Direct Selling Guidelines in India 2020
Direct Selling Guidelines in India 2020
Direct Selling Guidelines in India
बेहतर डायरेक्ट सेलिंग कंपनी या नेटवर्क मार्केटिंग कंपनी के बारे में बेहतर समझने के लिए डायरेक्ट सेलिंग गाइडलाइंस को समझना बहुत जरूरी है।
तो चलिए अब बात करते हैं कि डायरेक्ट सेलिंग के कौन से तथ्य हैं जो हम सभी को पता होने चाहिए।
कई डायरेक्ट सेलिंग कंपनियां हैं जो वास्तव में अच्छी हैं। और कई प्रत्यक्ष बिक्री कंपनियां हैं जो घोटाले हैं।
हमें वास्तविक प्रत्यक्ष बिक्री कंपनियों और घोटाले वाली प्रत्यक्ष बिक्री कंपनियों दोनों को समझना चाहिए। घोटाला कंपनी की वजह से एक वास्तविक प्रत्यक्ष बिक्री कंपनी का नाम बदनाम हुआ।
Direct Selling Guidelines :
F.No. .21/18/2014-IT(Vol-II)
Government of India
Ministry of Consumer Affairs, Food & Public Distribution Department of Consumer Affairs
Krishi Bhawan, New Delhi Dated the 09" Sep, 2016
OFFICE MEMORANDUM
Subject:-
Advisory to State
Governments /Union Territories on Model Guidelines
on Direct selling
An Inter-Ministerial Committee was constituted by the Government to look into matters concerning the direct selling industry consisting of representatives
from
Ministry
of
Finance,
the
Department
of
Industrial
Policy
and
Promotion,
Department
of
Legal
Affairs,
Department
of
Information
Technology
and the Ministry
of
Corporate
Affairs,
besides
representatives
of
State
Governments
of
Delhi,
Andhra
Pradesh
and
Kerala. Consultations with stakeholders were also held.
2.
Based on the deliberation of the Inter-Ministerial Committee and consultation with Stakeholders, the model guidelines on direct selling have been formulated. State Governments/UTs may kindly take necessary action to implement the same. It is en\/isaged in the guidelines that the State Governments will set up a mechanism to monitor/supervise the activities of Direct Sellers, Direct Selling Entity regarding the compliance of the guidelines for Direct Selling.
3.
Any direct selling entity conducting direct selling activities shall submit an undertaking to the Department of Consumer Affairs within 90 days, stating that it is in compliance with these guidelines and shall also provide details of its incorporation.
Enclosure: Model Guidelines on Direct Selling.
To
All Chief Secretaries of States/ Administrators of UTs.
(Mohd. Zakir Hussain)
Director (IT) Phone. No.23384390
Copy for kind information to:
1. Prime Minister Office.
2. CEO, NITI Aayog.
3. Department of Financial Service,
Department of Industrial Policy and Promotion, Department of Legal Affairs, Department of Information Technology, and Ministry of Corporate Affairs.
Advisory to State Governments / Union Territories: Model Framework for Guidelines on Direct Selling
These guidelines may be
called the Direct Selling Guidelines 2016. These are issued as guiding principles for State Governments to consider regulating the business of
„Direct Selling‟ and Multi-Level Marketing (MLM) and strengthen the existing regulatory
the mechanism on Direct Selling and MLM, for preventing fraud and protecting
the legitimate rights and interests of consumers.
Clause 1. Definitions:
In these Guidelines unless
and otherwise required:
1. "Act"
means the Consumer Protection Act, 1986 (68 of
1986);
2.
“Consumer”
shall have the same meaning as provided under the
Consumer Protection Act, 1986;
3.
“Prospect”
means a person to whom an offer or a proposal is made by the Direct Seller to
join a Direct Selling opportunity;
4.
“Direct
Seller” means a person appointed or authorized, directly or indirectly, by a
Direct Selling Entity through a legally enforceable written contract to
undertake direct selling business on principal to principal basis.
5.
