Centre notifies the Consumer Protection (Direct Selling) Rules, 2021

Tags: National News

• On December 28, the central government issued new regulations for the direct selling business, paving the way for the formalization of the direct selling industry while also intending to keep a check on this so-far unregulated segment.
• This is notified by the Ministry of Consumer Affairs, Food, and Public Distribution.
• It is notified under the Consumer Protection Act 2019.
• The direct selling industry’s major participants in India include companies like Tupperware, Amway, Herbalife, and Oriflame.

Highlights-

• Existing Direct Selling entities need to comply with these rules within ninety days.
• The rules apply to all India-based direct selling companies as well as to any direct selling entity that is not established in India but offers goods or services to consumers in India.
• Direct selling entities and direct sellers using e-commerce platforms for sale, should also comply with the Consumer Protection (e-Commerce) Rules, 2020.
• Direct selling entities and direct sellers are prohibited from:

• Promoting a Pyramid Scheme or enroll any person to such scheme or participate in such arrangement in any manner whatsoever in the garb of direct selling business;
• Participate in money circulation scheme in the garb of doing direct selling business.

• State Government to set up a mechanism to monitor or supervise the activities of direct sellers and direct selling entity.
• Direct sellers must have at least one physical location as their registered office within the country.
• Direct selling entities to be liable for the grievances arising out of the sale of goods or services by its direct sellers.

As per data published by the World Federation of Direct Selling Association (WFDSA), the retail size of the Indian direct selling industry was valued 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 employs over 7.4 million active direct sellers.