1. Preamble

Direct selling Entity, and in particular ADSEI Direct selling Entity members' actions change the world . The ASSOCIATION OF   DIRECT   SELLING   ENTITIES   OF   INDIA   (“ADSEI”),
recognizing that Direct selling entities engaged in direct selling Business assume certain responsibilities towards Government, Consumer, Public, Direct sellers and other Direct selling Entities arising out of the Network of Direct Selling method of distribution of their products and services, hereby sets forth the basic fair and ethical principles and practices to which member entities will continue to adhere to in the conduct of their business as well as maintain the Decorum in the ASSOCIATION  OF  DIRECT  SELLING  ENTITIES  OF  INDIA (“ADSEI”). Such Code of Conduct and Ethics for Direct Selling Agents (DSAs) is a non-statutory code issued by ASSOCIATION  OF  DIRECT  SELLING  ENTITIES  OF  INDIA (ADSEI) for adoption and implementation by Direct selling entities while acting as a Member of ADSEI.

2. Need of Code of Conduct

(ADSEI) is expected to adopt the standards of dignity, fairness and integrity. The purpose of this Code of Conduct and Ethics is to strengthen confidence in the integrity and professional standards of association executives. Abiding by this Code is essential for membership of the ADSEI.

3. Some Useful Terminology to Understand the Code of Conduct and Ethics:

Consumer shall have the same meaning as provided under the Consumer Protection Act, 2019

“Cross line”
“Cross line” refer to Crossline sponsoring usually indicates the violator is crossing lines of sponsorship to steal another Direct seller's recruit. However, it can also mean they're soliciting someone who wasn't recruited directly by them but is somewhere in the depth of their own downline and sponsored by a downline member.  

Prospect means a person to whom an offer or a proposal is made by the Direct Seller to join a Direct Selling opportunity.

means the Consumer Protection Act, 1986/ 2019

“Direct Seller”
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.

“Network of Direct Selling”
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 and shall include the multi- level marketing method of distribution.

“Direct Selling”
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

“Direct Selling Entity”
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.

Goods means goods as defined in the Sale of Goods Act, 1930 and “Service” means service as defined in the Consumer Protection Act, 1986;

Saleable shall mean, with respect to goods and / or services, unused and marketable, which has not expired, and which is not seasonal, discontinued or special promotion goods and / or services;

“Cooling-off Period”
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 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;

“Pyramid Scheme”
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:

  1. It has no provision that a Direct Seller will receive remuneration or incentives for the recruitment / enrolment of new participants.
  2. It does not require a participant to purchase goods or services:
    1. for an amount that exceeds an amount for which such goods or services can be expected to be sold or resold to consumers;
    2. 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;
  3. 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;
  4. It provides a participant with a written contract describing the “material terms” of participation;
  5. 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;
  6. 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;
  7. It establishes a grievance redressal mechanism for consumers.

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.

“Money Circulation Scheme”
Money Circulation Scheme has the same meaning as defined under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

“Remuneration System”
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:

  1. Have no provision that a direct seller will receive remuneration from the recruitment to participate in such direct selling;
  2. ensure that direct sellers shall receive remuneration derived from the sale of goods or services;
  3. clearly disclose the method of calculation of remuneration.


A. Prohibited practices by the Direct Selling Member Entity or Direct seller for a member Entity.
B. General Responsibilities of Direct Selling Member Entity.
C. Responsibilities of Direct Selling Member Entity or Direct seller for a member Entity towards Government/Ministry /Department.
D. Responsibilities of Direct Selling Member Entity towards Direct sellers.
E. Responsibilities of Direct Selling Member Entity or Direct seller for a member Entity towards Consumers.
F. Responsibilities of Direct Selling Member Entity or Direct seller for a member Entity towards ADSEI.
G. Responsibilities of Direct seller of a member Entity towards consumer and Direct Selling Member Entity.
H. Honor Confidentiality.


1. Uphold, promote, and respect the principles of the Code-
The future of Direct selling depends on both technical and ethical excellence. ADSEI members should adhere to the principles of the Code and contribute to improving them. ADSEI members who recognize breaches of the Code should  take  actions  to  resolve  the  ethical  issues  they recognize, including, when reasonable, expressing their concern to the person or persons thought to be violating the Code.

2. Treat   violations   of   the   Code   as   inconsistent   with membership in ADSEI- Each ADSEI member should encourage and  support adherence by  all  Direct selling entities    regardless    of    ADSEI   membership. ADSEI members who recognize a breach of the Code should consider reporting the violation to the ADSEI Executive chairman, which may result in remedial action as specified in the ADSEI Bylaw Severance and Reinstatement of Membership. The  remedial  measures may  include,  but are  not  limited  to,  member  censure,  suspension  or expulsion.


The Executive chairman may issue periodic reports on Code of
Ethics compliance including disclosure of numbers and types of complaints as well as entity-compliance efforts. The issuance of these reports will not identify individual complaints.


