The Andhra Pradesh Direct Selling Guidelines,2017- Notification

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GOVERNMENT OF ANDHRA PRADESH
ABSTRACT
CA,F&CS Department - The Andhra Pradesh Direct Selling Guidelines,2017- Notification- OrdersIssued.
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CONSUMER AFFAIRS, FOOD & CIVIL SUPPLIES (CS-II) DEPARTMENT
G.O.MS.No. 21 Dated: 08-12-2017
 Read:
GSR 1013(E), dated:26th October,2016 (Gazette of India), Department of Consumer Affairs,
Government of India.
***
ORDER:
 The appended notification will be published in English, Telugu and Urdu in the Andhra
Pradesh Gazette.

2. The Director of Printing & Stationery, Vijayawada is requested to publish the notification in
the Extraordinary issue of the Andhra Pradesh Gazette dated: 11.12.2017. The Telugu and Urdu
translation of the Notification will be furnished by the Director of Translation to the Director of
Printing & Stationery, Vijayawada for publication of the same under intimation to this Department
and General Administration Department. He is also requested to take necessary action to publish
the same in the District Gazettes. He is also requested to send 200 Gazette copies of the
Notifications to this Department. The Director of Translation is requested to furnish forthwith the
translation of the Notification into the Regional Languages concerned directly to the Director of
Printing & Stationery, Vijayawada to enable them to publish the same in the Andhra Pradesh
Gazette and District Gazette.
(BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA PRADESH)
 B.RAJSEKHAR
EX.OFFICIO PRINCIPAL SECRETARY TO GOVERNEMENT

