States to monitor Direct selling/MLM companies

Uninon govt said all sattes has to implement mlm/direct selling guidelines issued by the Govt of India.Girish Bapat, Minister for food, civil supplies and consumer protection has said the state would soon initiate the process for adopting the Union government’s model guidelines to regulate direct selling companies.

The new guidelines prohibit direct selling 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 ministry has since advised the state governments to set up a mechanism for monitoring/supervising the activities of direct sellers, direct selling and multilevel marketing (MLM) entities. The guidelines make it imperative for such companies to furnish an undertaking with the consumer affairs department within 90 days, stating that they are in compliance with all the provisions.

Direct selling potential

A recent report by FICCI-KPMG showcased the potential for direct selling in India, projecting potential growth of more than 800 per cent for the industry – reaching a volume of Rs64,500 crore by 2025, up from the current Rs8,000 crore.

Key guidelines

* Submission of an undertaking within 90 days declaring compliance of guidelines.

* Compulsory registration as direct selling entity under Indian laws.

* Disclosure of details of incorporation by direct selling companies.

* Agreement between company and agent should comply with provisions of Indian Contract Act, 1872.

* Agents should not be asked or induced to buy more products than what can be expected to be sold to customers.

* Agents should be allowed to withdraw their participation and get a refund for goods and services.

* Provision of a grievance redress system for consumers

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