Government imposes restrictions on chain networks of direct selling companies; Amway, Tupperware, Oriflame, others likely to see impact

Direct selling companies like Amway, Tupperware and Oriflame will not be able to form chain networks by way of pyramid and money circulation schemes in the name of selling their products.    

The government on Tuesday banned chain marketing for direct selling companies under the Consumer Protection (Direct Selling) Rules 2021. According to the newly notified rules, direct selling companies will be responsible and accountable for the products or services sold on their behalf.

Key Highlights of the new rules:

-These companies will not be able to create a chain network of people under the pyramid and money circulation scheme in the name of selling the product.

-According to the new rules, direct selling companies will be responsible and accountable for the products or services sold on their behalf.

-Government has also issued notification of new rules

-New rules have been notified as Consumer Protection (Direct Selling) Rules, 2021

-Companies related to direct selling will have to implement these rules within 90 days and will have to inform the government

-If such companies use the e-commerce platform, then they will have to follow the rules of e-commerce.

-States were also asked to create mechanisms to monitor such companies.

-Every company should have at least one registered office in the country
 
- Companies will have to give an affidavit that they are working according to the rules

- Must have a clear contract with direct selling people

- Selling people should have complete training, knowledge of rules

- All necessary documents should be with

- Grievance Redressal must be arranged

- There should be a tracking system for that

- Full details of the price of the product, tax on it, related breakup, convenience fee, delivery charge will have to be given.

- Information about the return process will have to be given before selling

- Refund, exchange policy must be clarified

- No agent will go to the customers without the identity card

- Misleading practice must be avoided