Centre issues guidelines to regulate direct selling companies

New Delhi, Sep 13 (KNN) The Centre has released model guidelines on direct selling, which among other things prohibit such companies from charging any entry/registration fee from, or forcing suppliers to buy back unsold stock. It has also barred e-commerce firms from selling products without approval from direct selling firms.

The Centre has asked the states to implement the guidelines for companies involved in direct sales to customers, bypassing retail stores.

Among the major companies operating in this unregulated sector in India are Amway, Oriflame and Tupperware.

“The model guidelines are being sent to the States today. They can localise the guidelines but the broad framework of guidelines will remain. Later, we may bring in a regulation too,” Food Minister Ram Vilas Paswan said at a press conference here.

Hem Pande, Secretary, Food Ministry, said that the basic idea behind the guidelines, which are “voluntary”, is to promote direct selling”, adding that “it will be a win-win for both consumers and sellers.”

The Ministry hopes that State governments will set up a mechanism to monitor/supervise the activities of direct sellers.

As per an official statement “Any direct selling entity conducting direct selling activities shall submit an undertaking to the Department of Consumer Affairs within 90 days, stating that it is in compliance with these guidelines and shall also provide details of its incorporation,”

The model guidelines also propose that agents must get a written contract describing the “material terms”, a grievance redress system for consumers and have no provision that a direct seller will receive remuneration/ incentives for recruitment/enrolment of new agents. Also, the direct selling agency has to be a registered entity under the laws of India.

The Direct Selling Guidelines 2016 should serve as guiding principles for State governments to consider regulating the business of direct selling and multi-level marketing to prevent frauds and protect consumers, the Ministry said.

As per the guidelines, direct selling means “marketing, distribution and sale of goods or providing services as a part of network of direct selling, other than under a pyramid scheme.” (KNN Bureau)