On 15-07-2022, the Consumer Affairs, Food & Civil Supplies Department, Andhra Pradesh has notified AP Consumer Protection (Direct Selling) Rules, 2021 to define direct selling entity, cooling off period, money circulation scheme, etc.

Applicability: The Rule is applicable to all goods and services bought or sold through direct selling, and also applies to direct selling services which is not established in India.

Key Points:

  1. Maintenance of Records: Every direct selling entity must maintain its record, either manually or electronically and required the documents like Certificate of Incorporation; Memorandum of Association (MoA) and Articles of Association (AoA), GST Returns, Income Tax Returns, Balance Sheet and Audit report etc.
  2. Obligation of Direct Selling Entity
    • direct selling entity include companies incorporated under Companies Act, 2013; partnership firm registered under Partnership Act, 1932 or a Limited Liability Partnership (LLP) registered under Limited Liability Partnership Act, 2008.
    • have a registered office within India.
    • maintain proper and updated website with all relevant details of that entity. All information provided in website duly certified by a Company Secretary (CS).
    • have a prior written contract with its direct seller and also, ensure the verified identities, addresses, and documents of a direct seller.any misleading, deceptive or unfair trade practices are not used.
  3. Duties and Obligations of direct selling entity: Direct seller must ensure that—
    • actual product delivered to the buyer matches with the description of the given product.
    • direct seller shall not visit a consumer’s premises without ID card and prior appointment.
    • terms of the offer are clear, so that the consumer know the exact nature of offer being made.
    • goods and services offered are accurate and complete with regard to price.
    • right of return offered by that entity shall be in writing.
  4. Person of unsound mind or who is convicted, or bankrupt during the last five years cannot be engaged in the business of direct selling.

*Disha Srivastava, Publication Assistant has reported this brief.

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