The central government has prohibited direct marketing firms and their suppliers from inducing consumers to make a purchase based upon the representation that they can reduce or recover the price by referring prospective customers to the direct sellers for similar purchases. The new rule also stipulates display of the total price of any goods or service in single figure, along with its break-up price showing all compulsory and voluntary charges, including delivery charges, postage and handling charges, conveyance charges and the applicable tax.
The changes are prescribed in the Consumer Protection (Direct Selling) Rules, 2021, notified on December 28. Existing direct selling entities will have to comply with these rules within 90 days. The new rules are meant to safeguard the interests of consumer through well laid down duties and obligations of both direct selling entities and direct sellers. It also provides for a mechanism to be set up by the state governments to monitor or supervise the activities of direct sellers and direct selling entities.
Once the new rule gets enforced, companies will have to provide information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment and grievance redressal mechanism to the consumers to make informed decisions. All products of the direct selling entity will also have to comply with the declarations to be made under the Legal Metrology Act, 2009.
The rule wants every direct selling entity to establish an adequate grievance redressal mechanism and display the current and updated name, contact details — including telephone number, email address and designation of such officer on its website — and the details of its website shall also be prominently printed on the product information sheet or pamphlet. The grievance redressal officer will have to acknowledge the receipt of any consumer complaint within 48 working hours of receipt of such complaint and redress the complaint normally within a period of one month from the date of receipt of the complaint. In case the grievance redressal process takes more than a month, the officer will have to tell the complainant the reasons for the delay, and the actions taken on the complaint.
It must also provide correct and complete information at pre-purchase stage to enable buyers to make informed purchase decisions.
“No direct selling entity shall adopt any unfair trade practice in the course of its business or otherwise, and shall abide by the requirements specified in any law for the time being in force,” the rule states.
The direct seller will not be allowed to visit a consumer's premises without identity card and prior appointment or approval or provide any literature to a prospect, which has not been approved by the direct selling entity.
Notwithstanding the distribution system adopted by it, the direct selling entities will now have to monitor the practices adopted by its direct sellers and ensure compliance with these rules by means of legally binding contract with such direct sellers.
