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According to the government’s announcement on Tuesday, corporations will be prohibited from marketing pyramid and money circulation schemes in an effort to distinguish legitimate organizations such as Amway, Tupperware and Oriflame from Ponzi scheme operators, which include Amway, Tupperware, and Oriflame among others mlm software company.

According to the Consumer Protection (Direct Selling) Rules, 2021, which were notified by the Ministry of Consumer Affairs, Food and Public Distribution, direct sellers must have at least one physical location as their registered office within the country and make a declaration that they are not engaged in any pyramid scheme or money circulation scheme. Rajat Banerji, head of self-regulatory industry body Indi, “These new standards would offer clarity to markets and give fuel to the business.”

According to him, the sector provides a source of income for more than seven million people in the country, with women accounting for more than half of those employed. Banerji stated that the IDSA has been collaborating with the government for the past two years in order to provide contributions into policy development. It is covered by the guidelines, which apply to both direct sellers and direct selling businesses that offer their products through ecommerce platforms. 


Time for Compliance

“Existing direct selling businesses are required to comply with these guidelines within 90 days,” according to the notification. Distributors and network or multi-level marketing (MLM) are used by direct-selling enterprises to sell to consumers instead of through traditional retail channels, according to the company.

According to the new laws, direct-selling enterprises are expected to have grievances redressal processes. All corporations will also be liable for the disputes coming out of the sale of goods and services by its direct sellers.

To defend consumer rights, companies will further need to publish details about goods and services they are providing, prices, credit terms, conditions of payment, return, exchange, refund policies, and after-sale support. 


The government has issued new regulations for the direct selling business, including a ban on pyramid schemes


On Tuesday, the Center prohibited direct selling companies like Tupperware, Amway, and Oriflame from promoting pyramid or money circulation schemes. It also warned the industry of new guidelines, which are expected to be implemented within 90 days.

In addition, such corporations will now be held accountable for any complaints stemming from the purchase or sale of goods or services by their direct sellers.

In accordance with the Consumer Protection (Direct Selling) Rules, 2021, which have been notified by the nodal consumer affairs ministry, both direct selling entities and direct sellers who sell through e-commerce platforms are required to comply with the rules. A method to monitor or supervise the operations of direct sellers and direct selling firms will be required under the new laws, which will be implemented by state governments.

In India, these laws shall apply to all goods and services purchased or offered through direct selling, as well as to all direct selling models and all direct selling businesses that sell directly to consumers. These restrictions apply to direct selling businesses that are not based in India but provide goods or services to consumers in the country under the same conditions. According to the new rules, a direct seller should not visit a consumer’s home or place of business without first obtaining an identity card and scheduling an appointment or receiving consent.