Applicability of Consumer Protection (Direct Selling) Rules, 2021

Central Government has notified the Consumer Protection (Direct Selling) Rules, 2021.

The new rules will be applicable to:

1. All goods and services bought or sold through direct selling
2. All direct selling entities offering goods & services to consumers
3. All models of direct selling
4. All forms of unfair trade practices in all models of direct selling
5. The direct selling entity is not established in India but offers goods or services to consumers across India.

• Under the notified rules, direct selling entities and direct sellers have been prohibited from:

1. Promoting a Pyramid Scheme or enrolling any person in these
2. Participating in money circulation scheme

• State Governments have been mandated to do monitoring to ensure compliance with these rules.
• Rules provide certain obligations upon Direct Selling Entities, including:

1. They should have at least one physical location as a registered office within India.
2. They should make self-declaration that Direct Selling Entity has complied with provisions of these rules and are not a part of Pyramid Scheme or money circulation scheme.

• All products of a direct selling entity are mandated to comply with the declarations made under Legal Metrology Act, 2009.
• A direct selling entity will have to establish an adequate grievance redressal mechanism. They will have to display the current and updated name and other details on their website. Details of the website will have to be prominently printed on product information sheets or pamphlets.