“Network
of Direct Selling” means a network of direct sellers at different levels of
distribution, who may recruit or introduce or sponsor further levels of direct sellers,
who they then support:
Explanation:
“network of direct selling” shall mean any system of distribution or marketing
adopted by a direct selling entity to undertake direct selling business and
shall include the multi-level marketing method of distribution.
6.
“Direct
Selling” means marketing, distribution and sale of goods or providing of
services as a part of network of Direct Selling other than under a pyramid
scheme,
Provided that such sale of
goods or services occurs otherwise than through a “permanent retail location”
to the consumers, generally in their houses or at their workplace or through
explanation and demonstration of such goods and services at a particular place
7.
“Direct
Selling Entity”, means an entity, not being engaged in a pyramid scheme, which
sells or offers to sell goods or services through a direct seller.
Provided that
“Direct Selling Entity” does not include any entity or business notified
otherwise by the Government for the said purpose from time to time.
8.
“Goods”
means goods as defined in the Sale of Goods Act, 1930 and “Service” means
service as defined in the Consumer Protection Act, 1986;
9.
“Saleable”
shall mean, with respect to goods and / or services, unused and marketable,
which has not expired, and which is not seasonal, discontinued or special
promotion goods and / or services;
10.
“Cooling-off
Period” means the duration of time counted from the date when the direct seller
and the direct selling entity enter into an agreement under Clause 4 and ending
with date on which the contract is to be performed and within which the direct
seller may repudiate the agreement without being subject to penalty for breach
of contract;
11.
“Pyramid Scheme” means:
A multi layered
network of subscribers to a scheme formed by subscribers enrolling one or more
subscribers in order to receive any benefit, directly or indirectly, as a
result of enrolment, action or performance of additional subscribers to the
scheme. The subscribers enrolling further subscriber(s) occupy higher position
and the enrolled subscriber(s) lower position, thus, with successive
enrolments, they form multi-layered network of
subscribers.
Provided that the above
definition of a “Pyramid Scheme” shall not apply to a multi layered network of
subscribers to a scheme formed by a Direct Selling Entity, which consists of
subscribers enrolling one or more subscribers in order to receive any benefit,
directly or indirectly, where the benefit is as a result of sale of goods or
services by subscribers and the scheme/financial arrangement complies with all
of the following:
a)
It has no
provision that a Direct Seller will receive remuneration or incentives for the
recruitment / enrolment of new participants.
b) It
does not require a participant to purchase goods or services:
i.
for an
amount that exceeds an amount for which such goods or services can be expected
to be sold or resold to consumers;
ii.
for a
quantity of goods or services that exceeds an amount that can be expected to be
consumed by, or sold or resold to consumers;
c) It does not require a participant to pay any
entry/registration fee, cost of sales demonstration equipment and materials or
other fees relating to participation;
d) It provides a participant with a written
contract describing the “material terms” of participation;
e) It allows or provides for a participant a
reasonable cooling-off period to participate or cancel participation in the
scheme and receive a refund of any consideration given to participate in the operations;
f) It allows or provides for a buy-back or
repurchase policy for “currently marketable” goods or services sold to the
participant at the request of the participant at reasonable terms;
g) It establishes a grievance redressal mechanism
for consumers, more particularly described in Clause 7 herein.
Explanation
1 –
For the purposes of this proviso the term “material terms” shall means buy-back
or repurchase policy, cooling-off period, warranty and refund policy
12.
“Money
Circulation Scheme” has the same meaning as defined under the Prize Chits and
Money Circulation Schemes (Banning) Act, 1978.
13.
“Remuneration
System” means the system followed by the direct selling entity to compensate
the direct seller which illustrates the mode of sharing of incentives, profits
and commission, including financial and non-financial benefits, paid by the
direct selling entity to the direct sellers, on a monthly or periodic or yearly
basis or both, as the case may be. This system, for every Direct Selling
entity, shall:
a)
Have no
provision that a direct seller will receive remuneration from the recruitment
to participate in such direct selling;
b)
ensure
that direct sellers shall receive remuneration derived from the sale of goods
or services;
c) clearly
disclose the method of calculation of remuneration.
