Direct-selling firm fined ₹10 lakh as govt cracks down on misleading ads

The consumer affairs ministry has fined Indiyaa Distribution Network LLP, a direct-selling firm in Indore, ₹10 lakh for violating rules on misleading advertisements while promoting its joint-pain-relieving product ‘Dhuandhar Oil’. The order, issued by the Central Consumer Protection Authority (CCPA), is one of a series of actions aimed at addressing allegedly unethical practices by direct sellers.

According to the CCPA order, which Mint has reviewed, Indiyaa Distribution Network claimed in an advertisement that using the oil “makes you fit even without any surgery or physiotherapy”. Other ads claimed it was the “world’s 1st hotstream joint pain relieving oil”, that there was “no parallel to this product in the entire world”, and that “patients get quick relief from joint pain, stiffness, and inflammation”, the CCPA order noted. “During the investigation and hearing, the company could not substantiate any of the claims,” it added.

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Queries emailed to the consumer affairs ministry remained unanswered, while Indiyaa Distribution Network was unavailable for comment.

Crackdown on direct sellers

Mint first reported on 10 May that the government planned to set up a team to tighten rules under the Consumer Protection Act to rein in the direct-selling industry. The report said the department was scrutinising complaints filed against direct-selling companies for violations of the Consumer Protection (Direct Selling) Rules, 2021, and would devise a plan to ensure compliance after assessing these complaints.

“Imposing penalties on errant firms will serve as a lesson for others and help protect the interests of consumers," said Ashim Sanyal, CEO of Consumer Voice.

The CCPA order read, “It was found that the company's claim lacked supporting documents or scientific evidence, suggesting it was exaggerated and misleading.” The company's assertion that athletes used the product for fitness was unsubstantiated, it added.

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“The company claimed ‘Dhuandhar Oil’ is produced in a good manufacturing practices-certified facility and approved by Madhya Pradesh Food and Drugs Administration (FDA Madhya Pradesh),” the order stated. However, the investigation found that the product’s licence in Madhya Pradesh expired on 27 September 2021 and was not renewed, CCPA added.

According to estimates released by the Indian Direct Selling Association (IDSA), India’s direct-selling industry grew by more than 12% in FY23, recording a gross industry turnover of ₹21,282 crore.

Total sales increased by ₹2,252 crore from to FY22, which was partly affected by the pandemic. According to the IDSA, the compounded average growth rate (CAGR) of the direct-selling industry from FY20 to FY23 stood at 8.3%.

Around 8.6 million people in India are self-employed in the direct-selling industry, the IDSA report said.