• Recently, the Centre has notified Consumer Protection (Direct Selling) Rules, 2021 for the direct selling industry.
  • It prohibits promotion of pyramid schemes and participation in money circulation schemes.
  • It has been notified in exercise of the powers conferred by the Consumer Protection Act, 2019.
  • Earlier, the government notified and made effective the provisions of the Consumer Protection (E-Commerce) Rules, 2020 under the Consumer Protection Act, 2019.

Important points:

  • The rules lay down duties and obligations of both direct selling entities and their direct sellers to “safeguard the interest of consumers’’.
  • The existing direct selling companies will need to ensure they comply with the rules within 90 days.
  • However the direct sellers as well as the direct selling entities using e-commerce platforms for sale shall comply with the requirements of the Consumer Protection (e-Commerce) Rules, 2020.

Applicability of the Rules

  1. All goods and services bought or sold through direct selling.
  2. All models of direct selling, all direct selling entities offering goods and services to consumers in India.
  3. All forms of unfair trade practises across all models of direct selling.
  4. To direct selling entities which are not established in India, but offers goods or services to consumers in India.

Consumer Protection (e-Commerce) Rules, 2020

  • The Consumer Protection (E-commerce) Rules, 2020 are mandatory and are not advisories.
  • Apply to all e-commerce retailers, whether registered in India or abroad, offering goods and services to Indian consumers.
  • E-commerce entities need to appoint a nodal person, resident in India to ensure compliance with the provisions of the act or rules.
  • The sellers through the e-commerce entities will have to display the total price of goods and services offered for sale along with the break-up of other charges.
  • Expiry date of the good needs to be separately displayed.


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