Particular and Relevant Provisions
Compliances under the Guidelines
I. For establishing Direct Selling business:
|Mandatory Orientation Session [Clause 2(2)]
||Conduct a mandatory orientation session to all
prospective direct sellers to provide fair and accurate information
about Direct Selling operation, including remuneration system and
expected remuneration for newly recruited direct sellers.
|Information to Direct Seller [Clause 2(3)]
||Provide accurate and complete information to prospective
and existing direct sellers about reasonable amount of remuneration
|Conviction of Promoters and KMP [Clause 2(7)]
||Promoters or key management personnel of DSE should not
have been convicted of any criminal offence punishable with imprisonment
in last 5 years.
|Office of DSE [Clause 2(8)]
||Should have an office with identified jurisdiction of
its operation in the State to enable the consumers and direct seller to
acquaint themselves with price of products, return or replacement of
|Trademark/ Service Mark/ Identification Mark [Clause
||Should be the owner, holder, licensee of a trademark,
service mark or any other identification mark which identifies DSE with
goods to be sold or services to be rendered.
|Website of DSE [Clause 3(4)]
||Should maintain and update a website with all relevant
details of DSE, its contact information, management products, product
information product quality certificate, price, complaint redressal
mechanism, etc. Website should have space for registering consumer
complaints, which should be addressed within 45 days of making
|Prohibited Activities for DSE [Clause 3(7)]
||DSE should not be engaged in the business of monetary
deposits, investments, trading in commodities, live stocks, life
insurance policies (not regulated by IRDA), virtual/ Crypto currencies,
selling of websites, web space, online education, online training, etc.
|Grievance Redressal Committee [Clause 7(4)]
||DSE should constitute a Grievance Redressal Committee (GRC)
consisting at least 3 officers of DSE.
|Pyramid Scheme and Money Circulation Scheme [Clause 8]
||DSE should not engage in Pyramid Scheme and Money
Money circulation scheme means any scheme, by whatever name called, for
the making of quick or easy money, or for the receipt of any money or
valuable thing as the consideration for a promise to pay money, on any
event or contingency relative or applicable to the enrolment of members
into the scheme, whether or not such money or thing is derived from the
entrance money of the members of such scheme or periodical
The meaning of Pyramid Scheme is defined in the Guidelines.
|Other Registration Requirements [Clause 9]
||# DSE should have its’ registered local
office address and the same address should be mentioned in all
# DSE should be registered in India.
# DSE should submits its’ balance sheets at least for
previous 3 years to the Competent Authority while getting registered for
DSE. New DSE, i.e., entities old less than 3 years, should submit
affidavit about financial condition of their business at the time of
# DSE should comply with all the norms pertaining to the
laws and rules made under Companies Act, Income Tax Act, Goods and
Services Tax, Provident Fund etc.
# Direct seller should be an Indian Citizen, not below the
age of 21 years.
II. Other Compliances
|Refund/ Buy-Back Guarantee [Clause 2(5)]
||DSE should notify and provide a full refund or buy-back
guarantee to every direct seller which can be exercised within a period
of 30 days from the date of distribution of the goods or services to the
|Cooling-off Period [Clause 2(6)]
||DSE should provide a cooling-off period to the direct
seller to participate or cancel participation in the scheme and receive
a refund of any consideration given to participate in the operations of
DSE. During cooling-off period, a direct seller is entitled to return
any goods/services purchased by the direct seller during the cooling-off
Cooling-off Period shall mean the duration of time counted from
the date when the direct seller and the DSE enter into an agreement and
ending with date on which the contract is to be performed and within
which the direct seller may repudiate the agreement without being
subject to penalty for breach of contract.
|Identification Documents to Direct Sellers [Clause 3(2)]
||DSE should issue proper identity documents(s) to its
|Periodic Account/ Information [Clause 3(5)]
||DSE should provide to direct sellers their periodic
account/information about sales, purchases, details of earnings,
commission, bonus and other relevant data, in accordance with agreement
entered with the direct sellers.
