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
in India direct selling exists by the way of corporation of goods to the consumers in a big way, until today there is no specialised law dealing specifically with the direct selling industry or direct sales.
However, there exists a legislation called Consumers Protection Act 1986 which has come into force since 15 April 1987 with amendments in 1991 which deals with the redress of grievances of the consumers in general with respect to the goods sold to them or services provided to them by the manufacturers or traders of the goods or institutions. This act based on the guidelines issued by the United Nation’s General Assembly on 9 April 1986 on consumer protection.
Under the said Act, consumer grievances are sought to be heard and redressed on complaint by Consumer through Consumer Forums at three different levels, ie:
District Level
State Level
Central Level
The object of the Act is to protect the consumer, inter alias, against:
> -An unfair trade – practice adopted by a trader
> -Goods bought which have defects
> -Services rendered found to have some deficiency.
> -Price charged for the goods in excess of the price fixed by law or displayed on the goods
-Goods offered for sale which are hazardous to life and safety and / or being sold in contravention of the provisions of the law.
The said Act provides for the following remedies to the consumer:
-Remove defects
-Replace goods
-Return the money / price paid by the consumer
-Pay compensation
-Discontinue unfair practices
-Not to offer hazardous goods for sale and to withdraw them
-Provide adequate costs to the parties.
These remedies are mostly the same as provided under the code of ethics prescribed by the national DSAs. The Act also empowers various forums under the Act to levy penalties by way of imprisonment and / or fine on traders failing to comply with the orders of the forum.
Apart from the said Act, there are the following Acts touching marginally on the rights of the consumers. They are:
Standard Weights and Measures Act
Drugs and Cosmetics Act
Prevention of Food Adulteration Act
Essential Commodities Act
Monopolies and Restrictive Trade Practices Act.
Cooling-off Period
There is no legislation which makes it obligatory either to include such a term or prohibit inclusion of such a term in any agreement between the manufacturer / trader and the consumer. It is left to the trader and the consumer whether to have such a term in the agreement or not. However, if such a term were included in the agreement, breach of the same would make either party civilly liable.
However, one usually finds that various reputed manufacturers or traders offer to the consumers guarantees / warranties for over a period, sometimes even up to five (5) years or more towards the quality of their goods so that, if during that period any defect crops up in the said goods, the manufacturer / trader repairs the defect or replaces the goods or returns the money if the defect is found to be incurable. In the case of breach of guarantee / warranty, the manufacturer / trader becomes civilly liable for damages.
It is usual for the manufacturer / trader to provide their sales persons with identity cards showing the company they represent, to be produced when demanded by the household or the consumer who is buying from him.
Pyramid Schemes
There is no legislation in India dealing with such schemes. However, if under any such scheme the benefit to be received by the consumer were to depend on a chance then such schemes are controlled by the State Legislation by making it compulsory to get a licence for the same from the concerned State Government Authority.
Multi-Level Marketing
There is no law prohibiting such sales
Prohibition on Products
This has already been answered above. At present the following laws exist on the said subject:
Drugs and Cosmetics Act
Prevention of Food Adulteration Act
Essential Commodities Act
Credit Restrictions Country
No legislation.
Money Collections
No legislation.
Licenses
Although in practically all states in India there are Municipal Laws providing for obtaining a license by peddlers / hawkers of goods in the Municipal area, there is no provision for obtaining a license by the salespeople selling company’s goods door to door.
Status of Direct Sellers
Sales people are always under an agreement with the manufacturer / trader whose goods he / she agrees to sell door to door and, therefore, his rights and obligations are governed by the terms and conditions of the agreement. Ordinarily the goods entrusted to him is the property of the manufacturer / trader. The sales people only act as the agent of the manufacturer / trader whose goods they agree to sell.
Earnings Claims
There is no legislation on the subject. However, the nature of the claim depends upon the terms and conditions of the Agreement and, if unethical, it would be for the DSAs to control the same under their code of ethics practice.
Taxes and Fees
The relevant legislators existing in India on the point is Central Sales Tax Act and State Sales Tax Act which provides for the sales tax to be paid by the parties.
Social Security
No information.
Others
Government of Kerala.