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NOTIFICATION
 With the prior concurrence of the Central Government vide F.No.21/18/2014-
IT(Vol-II), Ministry of Consumer Affairs, Food & Public Distribution, Department of Food &
Public Distribution, dated:09.09.2016 the Governor of Andhra Pradesh hereby makes the
following Order, namely:
Short title, extent and commencement:-
(1) This order may be called the “The Andhra Pradesh Direct Selling Guidelines order,
2017”.
(2) It extends to the whole of the State of Andhra Pradesh.
(3) It shall come into force with immediate effect.
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. “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.
5. “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:
Explanation: “network of direct selling” shall mean any system of distribution or
marketing adopted by a direct selling entity to undertake direct selling business in
accordance with these Guidelines, and shall include the multi-level marketing
method of distribution.
6. “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;
Provided that such sale of goods or services occurs otherwise than
through a “permanent retail location” to the consumers, generally in their
houses or at their workplace or through explanation and demonstration of
such goods and services at a particular place.
Explanation: “Permanent retail location” includes such place, location or
premises where the seller conducts sales in the ordinary course of business
7. “Direct Selling Entity”, means an entity, not being engaged in a pyramid scheme,
which sells or offers to sell goods or services through a direct seller.
Provided that “Direct Selling Entity” does not include any entity or business
notified otherwise by the Government for the said purpose from time to time.
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8. “Goods” means goods as defined in the Sale of Goods Act, 1930 and “Service”
means service as defined in the Consumer Protection Act, 1986;
9. “Saleable” shall mean, with respect to goods or services, unused and
marketable, which has not expired, and which is not seasonal, discontinued or
special promotion goods or services;
10.“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;
11. “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 multi-layered network of subscribers.
Provided that the above definition of a “Pyramid Scheme” shall not apply to a
multi layered network of subscribers to a scheme formed by a Direct Selling
Entity, which consists of subscribers enrolling one or more subscribers in order
to receive any benefit, directly or indirectly, where the benefit is as a result of
sale of goods or services by subscribers and the scheme/financial arrangement
complies with all of the following:
(a) It has no provision that a Direct Seller will receive remuneration or
incentives for the recruitment / enrolment of new participants.
(b) It does not mandatorily require a participant to purchase goods or
services:
(i) for an amount that exceeds an amount for which such
goods or services can be expected to be sold or resold to
consumers;
(ii) for a quantity of goods or services that exceeds an
amount that can be expected to be consumed by, or sold
or resold to consumers;
(c) It does not require a participant to pay any entry/registration fee, cost
of sales promotion equipment and materials or other fees relating to
participation;
(d) It provides a participant with a written contract describing the
“material terms” of participation;
(e) It allows or provides for a participant a reasonable cooling- off period
to participate or cancel participation in the scheme and receive a
refund of any consideration given to participate in the operations;
(f) It allows or provides for a buy-back or repurchase policy for “currently
marketable” goods or services sold to the participant at the request of
the participant at reasonable terms;
(g) It establishes a grievance redressal mechanism for consumers, more
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particularly described in under the definition of direct selling entity
herein.
Explanation 1 – For the purposes of this proviso the term “material terms”
shall means buy-back or repurchase policy, cooling-off period, warranty and
refund policy
12.“Money Circulation Scheme” has the same meaning as defined under the Prize
Chits and Money Circulation Schemes (Banning) Act, 1978.
13.“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:
(a) Have no provision that a direct seller will receive remuneration from
the recruitment to participate in such direct selling;
(b) ensure that direct sellers shall receive remuneration derived from the
sale of goods or services by such direct sellers;
(c) clearly disclose the method of calculation of remuneration.
14.‘State’ means the State of Andhra Pradesh
15.Registering Authority: “Registering Authority” means, the Commissioner,
Industries & Commerce Department having jurisdiction over the area in
respect of State of Andhra Pradesh.
16.“Disciplinary Authority” means the Joint collector of the districts having
jurisdiction over the area in respect of State of Andhra Pradesh.
17.“Appellate Authority” means the Collector of the districts having jurisdiction
over the area in respect of State of Andhra Pradesh.
18.“Revision Authority” means the Commissioner, Industries & Commerce having
jurisdiction over the area in respect of State of Andhra Pradesh.
Clause2.Conditions for 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 of Andhra
Pradesh, shall within 90 days comply with the following set of conditions for
the conduct of direct selling business:
The direct selling entity 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 and make withholdings from direct sellers in a commercially
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reasonable manner;
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
days, from the date of the distribution of the goods or services to the direct
seller;
6. Notify and provide to every direct seller a cooling-off period which entitles
such direct seller to:
(a) The refund of any fee, including any `training fee, franchise fee, fees
for promotional materials or other fees related solely to the right to
participate as a direct seller, paid upon the return of all goods
received at the time of joining;
(b)Return any other goods purchased by the direct seller during the
cooling-off period;
7. The promoter or key management personnel should not have been convicted
of any criminal offence punishable with imprisonment in last 5 years by any
Court of competent jurisdiction;
8. It shall have an office with identified jurisdiction of its operation in the State
to facilitate and satisfy 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;
9. Any trading or marketing or sale activity not adhering the above
condition/clause shall not be considered as Direct Selling and would be dealt
appropriately under relevant laws.
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 document(s) 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;
(a) Every Direct Selling entity shall maintain a “Register of Direct Sellers”
wherein relevant details of each enrolled Direct Seller shall be
updated and maintained;
(b)The details of Direct Sellers shall include and not be limited to verified
proof of address, proof of identity and PAN;
(c) The Register of Direct Sellers shall be in a machine readable and
printable format
4. 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
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consumers. The website should have space for registering consumer
complaints and should ensure that grievances are addressed within 45 days of
making such complaints;
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 and 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 and once the purchase value crosses the taxation
threshold; it must intimate the Direct seller/Distributor to pay the relevant
tax, including GST;
7. It shall provide training or demonstration materials, catalogues, brochure etc.
to the direct sellers generally free or only at cost if at all;
8. A Direct Selling entity shall not:
(a)Use misleading, deceptive or unfair recruiting practices, including
misrepresentation of actual or potential sales or earnings, in their
interaction with prospective or existing direct sellers;
(b)Make any factual representation to a prospective direct seller that
cannot be verified or make any promise that cannot be fulfilled;
(c) Present any advantages of direct selling to any prospective direct
seller in a false or deceptive manner;
(d)Make or cause, or permit to be made, any representation relating to
its direct selling practice, including remuneration system and
agreement between itself and the direct seller, or to the goods or
services being sold by itself or by the direct seller which is false or
misleading;
(e) Engage in, or cause or permit, any conduct that is misleading or likely
to mislead as to any material particular by relating to its direct selling
practice, including remuneration system and agreement between
itself and the direct seller, or to the goods or services being sold by
itself or by the direct seller;
(f) Use, or cause or permit to be used, fraud, coercion, harassment, or
unconscionable or unlawful means in promoting its direct selling
practice, including remuneration system and agreement between
itself and the direct seller, or to the goods or services being sold by
itself or by the direct seller;
(g)Require its direct sellers to provide any benefit or buy or acquire any
goods or services, including entry fees and renewal fees in order to
participate in its direct selling operations, other than the purchase of
sales demonstration equipment or materials at a resale and for which
no commission, bonus or price not exceeding their cost which are not
for any other advantage will be given to any person;
(h)Provide any benefit to any person for the introduction or recruitment
of one or more persons as direct sellers;
(i) Require the direct sellers to pay any money by way of minimum
monthly subscription or renewal charges;
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(j) Knowingly make, omit, engage or cause, or permit to be made, any
representation relating to its Direct Selling practice, including
remuneration system and agreement between itself and the direct
seller, or the goods or services being sold by itself or by the direct
seller which is false or misleading;
9. 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 enrolment:
(a) The Agreement shall be provided in a manner consistent with Section
