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Government considering a regulator for the direct selling sector

05 Dec 2014 Evaluate

Amid debate over e-retailing and brick and mortar selling models, the government has proposed changes to the Consumer Protection Act and is considering a regulator for the direct selling sector to safeguard interests of consumers by distinguishing between genuine and fraudulent players.

Consumer Affairs Minister Ram Vilas Paswan has said that an inter-ministerial committee has been formed comprising secretaries and is going to convene its first meeting on December 8 to look into this aspect. He further stated that “There are dangers in the methods of direct selling, some companies are forming pyramid structure in the name of direct selling. Many such cases have come in light, where the consumers were cheated by the companies in the name of direct selling. They vanished overnight by collecting their money.”

Direct selling market estimated to be around Rs 7,200 crore and currently employing 5.8 million people, offers goods and services to consumers outside of the fixed retail outlet channels through sellers who carry out business activities generally from their homes, workplaces and so on. The direct selling industry in India is having participation from several large foreign companies and has faced allegations of running fraudulent schemes in the country.

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