Government Banned Direct Selling Companies Like Amway, Vestige, Smart Value Which Promotes Pyramid Scheme in 2022

Government Banned Direct Selling

On Tuesday, India Government banned Direct Selling Companies whose are Promoting Pyramid Scheme and Money Circulation Scheme at it introduce new rules for the industry. This is a step that separates big players like Amway, Oriflame, and Tupperware from Ponzi Scheme companies or little companies like Smart Value, Vestige Marketing.

Since it has notified the industry to comply with the new rules within 90 days. Now, such companies will also be responsible for complaints arising out of the direct sale of goods or services by vendors.

The Ministry of Consumer Affairs, Food, And public distribution announced as per Consumer Protection (Direct Selling) Rules, 2021 that Every Direct Seller or Network Marketing must have at least one location as their registered office in the country. They have to promise are not involved in any Pyramid Scheme or Money Circulation Scheme.

After that Official Announcement by the Government, Rajat Banerjee, Chairman of the Indian Direct Selling Association (IDSA) say, “These new rules will bring transparency to the market and give impetus to the industry.”

In addition, He said that this sector provides livelihood to more than 6 million people in the country of which more than 50% are women. Rajat Banerjee said the IDSA has been working with the government for the past 2 years to provide input into the Direct Selling policy.

These new rules have covered both direct sellers and direct sellers using e-commerce platforms for product selling.

Under the new rules, state governments will have to create a system to monitor the activities of the direct selling companies and Direct Sellers, if they found something illegal, they can take action on that.

Compliance time

The Official Announcement said, “Existing direct sales companies must comply with these rules within 90 days.” 

Direct-selling companies must follow a model of selling to customers through distributors and Multi-level marketing (MLM) instead of traditional retail channels.

Under the new rules, direct selling companies must have a grievance redressal mechanism. All companies will also be responsible for complaints arising out of the sale of goods and services directly by vendors.

To protect consumer rights, companies must additionally provide details of the products and services they sell, pricing, credit terms, payment terms, returns, exchange, return policy, and after-sales service.

To know the detailed list of the new rules and regulations, click here.

Source of this content: The Economic Times

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