Consumer Protection

Direct Selling Rules

The Ministry of consumer affairs, India has published rules for Direct Selling (MLM) on 28th December,2021. These rules are named as Consumer Protection (Direct Selling) Rules 2021. Before 2019, there was no law in India which had identified MLM or Direct Selling but Consumer Protection Act 2019 defined Direct Selling or MLM as ‘marketing, distribution & sale of goods or provision of services through a network of sellers, other than through a permanent retail location’ From this Consumer protection act, Direct Selling Rules were created by taking power from clause (zg) of sub-section (2) of section 101 read with section 94 of the Consumer Protection Act, 2019.

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Here are key takeaways & our recommendations for your Direct Selling Company

  • Direct Selling means marketing, distribution & sale of goods or provision of services through a network of sales, other than through a permanent retail location
  • For this document, the company which are fulfilling above definition will be the companies considered as MLM Company
  • Direct Seller Means a person authorized by a direct selling entity through a legally enforceable written contract to undertake direct selling business on principal to principal basis
  • Customer is the one who is purchasing the product
  • Invoice must be in the name of customer who is paying for the product/service
  • GST number is compulsory for Direct Seller & Direct Selling Entity
  • GST must be paid on commission amount by Direct Seller
  • GST must be paid on every sale done by direct seller or direct selling entity
  • There must be no activation criteria or any other compulsory product purchase criteria in order to receive any commission for the sales done by network of direct sellers
  • The reason for purchasing any product by any customer must not be connected to business directly or indirectly
  • All the products related licenses & company registration in MCA must be completed
  • All the products must have trademark, service mark or any other identification mark of MLM Company
  • Products rates must be reasonable as per market standards
  • Products rates must not be inflated for giving more commission/incentive/remuneration/rewards
  • Website of MLM Company must have all the information mentioned in Clause 4, Clause 5.1.d & Clause 5.2 of Consumer Protection Direct Selling Rules 2021
  • Your MLM Company must not do any unfair trade practice & must provide all the information about products & related policies like return-refund policy, exchange policy, guarantees/warranties, payment policy etc before product sale
  • Your MLM Company must not use any Hypothetical model to show potential of business plan
  • All income qualification criterias must be based on sales of product. (Not based on joinings, placements, activation, headcounts, position in network etc)
  • It is compulsory to become partner in the convergence process of the National Consumer Helpline of Central Government
  • It is mandatory to resolve any grievance in one month by Grievance Redressal Officer & Management of company

Direct Selling Rules 2021

Watch This Video About Direct Selling Rules 2021 FAQs

It is compulsory for Every new Direct Selling (MLM) Company to follow Direct Selling Rules from the first day & For existing Direct Selling (MLM) Companies, 90 days’ time were given to follow these rules which were completed on 28th March 2022.

Live Discussion About 1 Most Important Thing Which Everyone Missed In Direct Selling Rules 2021


Now here are the important aspect for MLM Companies which every MLM Company owner must know

  • Government is not providing any specific certificate to MLM Companies which certifies that this MLM Company or that MLM Company is legal. Every MLM Company must follow the Direct Selling Rules 2021 every day in their whole business operations in order to be Legal.
  • Every product which has a label must follow the Legal Metrology Packaged Commodities Rules 2011 along with all necessary product related certifications.
  • Direct Selling Companies won’t be able to sell or provide commission on products which do not have the trademark, service mark or any other identification mark of Direct Selling Company on it.
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