14. „State‟ includes a Union territory.
Clause 2. Conditions for the setting up of Direct Selling business:
Every Direct selling entity
intending to carry out direct selling business subsequent to the publication of
the notification in the Gazette, shall within 90 days comply with the following
set of conditions for the conduct of direct selling business:
It shall
1.
be a registered legal
entity under the laws of India.
2.
Provide a
mandatory orientation session to all prospective direct sellers providing fair
and accurate information on all aspects of the direct selling operation,
including but not limited to the remuneration system and expected remuneration
for newly recruited direct sellers;
3.
Provide
accurate and complete information to prospective and existing direct sellers
concerning the reasonable amount of remuneration opportunity, and related
rights and obligations;
4.
Pay all
dues and make withholdings from direct sellers in a commercially reasonable manner;
5.
Notify and
provide a full refund or buy-back guarantee to every direct seller on
reasonable commercial terms which can be exercised
within a period of 30 days, from the date of the distribution of the goods or
services to the direct seller;
6.
Notify and
provide to every direct seller a cooling-off period which entitles such direct
seller to return any goods /services purchased by the direct seller during the
cooling-off period;
7.
The
promoter or key management personnel should not have been convicted of any
criminal offence punishable with imprisonment in last 5 years by any Court of competent
jurisdiction;
8.
It shall
have an office with identified jurisdiction of its operation in the State to
enable the consumers and direct seller to acquaint themselves with price of
products, return or replacement of products and efficient delivery of goods and
services, and post-sale redressal of grievances;
Clause 3: Conditions for conduct of Direct Selling Business
Every Direct Selling entity
shall comply with the following conditions:
1.
It shall
be the owner, holder, licensee of a trademark, service mark or any other
identification mark which identifies the entity with the goods to be sold or
supplied or services to be rendered;
2.
It shall issue proper
identity document(s) to its Direct Sellers;
3.
It shall
maintain proper records either manual or electronic of their business dealings,
with complete details of their goods, services, terms of contract, price,
income plan, details of direct sellers, including but not limited to enrolment,
termination, active status, earning etc;
a) Every Direct Selling entity shall maintain a
“Register of Direct Sellers” wherein relevant details of each enrolled Direct
Seller shall be updated and maintained;
b) The details of Direct Sellers shall include
and not be limited to verified proof of address, proof of identity and PAN;
4.
It shall
maintain proper and updated website with all relevant details of the entity,
contact information, its management, products,
product information, product quality certificate, price,
complete income plan, terms of contract with direct seller and complaint
redressal mechanism for direct sellers and consumers. The website should have
space for registering consumer complaints and should ensure that grievances are
addressed within 45 days of making such complaints;
5.
It shall
provide to all direct sellers their periodic account / information concerning,
as applicable, sales, purchases, details of earnings, commissions, bonus and
other relevant data, in accordance with agreement with the direct sellers. All
financial dues shall be paid and any withholding made in a commercially
reasonable manner;
6.
It shall
monitor the value of the purchases of all its Direct Sellers/Distributors on a
monthly basis and once the purchase value crosses the VAT threshold; it must
intimate the Direct seller/Distributor to pay the VAT;
7.
A Direct Selling entity
shall not:
a)
Use
misleading, deceptive or unfair recruiting practices, including
misrepresentation of actual or potential sales or earnings, in their
interaction with prospective or existing direct sellers;
b)
Make any
factual representation to a prospective direct seller that cannot be verified or make any promise that cannot be fulfilled;
c)
Present
any advantages of direct selling to any prospective direct seller in a false or
deceptive manner;
d) Make or cause, or permit to be made, any
representation relating to its direct selling business, including remuneration
system and agreement between itself and the direct seller, or to the goods or
services being sold by itself or by the direct seller which is false or misleading;
e) Engage in, or cause or permit, any conduct
that is misleading or likely to mislead with regard to any material particulars
relating to its direct selling business, including remuneration system and
agreement between itself and the direct seller, or to the goods or services
being sold by itself or by the direct seller;
f) Use, or cause or permit to be used, fraud,
coercion, harassment, or unconscionable or unlawful means in promoting its direct selling practice, including remuneration
system and agreement between itself and the direct seller, or to the goods or
services being sold by itself or by the direct seller;
g) Require its direct sellers to provide any
benefit, including entry fees and renewal fees or to purchase any sales
demonstration equipment or material in order to participate in its direct
selling operations;
h) Provide any benefit to any person for the
introduction or recruitment of one or more persons as direct sellers;
i)
Require
the direct sellers to pay any money by way of minimum monthly subscription or
renewal charges;
8.
