Govt Prohibits Direct-Selling Companies From Promoting Pyramid, Money Circulation Schemes

The central government has prohibited direct selling entities such as Amway from promoting a pyramid scheme or signing up people for mony circulation schemes in garb of doing direct-selling business, reports Business Standard.

The government on Tuesday (28 December) announced that it has notified the Consumer Protection (Direct Selling) Rules, 2021.

Under the new rules, the government has also prohibited such sellers from participating in money circulation schemes, directing them to comply with the rules within three months from the date of publication of these rules in the Official Gazette.

"These Rules shall apply to all goods and services bought or sold through direct selling, all models of direct selling, all direct selling entities offering goods and services to consumers in India, all forms of unfair trade practices across all models of direct selling and also to also to a direct selling entity which is not established in India, but offers goods or services to consumers in India," the Consumer Affairs Ministry said in a release.

Existing direct selling entities need to comply of these rules within ninety days from the date of publication of these rules in the Official Gazette, the ministry said.

The move is aimed at keeping the Ponzi schemes in control and protects people in both financial and commercial markets.

Direct-selling entities that make use of e-commerce platforms for their sales will also have to follow the essentials of the Consumer Protection (e-Commerce) Rules, 2020, according to the ministry.