10 of the Indian Contract Act, 1872;
(b) In addition to the rights and obligations of parties to this agreement
under these guidelines or any other law in force, parties shall have
rights and obligations that are coextensive with rights and obligations
of parties under the Indian Contract Act, 1872;
2. The agreement shall be made in writing, describing the material terms of
participation and shall:
(a)Not compel or induce the direct seller to purchase goods or services in
an amount that unreasonably exceeds an amount that can be
expected to be sold to consumers or consumed within a reasonable
period of time;
(b)Allow or provide the direct seller a reasonable cooling-off period in
which to cancel participation and receive a refund for goods or
services purchased and also of any consideration given to participate
in the operations of the applicant.
(c) Allow for the termination of contract, with reasonable notice, in such
instances and on such terms where a direct seller is found to have
made no sales of goods or services for a period of up to two years
since the contract was entered into, or since the date of the last sale
made by the direct seller;
(d)Allow or provide for a buy-back or repurchase policy for currently
marketable goods or services sold to the direct seller at the said direct
seller’s request at reasonable terms
Clause 5: Certain obligations of Direct Sellers
1. Direct Seller engaged in direct selling should carry their identity card 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
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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:
(a)Name, address, registration number or enrollment number, identity
proof and telephone number of the direct seller and details of direct
selling entity;
(b) A description of the goods or services to be supplied;
(c) Explain to the consumer about the goods return policy of the
company in the details before the transaction;
(d)The Order date, the total amount to be paid by the consumer along
with the bill and receipt;
(e) Time and place for inspection of the sample and delivery of good;
(f) Information of his/her rights to cancel the order and / or to return
the product in saleable condition and avail full refund on sums paid;
(g)Details regarding the complaint redressal mechanism;
5. 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 form as per applicable law or as may be
prescribed under law.
6. A direct seller shall not:
(a)Use misleading, deceptive and / or unfair trade practices;
(b)Use misleading, false, deceptive, and / or unfair recruiting practices,
including misrepresentation of actual or potential sales or earnings
and advantages of Direct Selling to any prospective direct seller, in
their interaction with prospective direct sellers;
(c) Make any factual representation to a prospective direct seller that
cannot be verified or make any promise that cannot be fulfilled;
(d)Present any advantages of Direct Selling to any prospective direct
seller in a false and /or a deceptive manner;
(e) Knowingly make, omit, engage, or cause, or permit to be made, any
representation relating to the Direct Selling operation, including
remuneration system and agreement between the Direct Selling
entity and the direct seller, or the goods and / or services being sold
by such direct seller which is false or misleading;
(f) Require or encourage direct sellers recruited by the first mentioned
direct seller to purchase goods and / or services in unreasonably large
amounts;
(g)Provide any literature and / or training material not restricted to
collateral issued by the Direct Selling entity, to a prospective or
existing direct sellers both within and outside the parent Direct Selling
entity, which has not been approved by the parent Direct Selling
entity;
(h)Require or encourage prospective or existing direct sellers to
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purchase any literature or training materials or sales demonstration
equipment and if at all required such purchase shall not be at a cost
exceeding the cost of materials.
Clause 6: Relationship between Direct Selling Entity and Direct Seller
1. The relationship between Direct Selling entity and Direct Seller shall be
determined as per the written agreement between the parties:
(a) For rights and obligations that are expressly provided as conditions for
the conduct of Direct Selling business under the guidelines for the
Direct Selling entity and Direct Seller, the same shall prevail;
(b)All other rights and obligations, shall be determined as per the
express terms of written agreement unless expressly provided
otherwise in the contract between a Direct Selling entity and Direct
Seller;
2. The Direct Selling entity will be liable for grievances arising out of sale of
products, services or business opportunity by its Direct Sellers;
3. It will be the 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:
(a) The Grievance Redressal Committee shall consist of at least three
officers of the Direct Selling entity;
(b)The Grievance Redressal Committee shall address complaints and
inform complainants of any action taken;
(c) Complaints may be made by any member of the general public against
a Direct Seller of the company, an employee or any other officer of
the entity;
(d)All such grievances will be resolved directly by the Direct Selling
Entity;
5. The direct selling entity shall provide information to the consumer upon
purchase which shall contain:
(a) the name of the purchaser and seller;
(b) the delivery date of goods or services;
(c) procedures for returning the goods; and
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(d) warranty of the goods and exchange / replacement of goods in
case of defect.
Provided that no Direct Seller shall, in pursuance of a sale, make any claim that is
not consistent with claims authorized by the Direct Selling Entity.
6. Any person who sells or offers for sale, including an e-commerce platform /
marketplace, of 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 garb of doing Direct Selling business
2. No person or entity will participate in Money Circulation Scheme, as defined
in Clause 1(12) in the garb 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 Andhra Pradesh will be the D/o CA, F & CS.
2. The nodal officers for the submission of undertakings and oversight of
compliance by direct selling entities shall jointly be Deputy Commissioner,
Dept. of CA,F&CS and Addl. Director, O/o Commissioner of Industries, DoI&C.
3. The nodal officers may designate other officers of the respective Departments
may appoint any other person whom they deem fit and necessary to assist
them in the implementation of these Guidelines.
4. Any direct selling entity conducting direct selling activities in the State of
Andhra Pradesh shall submit an undertaking and proforma to the nodal
officers, in the form of the attached proforma, stating that it is in compliance
with these guidelines.
5. Direct selling entities shall also provide such details of its incorporation and
other business details as may be notified from time to time. Such undertaking
needs to be submitted to the Department annually.
Clause 10: Powers of entry and search into Direct Selling Entity
/ Direct Seller premises if any violation of guide lines takes place:-
(1) The Enforcement Officer, not below the rank of General Manager,
Industries Dept., and Gazetted officer of Vigilance Enforcement Dept.,
Gagetted Food Inspector of Institute of Preventive Medicine and Inspector of
Legal Metrology may with a view to securing compliance with this Order or to
satisfy himself that this Order has been complied with:
(a) inspect or cause to be inspected
(b) require any person to give any information in his possession about the
goods / services of the Direct Selling Entity / Direct Seller;
(c) stop and search forthwith, with such aid or assistance as may be necessary;
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(d) enter and search, with such aid or assistance as may be necessary;
(e) The Enforcement Officer shall submit the enquiry report before the Joint
collector of the District concerned.
The provisions of the Code of Criminal Procedure, 1973 (Central Act 2 of 1974) relating to
search shall so far as may be, apply to searches under this order.
Clause 11: Appeal:
(1) Any person aggrieved by any order passed by the Joint Collector may
within (7) days from the date of receipt by him/her, of such order appeal
against such order, to the appellate authority.
(i) The Collector having jurisdiction over the area to the Collector in the
District.
Clause 12: Revision:
(i) Any person aggrieved by an order may within thirty days from
the date of communication to him / her of such an order,
prefer a revision to the Commissioner, Industries &
Commerce.
(ii) Pending disposal of the revision petition, the government may
direct that the order under revision shall not have effect until
the same is disposed off.
 B.RAJSEKHAR
EX. OFFICIO PRINCIPAL SECRETARY TO GOVERNMENT
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DECLARATION BY DIRECT SELLING ENTITIES/COMPANIES PROFORMA
PART – A
1 (i) Name of the Company (As Registered)
(ii) CIN No:
(iii) Name and address of Directors on
Board(Enclose details)
2 DETAILS OF REGISTRATION (WITH
JURISDICTION)
(a)Address of Registered Office (Enclose copy of
Registration Certificate):
(b) Email :
(c) Telephone Nos:
(d)Company Website:
(e)Details of other registrations (with
jurisdiction), if any
( Attach copy of Registration Certificate)
(f) Type of Entity (Private, Public, Trust, Ltd. Etc.)
3 HEAD OFFICE & REGIONAL OFFICE
(a) Address
(b) E-mail
(c) Details of Key Management Personnel as per
registration under the Companies Act:
(d)Details of Regional Office in the state of Andhra
Pradesh:
(e)Nodal Officer for interacting with D/o
Consumer Affairs;
(Name, designation, Tel No., e-mail, Fax, mobile
No.)
(f) Details of Nodal Officer for coordination with the
Government of Andhra Pradesh (Name, designation,
Tel No., e-mail, Fax, mobile No.):
4. Whether anyone from the Management was convicted by
any court in the past within the past 5 years (from the date
of application). If so, the details thereof;
5. Whether direct selling is of Products or services or both?
6. Details of License(s), Trade Mark or Principal
Brand which identifies the company:
8. i. Address / Telephone Nos. / e-mails etc. of Customer
Care & Grievance Redress Cells (HQ & State
Branch(es) in Andhra Pradesh);
ii. Details of Consumer Grievance Redress
Committee as per guidelines:
a. Member Name, Phone No and email:
b. Member Name, Phone No and email:
c. Member Name, Phone No and email:

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PART-B
(Direct Selling Business Details)

9 Details of Products / Services offered(Give link of websites)               Yes/No
10 Please confirm the following about your direct selling scheme:-
(a) It has no provision that a Direct Seller will receive remuneration or
incentives for the recruitment
/enrolment of new participants and provide that direct sellers will
receive remuneration derived only from the sale of goods or
services.     Yes/ No
(b) It does not require a participant to purchase goods or services:
i. for an amount that exceeds an amount for which such goods or
services can be expected to be sold or resold to consumers; Yes/ No
ii. for a quantity of goods or services that exceeds an amount that
can be expected to be consumed by, or sold or resold to
consumers; Yes/ No
(c) It does not require a participant to pay any entry/registration fee,
cost of sales demonstration equipment and materials or other
fees relating to participation; Yes/ No
(d) It provides a participant with a written contract describing the
“material terms” of participation; Yes/ No
(e) It allows or provides for a participant a reasonable cooling-off
period to participate or cancel participation in the scheme and
receive are fund of any consideration given to participate in the
operations; Yes/ No
(f) It allows or provides for a buy-back or repurchase policy for
“currently marketable” goods or services
sold to the participant at the request of the participant at
reasonable terms; Yes/ No
 Note: 1. Give details in regard to the above in an enclosure.
 2.In case any of the answers in this para is ‘No’,
 please provide full details with reasons in an enclosure.
11 (a) Whether proper identity document(s) to all the Direct Sellers are
issued. Yes/No
(b) Whether you maintain “Register of Direct Sellers” wherein
relevant details of each enrolled Direct Seller is updated and
maintained with details including verifiable proof of address,
proof of identity and PAN as per the Income Tax Act. Yes/ No

