Centre notifies rules for consumer protection, direct selling entities not to promote pyramid schemes

The Central Government on Tuesday has notified the rules for Consumer Protection. The Ministry Of Consumer Affairs, Food and Public Distribution, Department of Consumer Affairs by exercising the powers conferred by clause (zg) of sub-section (2) of section 101 read with section 94 of the Consumer Protection Act, 2019, has made the Consumer Protection rules. The rules notified by the Centre to be called as Consumer Protection (Direct Selling) Rules, 2021.

The Central government prohibited direct selling companies from promoting Pyramid Schemes. The notification also prohibits any person from enrolling into such a scheme in order to undertake direct selling business.

The Consumer Protection (Direct Selling) Rules, 2021 further prohibits participation in money circulation schemes by such sellers and directs them to comply with the given rules within three months from the date of publication of the Consumer Protection (Direct Selling) Rules, 2021 in the Official Gazette i.e., December 28, 2021.

The activities of the direct sellers and direct selling entities to be monitored by the mechanism setup by the state governments. Disputes arising out of sale of goods and services by the direct sellers will be the liability of their direct selling entity.

A period of ninety days has been provided to the existing entities engaged in the direct selling business in order to comply with these rules. The period of ninety days starts from the date of publication of the rules 2021in the Official Gazette.

As per the Consumer Protection (Direct Selling) Rules, 2021, the Consumer Protection (e-Commerce) Rules, 2020 shall be complied by direct sellers, as well as the direct selling entities using e-commerce platforms for sale.

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