CONSUMER PROTECTION (DIRECT SELLING) RULES, 2021

CONSUMER PROTECTION (DIRECT SELLING) RULES, 2021

Context:

The Central Government through the powers conferred on it by subsection (zg) of subsection (2) of section 101 read with section 94 of the Consumer Protection Act, 2019 has introduced the Consumer Protection (Direct Sales) Act, 2021.

Key Highlights:

• These Rules will apply to all goods and services purchased or sold through direct selling, all types of direct selling, all direct selling organizations providing goods and services to Indian buyers.
• Existing direct selling entities are required to comply with these rules within 90 days from the date of publication of these rules in the Official Gazette.
• The direct sellers and the direct selling entities that use e-commerce platforms for sale will comply with the requirements of the Consumer Protection (e-Commerce) Rules, 2020.

Direct selling entity and direct sellers are not allowed to:

(i) To develop the Pyramid Scheme or to register any person in the scheme or to participate in such planning in any way in connection with the direct selling business;

(ii) Participate in fundraising in the garb of doing direct selling business.

Rules provide for Monitoring by State Government to ensure compliance with these laws through direct selling entity and direct sellers, every State Government will have to establish a mechanism to monitor or direct the activities of direct sellers and direct selling entity.