Direct Selling Rules 2021, no need of panic, says Adv. P.M. Mishra
The Consumer Protection (Direct Selling) Rules, 2021 was notified by the Government of India on 28th December, 2021. The sense of panic was created among direct sellers and other stakeholders as soon as this information became public by different sources. Articles regarding the outlawing of pyramid schemes and money circulation saturated every major news website. They also spoke about the challenges that would be faced by the key players in the direct selling industry including Amway, Oriflame etc.
As per Adv. P.M. Mishra, instead of focusing on how these rules would bring structure to the direct selling industry, sources focused more on aspects that were already mentioned under the previous Direct Selling Guidelines, 2016 such as prohibition of Pyramid Scheme and Money Circulation Scheme. Being an industry that grew by 4.7% during a global pandemic with sales that have crossed a whopping Rs. 7,518 crores, appropriate regulations were needed to monitor and regulate the booming direct selling industry.
What’s new in the Consumer Protection (Direct Selling) Rules, 2021?
1. The Consumer Protection (Direct Selling) Rules, 2021 are executive in nature unlike the Direct Selling Guidelines, 2016 which were advisory in nature. The state government could choose to implement the guidelines in order to strengthen the direct selling industry in their states.
2. A more streamlined approach regarding maintenance of records and registration of direct selling entities with the Department for Promotion of Industry and Internal Trade (DPIIT).
3. The obligations of direct sellers are much more comprehensive in the 2021 rules which will make it easier for the direct selling industry to be regulated.
4. All products of direct selling firms need to comply with the declarations mentioned under the Legal Metrology Act, 2009.
5. The Consumer Protection (Direct Selling) Rules, 2021 have also emphasized on data protection. The term ‘sensitive personal data’ was included in the definitions.
6. The term ‘mis-selling’ has been defined in the 2021 rules.
7. Persons who are convicted or bankrupt during the last five years prior to his/her association with direct selling business or a person of unsound mind is prohibited from being engaged in the business of direct selling.
8. Consumer Protection (e-Commerce) Rules, 2021 would have to be complied with by the direct sellers as well as direct selling entities using e-commerce platforms.
9. The direct selling firms have to ensure compliance with the rules within 90 days.
10. The Direct Selling Guidelines 2016 focused more on the relationship between direct selling entities and direct sellers.
Do Direct Sellers and Direct Selling Entities have a reason to be afraid regarding Consumer Protection (Direct Selling) Rules, 2021?
No. Direct Sellers have absolutely no reason to be afraid. The Consumer Protection (Direct Selling) Rules, 2021 were created in order to provide clarity to the direct selling industry and has separated this legitimate business model from pyramid scheme and money circulation scheme. Direct sellers only have to ensure that they are carrying out their business ethically and in compliance with the new rules.
As per Adv. P.M. Mishra the government's move to establish legislation for the sector, is a constructive step that will assist the industry gain due recognition & at the same time this rule will allow startups to take an advantage of Direct Sales. Since long this Industry misrepresented & mistaken as Ponzi ,this rules will really help direct selling entities in many ways. www.finlawassociates.com
Disclaimer: This is a company press release. No HT journalist is involved in creation of this content.