III. Maintenance of Records
|Business Records [Clause 3(3)]
||DSE should maintain proper records either manually or
electronically of their business dealings with complete details of:
# Goods and Services offered by DSE
# Terms of contract price
# Income Plan
# Details of direct sellers, including but not limited
about their enrolment, termination, active status and earnings.
|Register of Direct Sellers [Clause 3(3) (a)&(b)]
||DSE should maintain a ‘Register of Direct Sellers’
wherein relevant details of each enrolled direct seller shall be updated
and maintained. Such details should include but not limited to verified
proof of address, proof of identity and PAN details.
IV. Agreement between DSE and Direct
|Written Agreement between DSE and Direct Sellers [Clause
||DSE shall execute a written contract agreement, whether
directly or indirectly, with direct sellers before their enrolment. The
relationship between DSE and the direct seller should be determined as
per their written agreement containing the rights and obligations that
are expressly provided as conditions for undertaking Direct Selling
|Content of the Agreement [Clause 1(16)(d) and 4(2)]
||The agreement with direct sellers should contain
material terms of participation by direct sellers. The term material
terms shall mean terms related to buy-back or repurchase policy,
cooling-off period, warranty and refund policy.
|Other Terms and Conditions of the Agreement [Clause
1(16) and 4(2)]
||The Agreement should:
# not require the direct seller to purchase goods or
services (i) for an amount that exceeds an amount for which such goods
or services can be expected to be sold or resold to consumers, and (ii)
for a quantity of goods or services that exceeds an amount that can be
expected to be consumed by or sold or resold to consumers;
# should not have provision that a direct seller will
receive remuneration or incentive for the recruitment/enrolment of new
# allow or provide the direct seller a reasonable
cooling#off period in which to cancel participation and receive a refund
for goods or services purchased;
# allow for termination of contract with reasonable notice,
where a direct seller is found to have made no sales of goods or
services for a period of up to 2 years since the contract was entered
into or since the date of the last sale made by the direct seller;
# allow or provide for a buy#back or repurchase policy for
currently marketable goods or services sold to the direct seller at the
said direct seller’s request at reasonable terms;
V. Responsibilities of Direct Sellers
|Responsibilities Direct Sellers [Clause 5(1), (2) & (3)]
||The direct sellers engaged by DSE should:
# carry their identity card and not visit the customer’s
premises without prior appointment/ approval;
# at the initiation of a sales representation without
request clearly identify themselves, the identity of DSE, the nature of
goods or services sold and the purpose of the solicitation to the
# offer a prospective consumer accurate and complete
explanations and demonstrations of goods and services, prices, credit
terms, terms of payment, return policies, terms of guarantee and
|Information to the prospect/ consumer at the time of
sale by Direct Seller [Clause 5(4)]
||Direct Seller should provide the following information
to the prospect/ consumers at the time of sale:
# name, address, registration number or enrollment number,
identity proof and telephone number of the direct seller and details of
# description of the goods or services to be supplied;
# explain about the goods return policy of DSE in the detail
before the transaction;
# order date, total amount to be paid by the consumer along
with the bill and receipt;
# time and place for inspection of the sample and delivery
# information of rights of consumer to cancel the order and
/or to return the product in saleable condition and avail full refund on
sums paid; and
# details regarding the complaint redressal mechanism.
|Protection of Consumers [Clause 7]
||# DSE and the direct sellers should take
appropriate steps to ensure the protection of all private information
provided by the consumer.
# DSE and direct sellers shall follow the provisions of the
Consumer Protection Act, 1986.
# All complaints received over phone, email, website, post
and walk–in should have a complaint number for tracing and tracking the
complaint and record time taken for redressal.
# Every DSE shall constitute a GRC which shall address
complaints and inform complainants of any action taken.
# All grievances will be resolved directly by DSE.
|Prior Written Approval of DSE [Clause 7(6)]
||Any person who sells or offers for sale any product or
service of DSE should take prior written consent from DSE in order to
undertake or solicit such sale or offer.