Under the new rule, direct selling companies will not be allowed to form pyramids. At the same time, companies will be fined for violating the provisions in the draft of the new rule.
Direct Selling Companies
For the past few months, the government is showing strictness regarding e-commerce companies. Now the government is making strict rules for direct selling companies. After the implementation of these rules, they will have to change their business model. Direct selling companies such as Amway and Tupperware that sell goods directly to customers will not be allowed to build a multi-layered network of customers, ie pyramids, and offer unusual benefits.
The government has issued a draft of rules to regulate such companies and protect the interests of customers. For the first time, the Union Ministry of Consumer Affairs has framed the Consumer Protection (Direct Selling) Rules, 2021. On this, suggestions have been sought from people till July 21.
Penalty provision for non-compliance of rules
Earlier, the ministry had issued guidelines for these companies in 2016. These guidelines were in the form of advisories. There is a provision of fine for violating the provisions in the draft rules. According to the draft rules, companies that sell goods directly to customers will be prohibited from promoting the multi-level network scheme of customers and the scheme of giving money from one to the other.
Must have at least one office in India
A multi-layered network of customers i.e. pyramid refers to connecting one or more customers to the scheme. As a customer makes new customers, he goes up in the network and he gets benefits directly or indirectly by adding additional customers. Direct selling companies will not be allowed to form pyramids in the new rule after the changes made by the government are implemented. At the same time, companies will be fined for violating the provisions in the draft of the new rule. Also, the direct selling company will have to have at least one office in the country.
DPIIT Sports Pass Registration Mandatory
These companies will have to register under the relevant law of the country and with the Department for Promotion of Industry and Internal Trade (DPIIT) to get the registration number. These companies must have at least one office in India. As per the draft rules, these companies will have to appoint compliance officers, grievance redressal officers and nodal officers to coordinate with the investigating agencies.
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