(c) What is the mechanism for payment of any taxes and duties
pertaining to sale of goods or services, including the mechanism
of ensuring compliance from direct sellers and distributors. Give
details.

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12 (a) The website is proper and updated regularly with all relevant
details, contact information, details pertaining to management,
products, product information and complaint redress mechanism
for direct sellers and consumers. Yes/ No
(b) There are arrangements for registering consumer complaints
online or otherwise and grievances are resolved within 45 days
of date of making such complaints. Details to be provided. Yes/No

13 Notes/Remarks, if any.

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Part – C
( UNDERTAKING )
* * *

I / We, …………… in the capacity of ……………… of the..
…………… company / firm declare that we are compliant with the following:
(a) We do
not promote a Pyramid Scheme, as defined in Clause1(11) or enroll any person
to such scheme or participate in such arrangement in any manner what so ever
in the garb of doing Direct Selling business.
(b) We do not
participate in Money Circulation Scheme, as defined in Clause1(12) in the garb
of Direct Selling of Business Opportunities.
(c) We are compliant with all the remaining aspects mentioned in the guidelines
issued vide GSR 1013(E), October 26, 2016 (Gazette of India) by the
Department of Consumers, Ministry of Consumer Affairs, Food and Public
Distribution and shall also provide such details as may be required by the
Government of Andhra Pradesh from time to time
Place: Sd/-
Date:
Name…………..….
Designation…..………… Tel
No…………..…
E-mail:…………….

