Govt issues draft norms to regulate direct selling cos

Source: TOI

What is the News?

The Ministry of Consumer Affairs has issued the Draft for Consumer Protection Rules (Direct Selling) 2021.

Key Features of the Draft Consumer Protection Rules (Direct Selling) 2021:

Applicability of Rules: These rules will apply to:

  • All goods and services brought or sold through direct selling
  • All direct selling entities such as Amway, Tupperware offering goods and services to consumers in India
  • All forms of unfair trade practices across all models of direct selling
  • Direct selling entity which is not established in India but offers goods or services to consumers in India.

Registration:

  • Every direct selling entity carrying out business in India will have to be registered with the Department for Promotion of Industry and Internal Trade(DPIIT) and must have at least one office in India.
  • The registration number has to be displayed prominently on its website and all invoices. They will also need to have dedicated executives to address grievances and comply with the government directives.
  • Such direct selling entities will also need to have a 24×7 customer care number to resolve all issues.
No Pyramid Scheme:
  • No direct selling entity will be allowed to promote the ‘Pyramid Scheme’ and participate in the ‘Money Circulation Scheme’ in the garb of direct selling business.
  • The pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, instead of the sale of products or services.
No Entry Fee for Agents:
  • Direct Selling entities will be barred from charging any entry or registration fee from agents. They can’t charge for the cost of equipment and materials for sales demonstrations from their agents as well.
  • Moreover, a direct selling entity would also have to take back spurious goods or deficient services and will have to refund the consideration paid for goods and services provided by it.
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