NEW DELHI: The government has barred the direct-selling entities from promoting “Pyramid Scheme” or participating in “Money Circulation Scheme” in the garb of their business. Pyramid scheme is a business model that recruits or engages members with a promise of payments or services for enrolling others into the scheme, instead of sale of products or services.
In a notification issued on Tuesday to regulate the direct-selling entities, the government specified that only those entities, which sell or offer to sell goods or services through direct sellers, will be treated as “direct-selling” companies.
The Prize Chit and Money Circulation Schemes (Banning) Act prohibits any company or individual from running any Pyramid or Money Circulation Scheme. The Reserve Bank of India has issued several public notices in the past urging people coming across such offers to lodge a complaint with the state police.
There have been several instances of companies following the pyramid business model while claiming themselves to be directing-selling companies.
According to the notification, all entities involved in direct selling will have to comply with the Consumer Protection (e-Commerce) Rules within 90 days. It says the state government will ensure compliance of the rules by the direct sellers and direct-selling entities. These entities will also give a self-declaration stating that they are complying with the provisions of the selling rules and not involved in any pyramid scheme or money circulation scheme.
The rules also specify that such entities will have to put information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment and grievance redressal mechanism on their websites so that consumers can make an “informed decision”. The websites will also have to mention available payment methods, fees payable by users and the procedure to cancel regular payments.
Moreover, they will be required to display 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, postage and handling, besides conveyance charges and the applicable tax.
TOI has already reported how the government’s new notification specifies that the direct-selling firms will be responsible to address the grievances of consumers, if the products or services are sold by their authorised direct sellers.
In a notification issued on Tuesday to regulate the direct-selling entities, the government specified that only those entities, which sell or offer to sell goods or services through direct sellers, will be treated as “direct-selling” companies.
The Prize Chit and Money Circulation Schemes (Banning) Act prohibits any company or individual from running any Pyramid or Money Circulation Scheme. The Reserve Bank of India has issued several public notices in the past urging people coming across such offers to lodge a complaint with the state police.
There have been several instances of companies following the pyramid business model while claiming themselves to be directing-selling companies.
According to the notification, all entities involved in direct selling will have to comply with the Consumer Protection (e-Commerce) Rules within 90 days. It says the state government will ensure compliance of the rules by the direct sellers and direct-selling entities. These entities will also give a self-declaration stating that they are complying with the provisions of the selling rules and not involved in any pyramid scheme or money circulation scheme.
The rules also specify that such entities will have to put information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment and grievance redressal mechanism on their websites so that consumers can make an “informed decision”. The websites will also have to mention available payment methods, fees payable by users and the procedure to cancel regular payments.
Moreover, they will be required to display 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, postage and handling, besides conveyance charges and the applicable tax.
TOI has already reported how the government’s new notification specifies that the direct-selling firms will be responsible to address the grievances of consumers, if the products or services are sold by their authorised direct sellers.
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