1. The Board of Directors of the ADSEI   shall appoint an Executive chairman (“Executive chairman”) to serve for a fixed term to be set by the Board prior to appointment.
2. The  Board  shall  have  the  authority  to  discharge  the Executive  chairman  for  cause  only.  The  Board  shall provide sufficient authority to enable the Executive chairman to properly discharge the responsibilities entrusted to the Executive chairman under this Code.
3. The Executive chairman will be responsible directly and solely to the Board.
4. The Executive chairman shall be a person of recognized integrity,  knowledgeable  about  the  industry,  and  of  a stature that will command respect by the industry and from the public.
5. The Executive chairman shall appoint a staff adequate and competent to assist in the discharge of the Executive chairman’s duties.
6. During the term of office, neither the Executive chairman nor any member of the staff shall be an officer, director, employee, or substantial stockholder in any member of the ADSEI .
7. The  Executive  chairman  shall  disclose  all  holdings  of stock in any member entity prior to appointment and shall also disclose any subsequent purchases of such stock to the Board of Directors.
8. The Executive chairman shall have the same rights of indemnification as the Directors and Officers have under the bylaws of the ADSEI .
9. The  Executive  chairman  shall  establish,  publish  and implement transparent complaint handling procedures to ensure prompt resolution of all complaints.
10.  The Executive chairman shall review and determine all  charges  against  member  entities,  affording  those entities an opportunity to be heard fully.
11. The  Executive  chairman  shall  have  the  power  to originate any proceedings and shall at all times have the full cooperation of all member entities.
12. The Executive chairman shall have the sole authority to  determine  whether  a   violation  of  the  Code  has occurred.   The   Executive   chairman   shall   answer   as promptly as possible all queries relating to the Code and its application, and, when appropriate, may suggest, for consideration by the Board of Directors, Code amendments,  or  other  implementation  procedures  to make the Code more effective.
13. If,  in  the  judgment  of  the  Executive  chairman,  a complaint is beyond the Executive chairman’s scope of expertise  or  resources,  the  Executive  chairman  may decline to exercise jurisdiction over the complaint and may recommend to the complainant another forum in which the complaint can be addressed.
14. The Executive chairman shall undertake to maintain and improve all relations with better business bureaus and other organizations, both private and public, with a view toward improving the industry’s relations with the public and receiving information from such organizations relating to the industry’s sales activities.
15. That all the decision of the Executive chairman shall be under supervision of the Board of THE Directors of the ADSEI and BOARD OF ADSEI shall have the power to change  the  order  or  decision  at  own  desecration or through received complaint/request.

VIII. Code of Ethics Enforcement Procedures

1. Receiving  the  Complaint-  
Upon  receipt  of  a  bona  fide complaint  from  a  bona  fide  consumer/Direct seller  member Entity/  Government/General  public,  the  Executive  chairman shall forward a copy of the complaint, to the accused member entity together with a letter notifying the entity that a preliminary investigation   of   a   specified   possible   violation   is   being conducted and requesting the member entity’s cooperation in supplying necessary information and documentation.

If the Executive chairman has reason to believe that a member entity has violated the Code, even if a written complaint has not been  received,  then  the  Executive  chairman  shall  provide written notice to the member entity stating the basis for the Executive chairman’s belief that a violation has occurred.

The Executive chairman shall honour request by complainants for confidential treatment of their identity. The subject matter of a complaint will not be kept confidential.

2. Cooperation with the Executive chairman
In the event a member entity refuses to cooperate with the Executive chairman and/or refuses to supply necessary information and documentation, the Executive chairman shall serve upon the member entity, by certified mail, a notice affording the member entity an opportunity to request Board of the Directors’ Appeal panel of ADSEI to evaluate whether its membership in the ADSEI   should not be terminated. In the event the member entity fails to request a review by an Appeals Review Panel, the ADSEI   Board of Directors may vote to suspend or terminate the membership of the member entity.

3. Investigation and Disposition Procedure
a.   The   Executive   chairman   shall   conduct   a   preliminary investigation, making such investigative contacts as are necessary to  reach an  informed decision as  to  the  alleged Code violation. If the Executive chairman determines, after the informal investigation, that there is no need for further action or that the Code violation allegation lacks merit, the investigation and administrative action shall terminate and the complaining party shall be so notified.

b. The Executive chairman may, at his discretion, remedy an alleged Code violation through informal, oral and written communication with the accused member entity.

c. If the Executive chairman determines that there are violations of such a nature, scope or frequency that the best interests of consumers, the ADSEI require remedial action, the member entity shall be notified. The reasoning and facts that resulted in the  decision as  well  as  the  nature of  the  remedy shall  be included in the Executive chairman’s notice. The notice shall also offer the member entity an opportunity to consent to the suggested without the necessity of an appeal.

If the member entity desires to dispose of the matter in this manner, it will within 20 calendar days advise the Executive chairman, in writing. The letter to the Executive chairman may state that the member entity’s willingness to consent does not constitute an admission or belief that the Code has been violated.

