Report Topics:
1:- General Information
2:- Cooling-off Period
3:- Pyramid Schemes
4:- Multi-Level Marketing
5:- Prohibition on Products
6:- Credit Restrictions Country
7:- Money Collections
8:- Licenses
9:- Status of Direct Sellers
10:- Earnings Claims
11:- Taxes and Fees
12:- Social Security
13:- Others
General Information
1972 law covering the marketing of products and services by a seller or its representatives protects consumers’ rights in direct selling, for person to person sales and party plan, at home or at the workplace (away from shops or exhibitions).
Cooling-off Period
Previously, the cooling off period for consumers was 7 days starting from the order.
The 2014 law relating to Consumption (included into the consumption code with the articles L. 121-16 and followings as regards Direct Selling) extended the cooling off period to 14 days, starting from :
– the order as regards service contracts, or
– the delivery as regards good contracts and service contracts including delivery of goods. Â Â
However, there are specific cases where the right of withdrawal cannot apply (Article L.121-21-8).
Pyramid Schemes
The Law of 5 November 1953 prohibits ‘snowball sales’ but does not define the term, which may be said to describe a transaction in which people are invited to recruit other participants in the hope that they will obtain the product free of charge or at a lower price.
By virtue of Article 4 of the Law of 23 June 1989, the ban on ‘snowball sales’ was extended to chain and, by extension, pyramid sales or offers of financial gain resulting from a collection of subscribers or enrolments to a chain, and of which the total amount depends upon the geometrical progression of the number of persons recruited or enrolled. The consequence of such a chain or pyramid is that on the one hand the market reaches saturation point and on the other incapacity to satisfy demand.
Since 1993, both the preceding laws are included into the Consumption Code with the Article L.122 6.
The legislator completed in 1995 the Article L.122 6 with the law of 1 February 1995 which states that:
“in selling networks constituted by the recruitment of members or affiliates, it is forbidden to obtain from a member or an affiliate in the network, the payment of money linked to an entry fee or to the acquisition of material or services of a pedagogic nature, relating to training, demonstration or selling, or any other material or service, when this payment induces money or the attribution or an advantage profiting to one or more members or affiliates in the network”
It is also forbidden in those networks, to propose to acquire an inventory of merchandise destined for re sale, without buy back guarantee at the moment of purchasing, with the eventual deduction of a sum not exceeding 10% of the corresponding price. This buy back guarantee may however by limited to a period of one year following the purchase.
In 2008, after the integration in French law of the Unfair commercial practices directive, the term “geometrical” in the expression “geometrical progression was deleted of the article L. 122-6.”
Multi-Level Marketing
Multi-level marketing systems which are economically viable are accepted. The French Administration established an accurate definition of this distribution channel in a memorandum of 18 October 1995, summarized hereunder :
Prohibition on Products
According to the article L.121-16-1 of the consumption code, Direct Selling’s Legislation does not apply to certain contracts, mostly because they are governed by a specific law. This includes the followings :
– contracts concerning social services including social housing, childcare and support of families,
– contracts concerning health services provided by health care professionals, including prescription, delivery of medicines and medical device,
– contracts concerning gambling,
– contracts concerning financial services,
– contrats drafted by a public officer,
– contracts concerning creation, acquisition or transfer of real estate or rights on real estate, construction of new buildings, significant transformation of existing buildings or leasing for residential purposes.
Therefore, the contracts above may not be sold by direct selling methods.
Credit Restrictions Country
The Law of 1st July 2010 (included into the consumption code with the articles L311-1 to L311-52) protects the consumer in the field of credit.
Money Collections
Article L342-1 of the Monetary and Financial Code provides that “prohibited peddling and canvassing for the sale, purchase or exchange of gold bullion, bars, coins and foreign coins gold demonetized.
Engages in peddling these matters who goes to the home of individuals, other than the bankers, brokers and dealers in precious metals, or in public places not reserved for this purpose, to provide or obtain the materials listed designated above, with immediate delivery and payment, in whole or in part, either in cash or securities. ”
Licenses
No legislation.
Status of Direct Sellers
According to the latter, the independent direct salespersons have to register either with the professional register of commerce and trades (if they are distributors) or with the professional register of commercial agents (if they are agents) provided that (cumulative conditions) :
Earnings Claims
No information
Taxes and Fees
Employees and independent salespeople pay their own income tax.
Social Security
Employees and independents salespeople benefit from the General Social Security system.
Others
The prohibition of receiving any kind of payment before a 7 days period after the order, edicted by the 1972 Law, was tempered with the 2014 Law relating to Consumption.
This law maintained the preexisting exceptions (subscriptions to a daily publication and contracts regarding personal care services), and added two more :
– meeting sales organized at the seller’s or consumer’s residence;
– maintenance and repair works requested by the consumer in case of emergency.
The WFDSA International Guide to Direct Selling Legislation is a guide and is not exhaustive either in terms of subjects presented or for all areas of concern to direct selling companies. It is intended to cover general areas of concern. The Guide is not a substitute for legal counsel but only intended to alert you to the general nature of laws and regulations affecting the direct selling industry in a particular country. Consequently, before beginning an operation in any foreign country, it is strongly recommended that competent legal counsel be consulted. While every effort has been made to insure that the information contained in this Guide is accurate, the variety of sources used makes absolute verification difficult. Further, laws and regulations also can change from time to time without notice. Therefore, the WFDSA cannot be held liable for the information included in this publication.