct sellers. Existing direct selling entities have to comply with these rules within ninety days.
The state governments need to set up a mechanism to monitor or supervise the activities of direct sellers and direct selling entities.
The releases said that both direct sellers, as well as the direct selling entities using e-commerce platforms for sale, shall comply with the requirements of the Consumer Protection (e-Commerce) Rules, 2020.
It said that Central Government has notified the Consumer Protection (Direct Selling) Rules, 2021 and these will apply to all goods and services bought or sold through direct selling, all models of direct selling, all direct selling entities offering goods and services to consumers in India, all forms of unfair trade practices across all models of direct selling and also to a direct selling entity which is not established in India but offers goods or services to consumers in India.
Direct selling entities and direct sellers are prohibited from “promoting a pyramid scheme or enrolling any person in such scheme or participate in such arrangement in any manner whatsoever in the garb of doing direct selling business”.
They are also prohibited from participating in money circulation schemes in the garb of doing direct selling business.
“Rules provide for monitoring by the state government. For ensuring compliance of these rules by direct selling entity and direct sellers, every state government to set up a mechanism to monitor or supervise the activities of direct sellers and direct selling entity.”
A direct selling entity should have a minimum of one physical location as its registered office within India.
They should have a grievance redress officer to acknowledge the receipt of any consumer complaint within 48 working hours of receipt of such complaint and redresses the complaint normally within a period of one month.
Every direct selling entity is also required to have a nodal officer who shall be responsible for ensuring compliance with the provisions of the Act.
“Every direct selling entity shall establish a mechanism for filing of complaints by consumers through its offices or branches or direct sellers, either in person or through post, telephone, e-mail or website,” the release said.
“Every direct selling entity shall, on the request in writing made by a consumer after the purchase of any goods or services, provide him with the information regarding any direct seller from whom such consumer has made a purchase,” it added.
The release said a direct seller shall not visit a consumer’s premises without an identity card and prior appointment or approval and provide any literature to a prospect, which has not been approved by the direct selling entity.
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