SEAL OF THE
COMPANY

List of documents to be provided:
1. Certificate of Registration/Bye-laws/Memorandum of
Association
2. List of Board of Directors, with contact details
3. Brief details of direct selling scheme and compensation plan.
4. Sample of contract with direct sellers/distributors.
5. Copy of the undertaking submitted to the Department of Consumer
Affairs, Government of India
6. Copies of compliances, including licenses or registrations for the sale of goods
or services

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GUIDELINES FOR THE DIRECT SELLING ENTITIES
FAQs

1. Clause 1.4
“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.” How shall digital and e-contracts be treated?
Answer: The ‘written contract’ includes e-contracts or digital contracts and the same shall
be governed as per the provisions of the Information Technology Act , 2000.P
2. Clause 1.6 (Proviso)P
“Provided that such sale of goods or services occurs otherwise than through a “permanent
retail location” to the consumers, generally in their houses or at their workplace or
through explanation and demonstration of such goods and services at a particular place”.
Does this Proviso mean that every sale needs to take place away from permanent retail
location only?
Answer: Clause 1.6 does not restrict / preclude sales made from permanent retail
location. However, direct selling entity will be governed by these guidelines.
3. Clause 2.2
“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’’. Whether the training/orientation provided by the Direct Seller to other
prospective Direct Sellers would be in compliance to this clause?
Answer: Yes, the training / orientation will be provided by the Direct Selling Entity or by a
Direct Seller or by any authorized representative of Direct Selling Entity, either in person or
through any digital means.
4. Clause 2.8
“It shall have an 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” Whether an office in one State can be designated as focal point
for jurisdiction of two or more states?
Answer: An office in one particular State can be designated having jurisdiction over two or
more states, subject to the accessibility of the consumers, where Direct Sellers/consumers
can interact with the Direct Selling Entity / Authorized representative of Direct Selling
Entity.
5. Clause 3.3 (b)
“The details of Direct Sellers shall include and not be limited to verified proof of address,
proof of identity and PAN”. Should the Direct Selling Entity take verified proof of
address, identity and PAN?
Answer. The requirement of PAN shall be as per the provisions of the Income Tax Act,
1961. Direct Sellers should submit to Direct Selling Entity, any photo ID card as issued by
the State or Central government. These ID cards could be from the following-: Aadhaar
Card, Driving License, Voter ID Card, Passport and Ration Card or any other identity
document issued by the state or central government which can be verified.
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6. Clause 3.8
“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”. How will a Direct Selling Entity ensure compliance of these Guidelines by Direct
Sellers?
Answer: To comply to this clause, Direct Selling Entity shall sign an addendum to the current
contracts with the existing Direct Sellers. For the Direct Sellers to be appointed herein-after,
this clause shall be added in the contract signed by both the parties. The Direct Selling Entity
should ensure that it contractually binds its Direct Sellers to comply with these Guidelines and
take disciplinary action against reported non- compliance.
7. Clause 4.2(c)
“Allow for the termination of contract, with reasonable notice, in such instances and on such
terms where a direct seller is found to have made no sales of goods or services for a period of
up to two years since the contract was entered into, or since the date of the last sale made by
the Direct Seller”. When can the contract between Direct Selling Entity and Direct Seller be
terminated?
Answer: The date of termination shall be provided or governed by the respective conditions
of the contract executed between Direct Selling Entity and Direct Seller or by giving notice of
reasonable period by either party say one month or as per the provisions of the Indian Contract
Act.
8. Clause 6.2
The Direct Selling Entity shall be liable for grievances arising out of sale of products and services
or business opportunity by the Direct Seller. And
Clause 6.3
“It will be the responsibility of the Direct Selling entity to monitor and control the
practices/methods adopted by the Direct Sellers”.
Does this mean that only the direct selling entity will be liable for all grievances arising out of
sale of products and services or business opportunity by the direct seller?
 Answer. It is clarified that the Direct Selling Entity will be responsible for the quality of
products and services and it will guide and help the Direct Seller to follow best practices in the
interest of consumers. The scope and specific liabilities of the Direct Seller in such cases will be
defined in unambiguous terms in the contract signed. By way of providing in the contract, every
Direct Selling Entity shall define and develop some mechanism to monitor the practices being
adopted by its Direct Sellers.
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9. Clause 7.5
Industry: It appears to be a typographical error in this Clause. As the consumer is buying the
products or services from the Direct Sellers, it should be the Direct Seller which will provide
various details listed in this sub-clause. Please clarify.
Answer – Yes, it should be the Direct Seller. Please read Direct Seller in place of Direct Selling
entity in this sub-clause.
 B.RAJSEKHAR,
 EX.OFFICIO PRINCIPAL SECRETARY TO GOVERNMENT