Consumer Protection (Direct Selling) (Amendment) Rules, 2023

The Central Government on 21st June, 2023 has issued the Consumer Protection (Direct Selling) (Amendment) Rules, 2023. The amendment has extended the scope of the term direct selling entity and thereby the scope of the Consumer Protection (Direct Selling) Rules, 2021.

“Direct selling entity” is redefined to mean the principal entity which sells or offers to sell goods or services directly through a network of sellers, but does not include an entity which is engaged in a Pyramid Scheme or money circulation scheme.

“Network of sellers” means a network of direct sellers formed by a direct selling entity to sell goods or services for the purpose of receiving consideration solely from such sale.

These Rules shall apply to all goods and services bought or sold through direct selling, all models of direct selling, all direct selling entities offering goods and services to consumers in India, all forms of unfair trade practices across all models of direct selling and also to also to a direct selling entity which is not established in India, but offers goods or services to consumers in India.

As per the rules, all entities falling under the definition of Direct Selling Entities shall:-

1. Be Incorporated under the Companies Act, 2013 or if a partnership firm, be registered under the Partnership Act, 1932, or if a limited liability partnership, be registered under the Limited Liability Partnership Act, 2008;
2. Have a minimum of one physical location as its registered office within India
3. Make self-declaration to the effect that Direct Selling Entity has complied with the provisions of the Direct Selling rules and is not involved in any Pyramid Scheme or money circulation scheme;
4. 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;
5. Ensure that all its direct sellers have verified identities and physical addresses and issue identity cards and documents only to such direct sellers;
6. Create adequate safeguards to ensure that goods and services offered by its direct sellers conform to applicable laws;
7. Be liable for the grievances arising out of the sale of goods or services by its direct sellers.
8. Every direct selling entity to provide the following information on its website in a clear and accessible manner
9. Registered name of the direct selling entity;
10. Registered address of the direct selling entity and of its branches;
11. Contact details, including e-mail address, fax, land line and mobile numbers of its customer care and grievance redressal officers;
12. A ticket number for each complaint lodged through which the complainant can track the status of the complaint;
13. Information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism and such other information which may be required by the consumers to make informed decisions;
14. Information on available payment methods, the security of those payment methods, the fees or charges payable by users, the procedure to cancel regular payments under those methods, charge-back options, if any, and the contact information of the relevant payment service provider;
15. Total price of any goods or service in single figure, along with its break-up price showing all compulsory and voluntary charges, including delivery charges, postage and handling charges, conveyance charges and the applicable tax;
16. Provide correct and complete information at pre-purchase stage to enable buyers to make informed purchase decisions, No direct selling entity shall adopt any unfair trade practice in the course of its business or otherwise, and shall abide by the requirements specified in any law for the time being in force.