On 28 December 2021 the central government notified the Consumer Protection (Direct Selling) Rules, 2021 under the Consumer Protection Act, 2019. The Rules were amended in 2023. They cover all goods and services sold through direct selling, every model of direct selling, and every direct selling company that offers goods or services to consumers in India, including companies based outside India.
Many of the obligations are operational: records to keep, documents to issue, complaints to track. That makes your software either your best compliance tool or your biggest gap. This checklist pairs the main obligations with what the software should do.
No entry fee, no pyramid
The Rules prohibit direct selling companies from promoting pyramid schemes or taking part in money circulation schemes, and they bar entry or subscription fees for direct sellers.
Your software should let sellers register free, calculate income only on product sales volume, and refuse plan settings that pay on joining or recruitment alone.
A written contract with every seller
A direct seller is a person the company authorises through a legally enforceable written contract.
Your software should show the agreement at sign-up, record acceptance with date and time, and keep a copy against each seller.
Records of direct sellers
Companies have to maintain records of their direct sellers, on paper or electronically, at their registered office.
Your software should keep a complete seller master with KYC documents, agreement, status history and termination details, exportable at any time.
A nodal officer and a grievance officer
Every direct selling company has to appoint a nodal officer responsible for compliance, and set up a grievance redressal mechanism with a grievance officer.
Your software should give every complaint a ticket number, assign it to the grievance officer, record when it was acknowledged and resolved, and give the nodal officer reports and an audit trail.
Refunds for spurious goods and deficient services
Companies and sellers cannot refuse to take back spurious goods or deficient services, and they have to refund the amount paid.
Your software should handle return, refund and buy-back requests, and reverse the commission paid on a returned order so the network isn’t paid for a sale that didn’t stand.
Order forms and invoices
A direct seller has to give the consumer an order form at or before the time of the first sale.
Your software should generate a digital order form and GST invoice for every order, available to the customer.
Disclosures on your website
The company’s website has to carry information such as its legal name, address and contact details, its nodal and grievance officers, its products and prices, and how consumers can raise a complaint.
Your software should come with a website that has these pages, kept up to date from the same admin panel.
Online sales
Direct selling companies and sellers that sell through e-commerce also have to follow the Consumer Protection (E-Commerce) Rules, 2020.
Your software should show seller details, return and refund policies, and grievance contacts on the online store.
State monitoring
The Rules ask every state government to set up a mechanism to monitor direct sellers and direct selling companies. States and union territories have been notifying these over time. Puducherry’s mechanism, for example, appeared in its gazette in March 2026. Check the notification for each state you operate in.
