The central government on December 28 notified new rules for the direct selling industry banning companies from promoting pyramid and money circulation schemes. The entities have to ensure that these new rules are complied by within 90 days.
According to the new rules, the direct selling companies will also be liable for the grievances arising out of the sale of goods or services by its direct sellers.
Tupperware, Amway and Oriflame are among the key players in the direct selling industry. The Consumer Protection (Direct Selling) Rules, 2021 notified by the nodal Consumer Affairs Ministry are to be complied with by both direct selling entities and direct sellers using e-commerce platforms for sale.
As per the new rules, state governments will have to set up a mechanism to monitor or supervise the activities of direct sellers and direct selling entities. Direct selling entities are also liable for the grievances arising out of the sale of goods or services by its direct sellers.
Here are a few other rules direct selling entities must abide by:
Every direct selling entity has to establish an adequate grievance redressal mechanism and display the current and updated name, contact details including telephone number, email address and designation of such officer on its website, and the details of its website shall also be prominently printed on the product information sheet or pamphlet.
The grievance redressal officer must acknowledge the receipt of any consumer complaint within forty-eight working hours of receipt of such complaint and redresses the complaint normally within a period of one month from the date of receipt of the complaint and in case of delay of more than a month, reasons for the delay, and the actions taken on the complaint, are informed to the complainant in writing.
Every direct selling entity shall appoint a nodal officer who shall be responsible for ensuring compliance with the provisions of the Act and the rules made there under, and to ensure compliance with any order, or requisition, made in accordance with the provisions of any other law for the time being in force or the rules made thereunder.
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.
Every direct selling entity shall maintain a record of all its direct sellers, including their identity proof, address proof, e-mail and such other contact information.
Direct selling entities 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, and such information shall include the name, address, e-mail, contact number and any other information which is necessary for making communication with such direct seller for effective dispute resolution.
Such entity shall ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services.
No direct selling entity shall, directly or indirectly, 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.
A direct selling entity which explicitly or implicitly vouches for the authenticity of the goods or services sold, or guarantees that such goods or services are authentic, shall bear the liability in any action related to the authenticity of such goods or services.
Notwithstanding the distribution system adopted by it, a direct selling entity shall monitor the practices adopted by its direct sellers and ensure compliance with these rules by means of legally binding contract with such direct sellers.
Every direct selling entity shall maintain a record of relevant information allowing for the identification of all direct sellers who have been delisted by the direct selling entity and such list shall be publicly shared on its website.
Every direct selling entity shall become a partner in the convergence process of the National Consumer Helpline of the Central Government.
(With inputs from PTI)
