Install Android App

West Bengal Direct Selling Guidelines, 2018

Consumer Affairs. .



No. 2287-CA/ESTT/0/1B-34/16. Dated 5th July, 2018.

In Pursuance of the Guidelines issued by the Government of India, Ministry of Consumer Affairs, Food & Public Distribution, Department of Consumer Affairs vide GS.R 1013 (E), New Delhi, dated 26th October, 2016, the State Government, hereby, issues the following Guidelines for regulating the business of Direct Selling & Multi-Level Marketing (MLM) & strengthen the existing regulatory mechanism on Direct Selling & Multi-Level Marketing (MLM), for preventing for & protecting the legitimate rights and interests of consumers, namely:-

West Bengal Direct Selling Guidelines, 2018

Short Title, Extent and Commencement

These guidelines may be called “West Bengal Direct Selling Guidelines 2018”. It extends to the whole of state of West Bengal.

It shall come into force from the date of publication in the official Gazette.

Clause 1. Definitions:

In these Guidelines unless and otherwise required:

  1. “Act” means the Consumer Protection Act, 1986 (68 of 1986);
  2. “Consumer” shall have the same meaning as provided under the Consumer Protection Act, 1986;
  3. “Prospect” means a person to whom an offer or a proposal is made by the Direct Seller to join a Direct Selling opportunity;
  4. “Agreement” means agreement as per Contract Act.
  5. “Direct Seller” means a person appointed or authorized, directly or indirectly, by a Direct Selling Entity through a legally enforceable written contract to undertake direct selling business on principal to principal basis.
  6. “Network of Direct Selling” means a network of direct sellers at different levels of distribution, who may recruit or introduce or sponsor further levels of direct sellers, who they then support;
  1. “Direct Selling” means marketing, distribution and sale of goods or providing of services as a part of network of Direct Selling other than under a pyramid scheme,
  1. “Direct Selling Entity”, means a registered entity, not being engaged in a pyramid scheme, which sells or offers to sell goods or services through a Direct Seller.
  1. “Goods” means goods as defined in the Sale of Goods Act, 1930 and “Service” means service as defined in the Consumer Protection Act, 1986;
  2. “Saleable” shall mean, with respect to goods and/ or services, unused and marketable, which has not expired, and which is not seasonal, discontinued or special promotion goods and or services;
  3. “Cooling-off Period” means the duration of time counted from the date when the direct seller and the direct selling entity enter into an agreement under Clause 4 and ending with date on which the contract is to be performed and within which the direct seller may repudiate the agreement without being subject to penalty for breach of contract;
  4. “Pyramid Scheme” means, a multi-layered network of subscribers to a scheme formed by subscribers enrolling one or more subscribers in order to receive any benefit, directly or indirectly, as a result of enrolment, action or performance of additional subscribers to the scheme. The subscribers enrolling further subscriber(s) occupy higher position and the enrolled subscriber(s) lower position, thus, with successive enrolments, they form multilayered network of subscribers.
  1. “Portal” means portal of Direct Selling dealing with registration of direct sellers, maintaining their databases, dealing with grievances related to direct sellers and direct selling entities on one hand and consumers on the other. It would include database of direct selling entities also.
  2. “Money Circulation Scheme” has the same meaning as defined under the Prize Chits and Money circulation Schemes (Banning) Act, 1978.
  3. “Mediation Centre” means mediation centers of the State as well as the mediation centres within districts, as operative under the Department of Consumer Affairs.
  4. “Remuneration System” means the system followed by the direct selling entity to compensate the direct seller which illustrates the mode of sharing of incentives, profits and commission. including financial and non-financial benefits, paid by the direct selling entity to the direct sellers, on a monthly or periodic or yearly basis or both, as the case may be. This system, for every Direct Selling entity, shall:
  1. “State” means the State of West Bengal.
  2. Registering Authority: Registering Authority means, the Director, Commerce & industries Department having jurisdiction over the area in respect of State of West Bengal.
  3. Disciplinary Authority: Disciplinary Authority means, SDM in case of the rural area or the Joint Commissioner of the Municipal Commission in respect of urban area of the state of W.B.
  4. Enforcement officer: Enforcement officer means Inspector Legal Metrology of the concerned jurisdiction or GM, DIC of the district or any other officer as authorized by the SDM. He/She shall submit the enquiry report to the Disciplinary Authority as mentioned above.
  5. Appellate Authority- Appellate Authority means the District Magistrate/ Municipal Commissioner of the concerned municipal area having jurisdiction over the area in respect of State of West Bengal.
  6. Reviewing Authority: Reviewing Authority means, the Additional Chief Secretary/ Principal Secretary/ Secretary of the Commerce & Industries Department having jurisdiction over the area in respect of State of West Bengal.
  7. Monitoring Authority: Monitoring Authority means the Secretary of the Department of Consumer Affairs.

