The Central Consumer Protection Authority (CCPA) has issued notices to 17 entities over the violation of Consumer Protection (Direct Selling) Rules, 2021.
According to the information provided by the Consumer Affairs Ministry, out of these 17 entities, 13 are currently under investigation while reply from three is awaited.
Entities whom the CCPA has served notices are 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.
The Consumer Protection (Direct Selling) Rules establishes a comprehensive framework to regulate direct selling entities and protect consumer interests, and aims to promote transparency, accountability, and ethical practices within the direct selling industry, enabling consumers to make informed decisions.
However, the Consumer Ministry highlighted that some fraudulent entities misuse the direct selling model to promote illegal pyramid or money circulation schemes.
These entities often make unrealistic promises of high commissions, foreign trips, entrepreneurship, high returns and a wealthy future, contingent on recruiting others, which violates consumer trust and established laws, thereby exposing consumers to fraudulent pyramid and money circulation schemes, it said.
The Ministry also highlighted three major signs that a product is being used to disguise pyramid schemes.
These are large joining fees or investment, compensation paid for recruiting, and no right of return, buy-back or cooling off period offered.
It also said that in order to make informed decisions and avoid falling victim to fraudulent schemes, consumers should Check Disclosures, Avoid Recruitment-Based Earnings, Understand Return and Refund Policies, Read Contracts Carefully, and Verify Direct Sellers.