Notwithstanding
the distribution system adopted by a direct selling entity, the Direct Selling
Entity shall be responsible for compliance of these Guidelines by any member of
its network of direct selling, whether such member is appointed directly or
indirectly by the Direct Selling Entity.
Clause 4: Conditions for Direct Selling contract between Direct Seller/Distributor and Direct Selling Entity.
1.
Every
Direct Selling entity shall execute a contract agreement, whether directly or
indirectly, with Direct Sellers before enrolment:
a) The Agreement shall be provided in a manner
consistent with Section 10 of the Indian Contract Act, 1872;
b) In addition to the rights and obligations of
parties to this agreement under these guidelines or any other law in force,
parties shall have rights and obligations that are coextensive with rights and
obligations of parties under the Indian Contract Act, 1872;
2.
The
agreement shall be made in writing, describing the material terms of
participation and shall:
a) Not compel or induce the direct seller to
purchase goods or services in an amount that exceeds an amount that can be
expected to be sold to consumers within a reasonable period of time;
b)
Allow or
provide the direct seller a reasonable cooling-off period in which to cancel
participation and receive a refund for goods or services purchased;
c) Allow for the termination of contract, with
reasonable notice, in such instances and on such terms where a direct seller is
found to have made no sales of goods or services for a period of up to two
years since the contract was entered into, or since the date of the last sale
made by the direct seller;
d) Allow or provide for a buy-back or repurchase
policy for currently marketable goods or services sold to the direct seller at
the said direct seller‟s request at reasonable
terms
Clause 5: Certain obligations of Direct Sellers
1.
Direct
Seller engaged in direct selling should carry their identity card and not visit
the customer‟s premises without prior appointment/approval;
2.
At the
initiation of a sales representation, without request, truthfully and clearly
identify themselves, the identity of the direct selling entity, the nature of
the goods or services sold and the purpose of the solicitation to the
prospective consumer;
3.
Offer a
prospective consumer accurate and complete explanations and demonstrations of
goods and services, prices, credit terms, terms of payment, return policies,
terms of guarantee, after-sales service;
4.
Provide
the following information to the prospect / consumers at the time of sale,
namely:
a) Name, address, registration number or
enrollment number, identity proof and telephone number of the direct seller and
details of direct selling entity;
b)
A description of the goods
or services to be supplied;
c)
Explain to
the consumer about the goods return policy of the company in the details before
the transaction;
d)
The Order
date, the total amount to be paid by the consumer along with the bill and receipt;
e) Time
and place for inspection of the sample and delivery of good;
f)
Information
of his/her rights to cancel the order and / or to return the product in
saleable condition and avail full refund on sums paid;
g) Details
regarding the complaint redressal mechanism;
5.
A direct
seller shall keep proper book of accounts stating the details of the products,
price, tax and the quantity and such other details in respect of the goods sold
by him/her, in such form as per applicable law.
6.
