pyramid: the government prohibits direct sales entities from using the pyramid system business model
NEW DELHI: The government has banned direct selling entities from promoting the “Pyramid Scheme†or participating in the “Money Circulation Scheme†as part of their activities. The pyramid scheme is a business model that recruits or hires members with a promise of payments or services to enroll others in the system, instead of selling products or services.
In a notification issued Tuesday to regulate direct selling entities, the government clarified that only entities that sell or offer to sell goods or services through direct sellers will be treated as “direct selling” companies.
The Prize Chit and Money Circulation Schemes (Banning) Act prohibits any business or individual from operating a pyramid or money circulation system. The Reserve Bank of India has issued several public notices in the past urging those faced with such offers to file a complaint with the state police.
There have been several instances of companies that have followed the pyramid business model while claiming to be direct selling companies.
According to the notification, all entities involved in direct selling will be required to comply with consumer protection (e-commerce) rules within 90 days. He says the state government will ensure that the rules are followed by direct sellers and direct selling entities. These entities will also provide a self-declaration indicating that they comply with the provisions of the sales rules and that they are not involved in any pyramid scheme or money circulation scheme.
The rules also specify that these entities will have to put information relating to the return, refund, exchange, guarantee and guarantee, delivery and shipment, methods of payment and the settlement mechanism. grievances on their websites so consumers can make an “informed decisionâ€. The websites should also mention the payment methods available, user fees and the procedure for canceling regular payments.
In addition, they will be required to display the total price of any good or service in a single digit, along with its break-out price showing all mandatory and voluntary charges, including delivery, shipping and handling charges, in plus shipping costs and applicable tax.
TOI has previously reported how the new government notification clarifies that direct selling companies will be responsible for responding to consumer complaints, if the products or services are sold through their authorized direct sellers.
In a notification issued Tuesday to regulate direct selling entities, the government clarified that only entities that sell or offer to sell goods or services through direct sellers will be treated as “direct selling” companies.
The Prize Chit and Money Circulation Schemes (Banning) Act prohibits any business or individual from operating a pyramid or money circulation system. The Reserve Bank of India has issued several public notices in the past urging those faced with such offers to file a complaint with the state police.
There have been several instances of companies that have followed the pyramid business model while claiming to be direct selling companies.
According to the notification, all entities involved in direct selling will be required to comply with consumer protection (e-commerce) rules within 90 days. He says the state government will ensure that the rules are followed by direct sellers and direct selling entities. These entities will also provide a self-declaration indicating that they comply with the provisions of the sales rules and that they are not involved in any pyramid scheme or money circulation scheme.
The rules also specify that these entities will have to put information relating to the return, refund, exchange, guarantee and guarantee, delivery and shipment, methods of payment and the settlement mechanism. grievances on their websites so consumers can make an “informed decisionâ€. The websites should also mention the payment methods available, user fees and the procedure for canceling regular payments.
In addition, they will be required to display the total price of any good or service in a single digit, along with its break-out price showing all mandatory and voluntary charges, including delivery, shipping and handling charges, in plus shipping costs and applicable tax.
TOI has previously reported how the new government notification clarifies that direct selling companies will be responsible for responding to consumer complaints, if the products or services are sold through their authorized direct sellers.