Clause 2. Conditions for the setting up of Direct Selling Business:

Every Direct Selling entity intending to carry out direct selling business subsequent to the publication of the notification in the Gazette, shall within 90 (ninety) days comply with the following set of conditions for the conduct of direct selling business:

It shall

  1. Be a registered legal entity under the laws of India.
  2. Provide a mandatory orientation session to all prospective direct sellers providing fair and accurate information on all aspects of the direct selling operation, including but not limited to the remuneration system and expected remuneration for newly recruited direct sellers;
  3. Provide accurate and complete information to prospective and existing direct sellers concerning the reasonable amount of remuneration opportunity, and related rights and obligations;
  4. Pay all dues to direct sellers as per written agreement.
  5. Notify and provide a full refund or buy-back guarantee to every direct seller on reasonable commercial terms which can be exercised within a period of 30 (thirty) days, from the date of distribution of the goods or services to the direct seller;
  6. Notify & provide to every Direct Seller a cooling off period which entitles such Direct Seller
  1. The promoter or key management personnel should not have been convicted of any criminal offence punishable with imprisonment by any Court of competent jurisdiction;
  2. It shall have an registered office with identified jurisdiction of its operation in the State to enable the consumers and direct seller to acquaint themselves with price of products, return or replacement of products and efficient delivery of goods and services, and post-sale redressal of grievances;
  3. Any trading or marketing or sale activity not adhering the above conditions/ clause shall not be considered as direct selling & would be dealt appropriately under relevant laws.
  4. Registration of such entity shall be done as per the norms of the Commerce & Industries Department issued in this regard as and when.

Clause 3: Conditions for conduct of Direct Selling Business

Every Direct Selling entity shall comply with the following conditions:

  1. It shall be the owner, holder, licensee of a trademark, service mark or any other identification mark which identifies the entity with the goods to be sold or supplied or services to be rendered;
  2. It shall issue proper identity documents to its direct sellers.
  3. It shall maintain proper records either manual or electronic of their business dealings, with complete details of their goods, services, terms of contract, price, income plan, details of direct sellers, including but not limited to enrolment, termination, active status, earning etc.
  1. It shall maintain proper and updated website with all relevant details of the entity, contact information, its management, products, product information, product quality certificate, price, complete income plan, terms of contract with direct seller and complaint redressal mechanism for direct sellers and consumers. The website should have space for registering consumer complaints and should ensure that grievances are addressed within 45 (forty five) days of making such complaints;
  2. It shall update all desired details of the direct selling entity as well as direct sellers on the Direct Selling Portal as designed by the Consumer Affairs Department for the purpose.
  3. Upon registration with the Director Industries, it would be mandatory for the Direct Selling Entity to enter all required fields in the portal. For any details to contact Nodal Officer, Direct Selling in the Department of Consumer Affairs.
  4. Details of the portal related to inputs/ information to be notified separately.
  5. It shall provide to all direct sellers their periodic account/ information concerning, as applicable, sales, purchases, details of earnings, commissions, bonus and other relevant data, in accordance with agreement with the direct sellers. All financial dues shall be paid & any withholding made in a commercially reasonable manner;
  6. It shall monitor the value of the purchases of all its Direct Sellers/ Distributors on a monthly basis & once the purchase value crosses the GST threshold it shall intimate the Direct seller/ Distributor to pay the GST.
  7. A Direct Selling entity shall not:
  1. Notwithstanding the distribution system adopted by a direct selling entity, the Direct Selling Entity shall be responsible for compliance of these Guidelines by any member of its network of direct selling, whether such member is appointed directly or indirectly by the Direct Selling Entity.

