New Delhi, December 29, : .The Union government has notified the Consumer Protection Rules 2021 and requested that direct-selling companies comply within 90 days.The new regulations of the Ministry of Consumer Affairs, Food and Public Distribution will apply to any goods and services purchased or sold via direct selling, as well to all companies that offer goods and/or services to Indian consumers.
The new rules prohibit direct sellers and companies from encouraging pyramid schemes or enrolling anyone to them.
They also ban direct sales businesses or participants in money circulation schemes.
These new regulations direct state governments to establish a monitoring and supervision mechanism for the direct seller and the direct selling entity.
It also makes it mandatory that direct selling entities be incorporated under the Companies Act (2013), registered as a partnership under the Partnership Act (1932), or registered as a limited liability partnership under the Limited Liability Partnership Act (2008).
A minimum of one location must be provided as the registered office for a company in India.
Companies are also required to declare that they have followed the requirements of direct selling regulations.
To sell goods and services to entities, they must first have an agreement in writing with their direct sellers.
This will allow them to authorize the sellers to offer or sell goods and services to the entity.It also ensures that its direct suppliers have valid identities, physical addresses and issue documents and identity cards to these direct sellers.
The entity is responsible for any grievances stemming from the direct seller’s sale.
Direct selling entities should have a system for consumers to file complaints through their offices, branches, or directly sellers.
All direct selling entities need to keep a record of each of its direct sellers including identity, address, and other information.
Any direct selling company must provide information to a customer who makes a request after he has purchased any goods and services.
This information should include contact information, name and address and all other necessary information for communication.
New rules stipulate that direct sellers must make sure that their advertisements are compatible with actual characteristics, accessibility, and usage conditions.
No direct selling entity may, directly or indirectly claim to be a consumer or post reviews or misrepresent any aspect of the goods or service it sells.
Each direct selling organization must keep a list of pertinent information that allows for identification of direct sellers delisted by it.This record must then be made public on the website.All direct selling entities must also become partners in the convergence of the Central government’s national consumer helpline, as per the newly added norms.
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