Central Consumer Protection Authority issues notices to 17 direct-selling companies over alleged unfair trade practices

In this regard, the authority carefully examined the websites of these direct selling entities.

The Central Consumer Protection Authority (CCPA) issued notices over alleged unfair trade practices, service deficiencies, and violations of the Consumer Protection (Direct Selling) Rules, 2021.

Notices were sent to Vihaan Direct Selling (India) Pvt. Ltd (a sub-franchise of QNet Group, Hong Kong), Triptales Pvt. Ltd, Oriens Global Marketing Pvt. Ltd., Zennesa Wellness Pvt. Ltd, Orgolife Solutions Pvt. Ltd, Oriflame India Pvt. Ltd, Juncture Marketing Pvt. Ltd and Wolte Marketing Pvt. Ltd.

Notices were also served to Preet Life Care Pvt. Ltd, Enroots Horizon Pvt. Ltd, E biotorium network Pvt. Ltd, Meghdoot Marketing Pvt. Ltd, Suii Dhaaga Lifestyle Pvt. Ltd, Winmarg Business Pvt. Ltd, Ayusratna Natural Herbal Pvt. Ltd, Biothon Lifecare Pvt. Ltd, Okflip India Pvt. Ltd.

Currently, 13 of these cases are under investigation, while replies from three companies are awaited, the ministry said.

“The action aims to address concerns about deceptive and exploitative practices in the direct selling industry and ensure adherence to the regulatory framework designed to safeguard consumer interests,” the ministry stated.

What is direct selling?

Direct selling is a method of marketing, distribution and sale of goods or services directly to consumers, away from fixed retail premises.

This method relies on independent representatives of the entity, known as direct sellers, selling products directly to customers, typically through personal contact, online platforms, or home presentations.

Ethical direct selling businesses operate transparently, providing quality products and fair compensation for their representatives without misleading consumers.

The Government of India notified the Consumer Protection (Direct Selling) Rules, 2021, establishing a comprehensive framework to regulate direct selling entities and protect consumer interests.

However, fraudulent entities misuse the direct selling model to promote illegal pyramid or money circulation schemes. These entities often make unrealistic promises of high commissions, foreign trips, entrepreurship, high returns and wealthy future, contingent on recruiting others, which violates consumer trust and established laws, thereby exposing consumers to fraudulent pyramid and money circulation schemes.

Three major signs that a product is being used to disguise pyramid schemes are:

Large joining fee or investment.

Compensation paid for recruiting

No right of return, buy-back or cooling off period offered.

To make informed decisions and avoid falling victim to fraudulent schemes, consumers should:

1.    Check Disclosures: Ensure the company provides all mandatory information, including registration and compliance certificates, as per the Consumer Protection (Direct Selling) Rules, 2021.

2.    Avoid Recruitment-Based Earnings: Be cautious of schemes focused on recruitment rather than product sales.

3.    Understand Policies: Verify transparent return, refund, and grievance redressal mechanisms.

4.    Review Contracts: Carefully read all terms, especially financial commitments.

5.    Verify Sellers: Engage only with direct sellers carrying valid IDs, offering proper demonstrations, and avoiding false claims.

“Consumers are advised to stay vigilant and report any suspected illegal activities or violations related to direct selling to the appropriate authorities. Together, we can ensure a safe and trustworthy marketplace for all,” the ministry added.