Obligation & Duties of Direct Selling Entities under Consumer Protection (Direct Selling) Rules, 2021

Consumer Protection (Direct Selling) Rules, 2021 has been come into existence from 28^th December, 2021. The Ministry of Consumer affairs has laid down Obligation and Duties for Direct Selling Entities and this mandate is to be followed by every Direct Selling Entities.

WHAT ARE THE OBLIGATIONS OF DIRECT SELLING ENTITIES 

Direct Selling Entity shall 

• Be either in the form of Company or Limited Liability Partnership (LLP) or Registered Partnership Firm and have minimum one physical location as its registered office within India.
• Make self-declaration that it has complied with the provisions of these rules and is not involved in any Pyramid Scheme or money circulation scheme.
• Maintain proper and updated website with all relevant details of that entity, including the all documents or records along with self-declaration, contact information which is current and updated, details of its nodal officer, grievance redressal officer, its management, products, product information, price and grievance redressal mechanism for consumers.
• Own, hold or be the licensee of a trademark and obtain all applicable trade registrations and licenses, including Permanent Account Number (PAN) and Goods and Services Tax Registration (GSTIN).
• Get all information provided by it on its website duly certified by a Company Secretary.
• Have a prior written contract with its direct sellers in order to authorize 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.
• Provide the information on its website in a clear and accessible manner.
• Comply with the declarations to be made under the Legal Metrology Act, 2009.
• Store sensitive personal data within the jurisdiction of India and accordance with applicable law.
• Ensure that the grievance redressal officer acknowledges the receipt of any consumer complaint within forty-eight working hours of receipt of such complaint and redresses the complaint normally within a period of one month from the date of receipt of the complaint.
• Appoint a nodal officer who shall be responsible for ensuring compliance with the provisions of the Act and the rules made thereunder.
• Maintain a record of all its direct sellers, including their identity proof, address proof, e-mail and such other contact information.
• Ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services.
• Not directly or indirectly, falsely represent itself as a consumer and post reviews about its goods or services or misrepresent the quality or features of any of its goods or services.
• Maintain a record of of all direct sellers who have been delisted by the direct selling entity and such list shall be publicly shared on its website.
• Become a partner in the convergence process of the National Consumer Helpline of the Central Government.

WHAT ARE THE DUTIES OF DIRECT SELLING ENTITY

Every Direct Selling Entities shall ensure that

• the terms of the offer are clear, so as to enable the consumer to know the exact nature of offer being made and the commitment involved in placing any order
• the presentations and other representations used in direct selling shall not contain any product description, claim, illustration or other element which, directly or by implication, is likely to mislead the consumer
• the explanation and demonstration of the goods or services offered are
  • accurate and complete,
  • particularly with regard to price and, if applicable,
  • to credit conditions,
  • terms of payment,
  • cooling-off periods or right to return,
  • terms of guarantee,
  • after-sales service and
  • delivery
• any misleading, deceptive or unfair trade practices are not used
• the remedial action open to the consumer shall be clearly set out in the order form or other accompanying literature provided with the goods or service
• the presentation of the offer does not contain or refer to any testimonial, endorsement or supportive documentation unless it is genuine, verifiable and relevant
• when after-sales service is offered, details of the service are included in the guarantee or stated elsewhere in the offer and if the consumer accepts the offer, information shall be given on how the consumer can activate the service and communicate with the service agent
• products, including, where applicable, samples, are suitably packaged for delivery to the consumer and for possible return, in compliance with the appropriate health and safety standards
• right of return offered by that entity shall be in writing
• unless otherwise stipulated in the offer, orders shall be fulfilled within the delivery date proposed to the consumer at the time of purchase and the consumer shall be informed of any undue delay
• whether payment for the offer is on an immediate sale or instalment basis, the price and terms of payment shall be clearly stated in the offer together with the nature of any additional charges
• the provisions of the Legal Metrology Act, 2009 and the rules shall be followed.

WHAT IS PROHIBITED TO DO BY DIRECT SELLING ENTITY 

• Entity shall not charge any entry fee or subscription fee
• Entity shall not indulge in fraudulent activities or sales and shall take reasonable steps to ensure that participants do not indulge in false or misleading representations or any other form of fraud, coercion, harassment, or unconscionable or unlawful means
• Entity Shall not 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, or to the goods or services being sold by itself or by the direct seller
• Entity Shall not indulge in mis-selling of products or services to consumers
• Entity Shall not use, or cause or permit to be used, any fraudulent, coercive, unconscionable or unlawful means, or cause harassment, for promoting its direct selling business, or for sale of its goods or services
• Entity Shall not refuse to take back spurious goods or deficient services and refund the consideration paid for goods and services provided.

For any query email at msdassociates19@gmail.com Contact +91-9315760696/ +91-8375877464

Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.