4. Appeals Review Panel
If a member entity has submitted a request for review pursuant to or an appeal of the Executive chairman’s remedial action pursuant  to  an  Appeals  Review  Panel  consisting  of  three representatives from active member entities shall be selected by the ADSEI Board of Directors within 20 calendar days.

The three member entities shall be selected in a manner that represents a cross section of the industry. When possible, none of the three shall sell a product that specifically competes with the member entity that is seeking the Appeals Review Panel (hereinafter “the Appellant”), and every effort shall be made to avoid conflicts in selecting the Panel. If for any reason, a member of the Panel cannot fulfill his or her duties, the Chairman of the Board of ADSEI  can replace that person with a new appointment.

The representatives serving on the Appeals Review Panel shall during their time on the Panel have the same rights of indemnification  the  Directors  and  Officers  have  under  the bylaws of the ADSEI .

5. Appeals Review Procedure
a. An appellant who want to appeal against the order of the Executive chairman than he may file an appeal in format of the application with copy of the Executive chairman’s order before the Appeals Review Panel in writing within 20 calendar days of the date of the Executive chairman’s order.

b. Within  10  calendar  days  of  receiving  such  a  request, Appeals Review Panel shall inform by written notice to the Executive chairman to submit all the written submission with proof against such appeal.

c. Within 15 calendar days of that such notice, the Executive chairman shall send a copy of the Complaint and all relevant documents, including an explanation of the basis of the decision to impose remedial action, to the panelists with copies to the Appellant.

d. Upon receipt of such information, the Appellant shall have 15 calendar days to file with the Panel its reasons for arguing that remedial action should not be imposed along with any additional documents that are relevant.

e. Once the information has been received by the panelists from both the Executive chairman and the Appellant, the Panel will complete its review within 30 calendar days or as soon thereafter as practicable. If the review pertains to whether the Appellant’s membership in the ADSEI  should be terminated, the Panel shall decide whether the member
entity’s failure to work with the Executive chairman justifies suspending or terminating the Appellant’s membership in the ADSEI .

f.   If   the  review  pertains  to   the   Executive   chairman’s suggested remedial action, the Panel shall decide whether the Executive  chairman’s  decision  to  impose  remedial action   was   reasonable  under   all   of   the   facts   and circumstances  involved  and  shall   either   confirm  the Executive chairman’s decision,  overrule it, or impose a lesser sanction.

g. The Panel shall be free to contact the Executive chairman, the        Appellant,  and  any  other  persons  who  may  be relevant, in writing as deemed appropriate. A decision by the Panel shall be final and shall be promptly communicated both to the Executive chairman and the Appellant.

h. The  costs  involved  in  the  appeal  such  as  costs  of photocopying, telephone, fax, and mailing, shall be borne by the Appellant.

IX. Restrictions

1. Conferring with Others
At no time during an investigation or the hearing of charges against a member entity shall the Executive chairman or member of an Appeals Review Panel confer with anyone concerning the alleged violation(s) of the Code, except as provided herein and as may be necessary to conduct the investigation and hold a hearing. At no time during the investigation or the Appeals Review Panel process shall the Executive chairman or a member of the Appeals Review Panel confer with a competitor of the member entity alleged to be in violation of the Code, except when it may be necessary to call a competitor concerning the facts, in which case the competitor shall be contacted only for the purpose of discussing the facts. At no time shall a competitor participate in the Executive chairman’s or in an Appeals Review Panel’s disposition of a matter.

2. Documents

Upon request by the Executive chairman to any member entity, all documents directly relating to an alleged violation shall be delivered to the Executive chairman. Any information that is identified as proprietary by the producing party shall be held in confidence. Whenever the Executive chairman, either by his own determination or pursuant to a decision by an Appeals Review  Panel,  closes  an  investigation,  all  documents  shall either be destroyed or returned, as may be deemed appropriate by the Executive chairman, except to the extent necessary for defending a  legal challenge to  the  Executive chairman’s or Appeals Review Panel’s handling of a matter, or for submitting relevant data concerning a complaint to a local, state or federal agency. At no time during proceedings under this Code shall the Executive chairman or a member of an Appeals Review Panel either unilaterally or through the ADSEI   issue a press release concerning allegations or findings of a violation of the Code unless specifically authorized to do so by the Executive Committee of ADSEI ’s Board of Directors.

X. Resignation

1. At  any  time  the  Direct  selling  member  entity  may  file request before the ADSEI Board to resign the membership from ADSEI.
2. Resignation from ADSEI   by an accused member entity
prior to completion of any proceedings constituted under this Code shall not be  grounds for termination of said proceedings, and a determination as to the Code violation shall be rendered by the Executive chairman at his or her discretion, irrespective of  the  accused  member  entity’s continued membership in ADSEI   or participation in the complaint resolution proceedings.

XI. Amendments

This Code may be amended by vote of two thirds of the Board of Directors.

As Adopted on June 15, 2021