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New curbs on direct selling, e-commerce firms

KT NEWS SERVICE. Dated: 12/29/2021 9:19:32 AM

NEW DELHI, Dec 28: The Centre on Tuesday notified the Consumer Protection (Direct Selling) rules to put a curb on the foreign entities offering goods and services to consumers without having any establishment in India.

The Rules also put under check all goods and services bought and sold through direct selling and engaged in unfair trade practices. Existing direct selling entities need to comply of these rules within 90 days from the date of publication of these rules in the Official Gazette.

Under the rules, the direct selling entities and direct sellers are prohibited from

(i) Promoting a Pyramid Scheme or enroll any person to such scheme or participate in such arrangement in any manner whatsoever in the garb of doing direct selling business;

(ii) Participate in money circulation scheme in the garb of doing direct selling business.

The rules require the state government to monitor and supervise the activities of direct sellers and direct selling entities.

Certain obligations imposed on the direct selling entities mandates that they should have at least one physical location as its registered office within India and they should declare not to involve in any pyramid scheme or money circulation scheme.

The direct selling entities have to state on their website the registered name of the entity, their registered address and that of branches, contact details, including e-mail address, land line and mobile number of consumer care and grievance redressal officers.

The rules also require that direct selling entity and a direct seller shall not induce consumers to make a purchase based upon the representation that they can reduce or recover the price by referring prospective customers to the direct sellers for similar purchases.