Seek refund for faulty ‘direct selling’ goods

Pushpa Girimaji

At a friend’s party, I met someone who was selling cosmetic products through what she called ‘direct selling’. She said the products were excellent and some of my friends, who had used it also confirmed it. So I ordered a couple of face creams, even though they were really expensive. However, when these arrived, I found that the seal of one of the bottles was open and the cream had a stale smell. I contacted the seller who told me that she would talk to the company and get back, but it is now over a month and I am yet to hear from her. Since I did not buy from a shop, either online or offline, but from an individual or a direct seller, will I be able to go to the consumer court for the redress of my grievance? Does such a transaction come under the Consumer Protection Act?

Yes, it does. Under the Consumer Protection (CP) Act, any person who ‘buys any goods for a consideration’ or ‘hires or avails of any service for a consideration’ is a consumer and the consumer not only has the right to be protected from unfair trade practices, but also defective and unsafe goods and deficient services. The consumer also has a right to grievance redress through the consumer courts constituted under the law.

That’s not all. The Consumer Protection Act of 2019 specifically includes in the definition of ‘consumer’ those who buy goods through direct selling or multi-level marketing. After defining ‘consumer’, the Act gives an ‘explanation’, which says that “the expressions ‘buys any goods’ and ‘hires or avails any service’ include offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing”.

You are fully protected under the CP Act and you can seek, through the consumer court, a replacement or a refund and compensation and costs. But first, ask the person who sold you the cosmetics to give you contact details of the grievance redress officer of the direct selling entity and write to the person. You can also write to the National Consumer Helpline run by the Union Ministry of Consumer Affairs. The consumer court can be the last resort.

Since there are no registered retailers or shops for such a sale, how are consumers protected?

In 2016, the Union Ministry of Consumer Affairs notified detailed guidelines for regulation of direct selling entities and asked all state governments to implement them and also set up a mechanism to monitor compliance. Consequently, many state governments notified them.

Punjab, for example, notified it in October 2020. Accordingly, every multi-level marketing company had to comply with the guidelines, which also included setting up of a grievance redress mechanism. I do not know if the company whose product you bought had done so.

Subsequently, on December 28, 2021, the Union Ministry of Consumer Affairs replaced the guidelines with detailed rules to regulate all models of direct selling, all goods and services bought or sold through direct selling and all forms of unfair trade practices across all models of direct selling.

Called the Consumer Protection (Direct Selling) Rules, 2021, these seek to protect consumers from any kind of fraud, deception or unfair trade practice vis-à-vis multi-level marketing agencies. These also prohibit direct selling entities or direct sellers from promoting a pyramid scheme or a money circulation scheme in the garb of doing direct selling business. The rules require state governments to set up a mechanism to ensure compliance.

Under the rules, every direct selling entity not only has to provide all mandated information on its website and comply with all relevant laws and rules, including the Legal Metrology (Packaged Commodities) rules, but also provide a grievance redress mechanism for addressing consumer complaints within the prescribed timelines.

The company also has to become a partner in the convergence process of the National Consumer Helpline, so as to facilitate resolution of consumer complaints through the helpline.