A direct seller shall not:
a) Use
misleading, deceptive and / or unfair trade
practices;
b)
Use
misleading, false, deceptive, and / or unfair recruiting practices, including
misrepresentation of actual or potential sales or earnings and advantages of
Direct Selling to any prospective direct seller, in their interaction with
prospective direct sellers;
c)
Make any
factual representation to a prospective direct seller that cannot be verified
or make any promise that cannot be fulfilled;
d) Present any advantages of Direct Selling to
any prospective direct seller in a false and / or a deceptive manner;
e) Knowingly make, omit, engage, or cause, or
permit to be made, any representation relating to the Direct Selling operation,
including remuneration system and agreement between the Direct Selling entity
and the direct seller, or the goods and / or services being sold by such direct
seller which is false and / or misleading;
f)
Require or
encourage direct sellers recruited by the first mentioned direct seller to
purchase goods and / or services in unreasonably large amounts;
g)
Provide
any literature and / or training material not restricted to collateral issued
by the Direct Selling entity, to a prospective and / or existing direct sellers
both within and outside the parent Direct Selling entity, which has not been
approved by the parent Direct Selling entity;
h)
Require
prospective or existing direct sellers to purchase any literature or training
materials or sales demonstration equipment.
Clause 6: Relationship between Direct Selling Entity and Direct Seller
The
relationship between Direct Selling entity and Direct Seller shall be
determined as per the written agreement between the parties which shall contain the rights and
obligations that are expressly provided as conditions for the conduct of Direct
Selling business as well as provide for the obligation of the direct selling
entity and the direct seller in terms of these
guidelines;
All other
rights and obligations shall be determined as per the express terms of written
agreement between a Direct Selling entity and Direct Seller;
2.
The Direct
Selling entity will be liable for grievances arising out of sale of products,
services or business opportunity by its Direct
Sellers;
3.
It will be
the responsibility of the Direct Selling entity to monitor and control the
practices/methods adopted by the Direct Sellers;
Clause 7: Conduct for the Protection of Consumer
1.
Direct
Sellers and Direct Selling Entity shall take appropriate steps to ensure the
protection of all private information provided by a consumer;
2.
Direct
Sellers and Direct Selling Entity shall be guided by the provision of the
Consumer Protection Act 1986;
3.
All
complaints received over phone, email, website, post and walk-in should have a
complaint number for tracing and tracking the complaint and record time taken
for redressal;
4.
Every
Direct Selling company shall constitute a Grievance Redressal Committee whose
composition, nature of responsibilities shall include but not limited to:
a) The Grievance Redressal Committee shall
consist of at least three officers of the Direct Selling entity;
b)
The
Grievance Redressal Committee shall address complaints and inform complainants
of any action taken;
c) Complaints may be made by any member of the
general public against a Direct Seller of the company, an employee or any other
officer of the entity;
d)
All such grievances will be
resolved directly by the Direct Selling Entity;
5.
The direct
selling entity shall provide information to the consumer upon purchase which
shall contain:
(a) the
name of the purchaser and seller;
(b) the
delivery date of goods or services;
(c) procedures
for returning the goods; and
(d)
warranty
of the goods and exchange / replacement of goods in case of defect. Provided that no Direct Seller shall, in
pursuance of a sale, make any claim that is not consistent with claims
authorized by the Direct Selling Entity.
6. Any person who sells or offers for sale, including on an e-commerce platform / marketplace, any product or service of a Direct Selling Entity must have prior written consent from the respective Direct Selling Entity in order to undertake or solicit such sale or offer.Clause 8: Prohibition of Pyramid Scheme & Money Circulation Scheme
1.
No person
or entity shall promote a Pyramid Scheme, as defined in Clause 1(11) or enroll
any person to such scheme or participate in such arrangement in any manner
whatsoever in the garb of doing Direct Selling
business.
2.
No person
or entity will participate in Money Circulation Scheme, as defined in Clause
1(12) in the garb of Direct Selling of Business Opportunities.
.Clause 9: Appointment of Monitoring Authority
1.
The Nodal
department to deal with the issues related to Direct Selling will be Department
of Consumer Affairs at the Union and the respective State Governments in the States;
2.
The State
Governments will also set up a mechanism to monitor/supervise the activities of
Direct Sellers, Direct Selling Entity regarding compliance of the guidelines
for Direct Selling;
3.
Any direct
selling entity conducting direct selling activities shall submit an undertaking
to the Department of Consumer Affairs, stating that it is in compliance with
these guidelines and shall also provide such details of its incorporation and
other business details as may be notified from time to time.
***End of note***
No comments:
Post a Comment