Centre Notifies Consumer Protection Rules, Asks Direct Selling Entities To Comply In 90 Days

New Delhi: The Central government on Tuesday notified the consumer protection rules 2021 and asked the existing direct selling entities to comply those within 90 days.

According to a release of Ministry of Consumer Affairs, Food & Public Distribution,  the new rules will be applicable to all goods and services bought or sold through direct selling, all models of direct selling, all direct selling entities offering goods and services to consumers in India, all forms of unfair trade practices across all models of direct selling and also to a direct selling entity which is not established in India, but offers goods or services to consumers.

As per the rules, direct selling entity 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 doing direct selling business.
• Participate in money circulation scheme in the garb of doing direct selling business.

The state governments have been directed to set up a mechanism to monitor and  supervise the activities of direct sellers and direct selling entity. The rules provide for following obligation for direct selling entities:

• Incorporation under the Companies Act, 2013 or if a partnership firm, be registered under the Partnership Act, 1932, or if a limited liability partnership, be registered under the Limited Liability Partnership Act, 2008
• Have a minimum one physical location as its registered office within India
• Make self-declaration that Direct Selling Entity has complied with the provisions of the Direct Selling rules
• Have a prior written contract with its direct sellers in order to authorise them to sell or offer to sell its goods or services, and the terms of such agreement shall be just, fair and equitable;
• Ensure that all its direct sellers have verified identities and physical addresses and issue identity cards and documents only to such direct sellers
• Be liable for the grievances arising out of the sale of goods or services by its direct sellers.