Consumer Protection (Direct Selling) Rules 2021 –
The Union Government in exercise of the powers conferred by the Consumer Protection Act, 2019 has notified the Consumer Protection (Direct Selling) Rules 2021.
As per the new rules, Direct selling entity and direct sellers are prohibit from Promoting a Pyramid Scheme or enroll any person to such scheme or participate in such arrangement.
They are also prohibit from participating in money circulation scheme in the name of direct selling business.
The Consumer Protection (Direct Selling) Rules, 2021 notified by the nodal Consumer Affairs Ministry are to be comply with by both direct selling realities and direct merchandisers using commerce platforms for sale.
The realities have to insure that these new rules are comply by within 90 days. Still, the correctional vittles under the Act will apply to them, If these rules aren’t comply with.
New Rules of Consumer Protection (Direct Selling) –
Direct selling entity and direct sellers are prohibit from:
- Promoting a aggregate Scheme or enroll any person to similar scheme or share in similar arrangement in any manner whatsoever in the garb of doing direct selling business.
- Share in money rotation scheme in the garb of doing direct selling business.
- Direct merchandisers must have at least one physical position as their listed office within the country.
- Make a protestation that they aren’t involve in any aggregate scheme or money rotation scheme, as per the Consumer Protection (Direct Selling) Rules, 2021 notified by the Ministry of Consumer Affairs, Food and Public Distribution.
- Every direct selling entity shall appoint a nodal officer who shall be responsible for ensuring compliance with the provisions of the Act.
- Under the rules direct selling entities are also liable for the grievances arising out of the sale of goods or services by its direct sellers.
- Every direct selling reality shall establish a medium for form of complaints by consumers through its services or branches or direct merchandisers, either in person or through post, telephone, e-mail or website.
- Every direct selling reality shall maintain a record. of all its direct merchandisers, including their identity evidence, address evidence, e-mail and similar other contact information.
- Similar reality shall insure that the announcements for marketing of goods or services are harmonious with the factual characteristics, access and operation conditions of similar goods or services.
- No direct selling reality shall, directly or laterally, falsely represent itself as a consumer and post reviews about its goods or services or misrepresent the quality or features of any of its goods or services.
- As per the new rules, state governments will have to set up a medium to cover or supervise the conditioning of direct merchandisers and direct selling realities.
What is direct selling realities?
Direct-selling companies follow a model of selling to consumers through distributors and network or multi-level marketing (MLM), instead of through traditional retail channels. Some direct selling company like Amway, Oriflame, Tupperware.
As per data publish by World Federation of Direct Selling Association (WFDSA), retail size of the Indian direct selling industry was value at $3 billion,
or about Rs 22,500 crore, in 2020 with year-on-year growth of 28.3%, making it the fastest-growing market in the world.
The sector provides livelihood to more than seven million in the country of which over 50% are women.
What is pyramid scheme?
Pyramid scheme is a business model that recruits or engages members with a promise of payments or services for enrolling others into the scheme, instead of sale of products or services.
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