States Issue Guidelines for Regulating Direct Selling Entities

A total of eight states, including Madhya Pradesh, Goa, Chhattisgarh, Himachal Pradesh, West Bengal, Kerala, Andhra Pradesh, and Maharashtra have come up with guidelines for the regulation of direct selling entities. The same is in conformity with the Consumer Protection (Direct Selling) Rules, 2021 which envisages the setting up of monitoring mechanisms by state governments for overseeing the activities of direct selling entities and direct sellers and to ensure adherence to the rules.

The rules which were notified by the Department of Consumer Affairs on December 28, 2021, impose several obligations on the direct selling entities and direct sellers. For instance, direct selling entities are required to make a self-declaration regarding compliance with the rules, have a registered office in India, etc. whereas direct sellers have to procure GST registration, see to it that the product delivered matches the description provided, and so on. Further, the rules prohibit direct selling entities and direct sellers from promoting or participating in pyramid schemes and money circulation schemes under the guise of conducting direct selling business.