of Kerala

Samgraham (Extract) Industries department - Order approving the guidelines for proper functioning of Direct Marketing

Industries (B) Department
G: 0 CM.S) NO: 190/2011NYVA Date: 12-09-2011 Thiruvanathapuram

Reference: 1) Submit by General Secretary National Direct Selling dtd 17/08/2011 2) G.O (M.S) No. 1841201 1NYVA order dated 2710812011

1) It has come to the notice of the Govt. that while actions were taken against companies involved in Money Chain frauds, it is also affecting the genuine direct marketing companies. As per the Reference 2, a committee has been formed and entrusted to ensure that genuine direct marketers should not be disturbed while investigating cases against money chain frauds, also to prepare guidelines for unhindered and legal functioning of genuine Direct Marketing companies. The recommendations of the Committee has been approved.

2), Order approving Guidelines)

the guidelines

for proper


of direct marketing

( Enclosing


By Order of The Governer T Balakrishnan Add!. Chief Secretary

Addl Chief Secretary, Home and Vigilance Addl Chief Secretary, Industries Dept. Secretary Dept. Law Dept DGP General Secretary, National Direct Sellers Association, Thiruvananthapuram Stock File Office Copy As per Order

Section Officer

Definitions: 1.Guidelines These guidelines are issued to regulate the sale of goods and services outside of retail establishments otherwise known as "Direct Selling" and to provide for protection of the consumers who purchase goods and services from direct sellers. 2. These guidelines will remain in force till an appropriate legislation is enacted for the said purpose. by receiving an offer for a sale contract by mall. Direct Selling Direct Selling means marketing of consumer products/services directly to the consumers generally in their homes or homes of others. usually through explanation or demonstration of the products by a Direct Seller or by mail order sales. 4. Direct Selling Entity: Direct Selling Entity means a business entity which sells or markets products with its trademark or service mark or any other identifying mark through a direct selling individual or organisation. Direct Seller: Direct Seller means a person who is a member of a distribution system of the direct selling entity engaged in Direct Selling. . 3.Mail order sales: Mail Order Sales means sale of goods and services which a person conducts either by himself or through any person authorised by him. at their workplace and other places away from the permanent retail locations.

b) The Direct Selling Entity should be a valid licensee or a permitted user of a registered trademark which identifies the promoter. Conditions for a valid Direct Seiling: The following conditions are to be complied with by the Direct Selling entities and Direct Sellers.5. where a person for a consideration acquires the opportunity to receive a pecuniary benefit which is not dependent on the volume of goods or services sold or distributed but is based wholly or partly upon the inducement of additional persons to participate in such a scheme or arrangement 6. terms and conditions. details of direct sellers and all relevant information about the company and business. The websites shalt be updated regularly. Consumer: Consumer means any person who buys or agrees to buy goods from a Direct Seller for a consideration. I. 2 . goods or services distributed. a) The Direct Selling Entity should be a legal entity authorised to conduct business iri India and which files all retums as mandated by Law. 1978. price. c) The Direct Seiling Entities should maintain websites with complete details of their products/services. and shall furnish all necessary information required by the District Industries Centre. Pyramid scheme/Money Chain Scheme Pyramid Scheme/Money Change Scheme is a scheme or arrangement which also includes any Money circulation scheme as defined within the meaning of the Section 2(c) and 2(e) of the Prize Chits and money Circulation Scheme ( Banning)Act. involving sale of goods and services.

The Order date. A description of the goods or services to be supplied. Time and place for inspection of the sample and delivery of goods A notice . Details regarding the complaint mechanism of the Direct Selling Entity redressal iv. 3 . ii. g) A Direct Selling Entity shall require Direct Sellers to provide the following information to the consumers at the time of the sale: • i. viii.~. Name. e) The compensation to Direct Sellers shall only be based on the quantum of sale of goods and services. . v. address and telephone number of the Direct Seller and Direct Selling Entity.d) The Direct Selling Entity shall not require a Direct Seller to purchase any product or collect any membership fee as a condition precedent for enrolment. vi.. ill. o the consumer of the consumer's t rights to cancel the order and to receive a full refunq of sums paid. f) The Direct Selling Entity should ensure that a consumer purchasing goods or services from a direct seller shall have at least thirty days from the date of delivery of such goods and services to return the Same and to receive full refurid. The Direct Seller Entity/Direct Sellers or their representatives shall at all times carry Identity proof of their respective companies along with any photo ID's issued by any Government agency. The Direct Selling Entity shall display details of their Direct Sellars on their websttes. the total amount to be paid by the consumer along with the bill and receipt. vii.

h) The Direct Sellers/Direct Selling Entities who call at any premises of the customers for the purpose of negotiating direct sales shall take prior permission or appointment. The sale activities not following the above guidelines shall not be considered as Direct Selling/Multilevel marketing and would be dealt appropriately under relevant provisions. . II. identify himself/herself with credentials and shall leave the premises at the request of the occupier of the premises or any person acting with the actual or implied authority of the occupier. immediately indicate the purpose of the visit before entering the premises.

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