Prohibitions
1. Absolute Ban on Pyramid and Money Circulation Schemes :
- It is strictly prohibited to promote, participate in, or enroll any person into a Pyramid Scheme.
- Promoting or participating in a Money Circulation Scheme in any form is forbidden.
2. Prohibitions on Making False and Misleading Claims :
- The company or the Direct Seller must not make false, unsubstantiated, or misleading claims about the products or services.
- They should not provide incorrect information about the company's compensation plan or business opportunity, such as claiming that income can be earned only through recruitment without any actual product sales.
- Providing misleading information about the quality, functionality, use, or features of a product (this is considered 'Mis-selling').
3. Prohibition on Charging Fees for Enrolment/Recruitment :
- It is forbidden to charge any Entry Fee or Membership Fee for enrolment or subscription as a Direct Seller.
- No Direct Seller should be compelled to purchase mandatory inventory, products, or services to join or continue with the company.
4. Unfair Trade Practices :
- Exerting undue pressure on consumers to purchase products or influencing them unfairly.
- Visiting a consumer's premises without a prior appointment or approval, or making sales there.
- Providing any literature or sales equipment that has not been approved by the company.
- Requiring a prospect to purchase any literature or sales demonstration equipment.
- Failing to provide information about the Direct Seller's identity, address, contact details, and the correct price of the goods or services being sold to the purchasing consumer.
5. Prohibited Actions by the Company :
- Appointing any person as a Direct Seller without proper verification.
- Not prominently displaying mandatory information on its website (such as address, contact details, grievance redressal mechanism, etc.).
- Providing commission, bonus, or incentives to Direct Sellers solely for recruiting new members (income must be derived from the sale of goods or services).
- Failing to handle grievances promptly (acknowledging complaints within 48 working hours and aiming to resolve them within 30 days).
- That the Distributor or his/her relatives (relative means dependent son or daughter, father/mother, spouse) shall not engage in any activities of Multi Level Marketing of any other entity. If it is found then such Distributor shall be terminated.
- That the Distributor is prohibited from listing, marketing, advertising, promoting, discussing, or selling any product, or the business opportunity on any website or online forum that offers like auction as a mode of selling.
- That the Distributor hereby undertakes not to compel or induce or mislead any person with any false statement /promise to purchase products from the Company or to become Distributor of the Company.
- That the Distributor and the company hereby undertakes not to indulge in money circulation scheme or any act barred by the Prize Chits and Money Circulation Scheme (Banning) Act, 1978.
- That the Company/Distributor shall not promote a pyramid scheme, as defined in Clause 1(12) of the “Advisory to state Government/Union territories on Model Guideline on Product selling” issued by the Department of consumer Affairs, Ministry of Consumer Affairs, Food & Public Distribution, Government of India Dt. 09th Sep. 2016 F.NO. 21/18/2014-IT(Vol-II). In the garb of Product selling Business opportunities.
In summary, a Direct Selling Company or its Direct Sellers must strictly adhere to the principles of
transparency, ethics, and consumer protection.