The Government of Nagaland has notified a comprehensive Monitoring Mechanism to oversee and regulate the operations of Direct Selling Entities (DSEs) and Direct Sellers, in accordance with Rule 11 of the Consumer Protection (Direct Selling) Rules, 2021, under the Consumer Protection Act, 2019.
This move is aimed at protecting consumer rights, curbing pyramid schemes, and preventing unfair trade practices across the state.
🎯 Key Objectives of the Monitoring Authority
- Regulate direct selling in compliance with the 2021 Rules.
- Prohibit pyramid and money circulation schemes.
- Eliminate unfair trade practices in direct selling.
- Supervise DSEs and sellers for legal compliance.
🧑⚖️ Constitution of the Monitoring Authority
The Department of Legal Metrology & Consumer Protection will act as the nodal department. The Monitoring Authority will comprise:
| Position | Role |
| Secretary, Legal Metrology & Consumer Protection Dept. | Chairman & Convener |
| Secretary, Finance Dept. (or nominee) | Member |
| Secretary, Law Dept. (or nominee) | Member |
| Commissioner of Taxes (or nominee) | Member |
| Controller, Legal Metrology & Consumer Protection (or nominee) | Member |
| DIGP (Economic Offences) | Member |
| Registrar, State Consumer Disputes Redressal Commission | Member |
| Expert nominated by the State Government | Member |
📋 Roles & Responsibilities
- Enroll direct selling entities (DSEs) and maintain records.
- Receive and address complaints from consumers and direct sellers.
- Report violations to appropriate authorities.
- Recommend policy changes to the Central Government.
📝 Enrolment Procedure for Direct Selling Entities
- DSEs must apply for enrollment using the prescribed form.
- Must provide documents including:
- Profile of promoters/directors
- PAN, GST, incorporation documents
- Notarized affidavit and self-declaration
- Non-compliance or incomplete submissions may result in rejection.
⚠️ Note: Enrolment does not imply government approval; it is solely for regulatory monitoring.
🛠️ Monitoring Powers
The Monitoring Authority is empowered to:
- Grant or cancel enrolments
- Conduct inquiries and demand documents like:
- GST/IT returns, balance sheets
- Registration certificates
- Blacklist or stop operations of violators
- Refer cases to Central Consumer Protection Authority or law enforcement
📚 Mandatory Records for DSEs
Entities must maintain (electronically or manually):
| Documents Required |
| Certificate of Incorporation |
| PAN, GST, IT Returns |
| MoA, AoA |
| Balance Sheets, Audit Reports |
| Register of Direct Sellers |
| Food/Drug Safety Licenses (if applicable) |
| Importer-Exporter Code (if applicable) |
🛡️ Complaint Redressal Mechanism
- Complaints must first go through the internal grievance redressal of the DSE.
- If unresolved, complaints may be filed with a designated district officer.
- DSEs must resolve it within 10 days or face action.
- Failure to respond in 15 days leads to escalation to the Monitoring Authority.
⚖️ Actions for Non-Compliance
If a DSE or seller violates the law:
- Authority may issue show-cause notices
- Cancel enrolment, blacklist the entity
- Refer for prosecution under:
- Consumer Protection Act, 2019
- Prize Chits and Money Circulation Schemes (Banning) Act, 1978
- Tax Laws
- IPC or other relevant statutes
🏁 Conclusion
This notification marks a major step toward cleaning up the direct selling industry in Nagaland. With an empowered Monitoring Authority in place, consumer protection, legal compliance, and ethical practices are expected to improve significantly in the state’s direct selling landscape.