Clause 4: Conditions for Direct Selling contract between Direct Seller/ Distributor and Direct Selling Entity:

  1. Every Direct Selling entity shall execute a contract agreement, whether directly or indirectly, with Direct Sellers before enrollment:
  1. The agreement shall be made in writing, describing the material terms of participation and shall;

3) For termination of the agreement as stated above;

Clause 5: Certain obligations of Direct Sellers

  1. Direct Seller engaged in direct selling should carry their identity card as issued by the Direct Selling entity and not visit the customer’s premises without prior appointment/ approval;
  2. At the initiation of a sales representation, without request, truthfully and clearly identify themselves, the identity of the direct selling entity, the nature of the goods or services sold and the purpose of the solicitation to the prospective consumer;
  3. Offer a prospective consumer accurate and complete explanations and demonstrations of goods and services, prices, credit terms, terms of payment, return policies, terms of guarantee, after-sales service;
  4. Provide the following information to the prospect/ consumers at the time of sale, namely:
  1. A direct seller shall keep proper book of accounts stating the details of the products, price, tax and the quantity and such other details in respect of the goods sold by him/ her, in such as per applicable law.
  2. A direct seller shall not:

Clause 6: Relationship between Direct Selling Entity and Direct Seller:

  1. 1. The relationship between Direct Selling entity and Direct Seller shall be determined as per written agreement between the parties which shall contain the rights and obligations that are expressly provided as conditions for the conduct of Direct Selling business as well as provide for the obligation of the direct selling entity and the direct seller in terms of these guidelines;
  1. 2. All other rights and obligations shall be determined as per the express terms of written agreement between a Direct Selling entity and Direct Seller;
  1. The Direct Selling entity will be liable for grievances arising out of sale of products, services or business opportunity by its Direct Sellers;
  2. It will be responsibility of the Direct Selling entity to monitor and control the practices/ methods adopted by the Direct Sellers;

Clause 7: Conduct for the Protection of Consumer:

  1. Direct Sellers and Direct Selling Entity shall take appropriate steps to ensure the protection of all private information provided by a consumer;
  2. Direct Sellers and Direct Selling, Entity shall be guided by the provision of the Consumer Protection Act 1986;
  3. All complaints received over phone, email, website, post and walk-in should have a complaint number for tracing and tracking the complaint and record time taken for redressal;
  4. Every Direct Selling company shall constitute a Grievance Redressal Committee whose composition, nature of responsibilities shall include but not limited to
  1. The direct selling entity shall provide information to the consumer upon purchase which shall contain:
  1. Any person who sells or offers for sale, including on an e-commerce platform/ marketplace, any product or service of a Direct Selling Entity must have prior written consent from the respective Direct Selling Entity in order to undertake or solicit such sale or offer.

Clause 8: Prohibition of Pyramid Scheme & Money Circulation Scheme:

  1. No person or entity shall promote a Pyramid Scheme, as defined in Clause 1(11) or enroll any person to such scheme or participate in such arrangement in any manner whatsoever in the grab of doing Direct Selling business.
  2. No person or entity will participate in. Money Circulation Scheme, as defined in Clause 1(12) in the grab of Direct Selling of Business Opportunities.

Clause 9: Appointment of Monitoring Authority:

  1. The nodal department to deal with the issues related to Direct Selling in the State of West Bengal will be Secretary/ Principal Secretary/ ACS of the Department of Consumer Affairs, in the state.
  2. The nodal officer for issues relating to Direct Selling in the Department would be any Joint Secretary/ Sp Secretary/ Additional Secretary of the Consumer Affairs Department.
  3. The nodal officer would be responsible for coordination with other Departments on issues relating to proper implementation of these guidelines.
  4. Each direct selling entity conducting direct selling activities in the State of West Bengal shall submit an undertaking and a filled up prescribed proforma stating compliance with these guidelines, online(in the portal) or in hard copy to the Deptt.
  5. Direct selling entities shall also provide such detail of its information & other business details as may be notified from time to time.
  6. Such undertaking and proforma needs to be submitted to the department annually.
  7. In case of any queries, the nodal officer would be the coordinating officer for the purpose, for all the direct selling entities.

Clause 10: Power of entry & search and seizure into direct selling entity/direct seller premises

  1. If any violation of guidelines take place the enforcement authority as defined in the guidelines may with a view to securing compliance with this order or to satisfy himself/ herself that this order has been complied with:
  1. The provision of the Code of Criminal Procedure 1973 relating to search shall so far as may be, apply to searches under this order.

Clause 11. Appeal.

Any person aggrieved by any order passed by SDM/Joint Municipal Commissioner may within 15 days from the date of receipt of order by him or her appeal against such order to the appellate authority, which is the District Magistrate/Municipal Commissioner.

Clause 12. Review.

Any person aggrieved by an order passed by DM may within 30days from the date of communication of such order to him or her prefer a review to the Secretary/ Principal Secretary/ ACS of the Commerce & Industries Department.

By Order of the Governor,

Secretary to the Govt. of West Bengal

No. 2287-CA dated 05.07.2018, Source