Consumer Protection Authority Pulls Up 17 Direct-Selling Firms For Alleged Violations

(MENAFN- Live Mint) New Delhi: The Central Consumer Protection Authority (CCPA) has issued notices to 17 direct-selling entities for allegedly violating the Consumer Protection (Direct Selling) Rules, 2021. Of these, 13 companies are under investigation, and responses from three firms are still awaited, the Ministry of consumer affairs, food & public distribution said in a statement on Friday.

This action is part of the CCPA's ongoing efforts to ensure compliance with regulations governing direct-selling activities and protect consumer interests, which Mint first reported on 10 May .

Direct selling refers to the sale of goods or services directly to consumers, typically by independent representatives. These representatives sell products through personal interactions, online platforms, or presentations at home, doing away with the need for retail outlets.

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The ministry said,“The 17 entities that have received notices for alleged non-compliance include Vihaan Direct Selling (India), a sub-franchise of QNet Group, Hong Kong; Triptales; Oriens Global Marketing; Zennesa Wellness; Orgolife Solutions; Oriflame India; Juncture Marketing, Wolte Marketing; Preet Life Care; Enroots Horizon; E Biotorium Network; Meghdoot Marketing; Suii Dhaaga Lifestyle; Winmarg Business; Ayusratna Natural Herbal; Biothon Lifecare; and Okflip India.”

Juncture Marketing said in response to an emailed query that it had closed its firm and completed all the required formalities, including the surrender of their GST number. Queries emailed to the other firms remained unanswered.

"Of these, only Oriflame India is a member of the IDSA (Indian Direct Selling Association) and fully complies with the Consumer Protection (Direct Selling) Rules, 2021. There was no violation by Oriflame India," Vivek Katoch, chairman of IDSA, told Mint. "As the other companies are not members of the IDSA, I won't comment on their practices," he added.

On 10 May Mint reported that the government planned to set up a team to tighten rules under the Consumer Protection Act to rein in the direct-selling industry. The report said the department was scrutinising complaints filed against direct-selling companies for violations of the Consumer Protection (Direct Selling) Rules, 2021, and would devise a plan to ensure compliance after assessing these complaints.

The CCPA's actions aim to counter deceptive practices in the direct-selling industry and ensure that businesses comply with established consumer protection laws. The ministry has called on all direct-selling entities to adhere to the rules, and emphasised the need for transparency and accountability in their operations.

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“Consumers are advised to exercise caution when engaging with direct-selling businesses. They should verify the legitimacy of the company and its sales representatives, check for clear disclosures on the company's website, and avoid schemes that focus primarily on recruitment for earnings,” the ministry said. Consumers should also ensure that the business provides transparent policies for returns, refunds, and resolving complaints, it said.

In July the consumer affairs ministry fined Indiyaa Distribution Network LLP , a direct-selling firm in Indore, ₹10 lakh for violating rules on misleading advertisements while promoting its joint-pain-relieving product Dhuandhar Oil.

According to estimates released by IDSA, India's direct-selling industry grew by more than 12% in FY23, recording a gross turnover of ₹21,282 crore. According to the IDSA, the compounded average growth rate (CAGR) of the direct-selling industry from FY20 to FY23 was 8.3%. Around 8.6 million Indians are self-employed in the direct-selling industry, the IDSA report said.

Earlier today Mint reported that the department of consumer affairs is preparing to launch a“future-ready” platform to redressing consumer grievances through a new e-Jagriti app and an updated portal, which is expected to streamline the resolution of complaints, two people aware of the matter said.

The new system looks to take into account changes in consumer behaviour resulting from, among other things, the launch of quick deliveries across segments, from groceries and medicines to cosmetics and fashion, they added.

The platform will offer a seamless and user-friendly experience, allowing consumers to file complaints, track their status, and even appear for hearings through the app or portal, the first person said.

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