Context: The Centre banned direct selling companies from promoting pyramid and money circulation schemes as it notified new rules under Consumer Protection (Direct Selling) Rules, 2021 for the direct selling industry.

Key Points

• The entities have to ensure compliance with the rules within 90 days.
• The direct selling companies will also be liable for the grievances arising out of the sale of goods or services by its direct sellers.
• The rules are complied for both direct selling entities and direct sellers using e-commerce platforms for sale.
• The entities have to ensure that these new rules are compiled by within 90 days.

Key highlights of Consumer Protection (Direct Selling) Rules, 2021
Guidelines for the Entities
Redressal Mechanism: Every direct selling entity has to establish a grievance redressal mechanism and display the relevant information on its website.

Role of Redressal Officer

• The grievance redressal officer must acknowledge the receipt of any consumer complaint within 48 working hours and redresses the complaint within a period of one month from the date of receipt of the complaint.
• In case of delay of more than a month, reasons for the delay and actions taken on the complaint are to be informed in writing.

Nodal Officer: The entity shall appoint a nodal officer who will be responsible for ensuring compliance with the provisions of the Act and the rules made there under.

Filing Complaints

• The entity shall establish a mechanism for filing of complaints by consumers through its offices or branches or direct sellers.
• It shall maintain a record of all its direct sellers, including their identity proof and such other contact information.

Information regarding a Seller

• The entities shall, on the request in writing made by a consumer after purchase of any goods or services, provide him with the information regarding any direct seller from whom such consumer has made a purchase.
• It will ensure that advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions.
• No entity shall directly or indirectly, falsely represent itself as a consumer and post reviews about its goods or services.

Liability: The entity which explicitly or implicitly vouches for the authenticity of the goods or services sold, shall bear the liability in any action related to the authenticity of such goods or services.

• Legally Binding Contract: A direct selling entity will monitor the practices adopted by its sellers and ensure compliance with these rules by legally binding contract with such sellers.
• Monitoring Mechanism: State governments will set up a mechanism to monitor or supervise the activities of the entities.