Direct seller Amway sues Flipkart over unauthorised sale

2 minute read

Amway took the e-commerce giant Flipkart to the court for allowing unauthorised and illegal selling of Amway products on its platform thereby violating the Direct Selling Guidelines issued by the Government.

ByApprentice News Bulletin
October 23, 2018

The US based direct-selling giant Amway, which specialises in direct selling techniques for health, beauty and lifestyle products said it had sent legal notices to Flipkart asking it to bar such sellers from the platform but did not get any response from Flipkart. As a result, Amway took Flipkart to court and filed a suit in Delhi High Court on October 19, 2018, for selling its product ‘illegally’ on its platform.

The accusations on Flipkart by Amway were as follows:

Flipkart sellers tampered with the unique code imprinted on lids and silver foil seals to make it impossible to trace the source of the product.
Flipkart is allowing the Amway products to be sold at its platform without requisite authority.
Flipkart has violated guidelines that mandate e-commerce companies to seek permission in advance from direct-selling companies such as Amway.

Direct selling means marketing or sales of goods directly to the end user consumer using word of mouth, publicity, display and/or demonstrations of the goods/products, and/or distribution of pamphlets.

Takeaways

Department of Consumer Affairs has issued the Direct Selling Guidelines in 2016 which prohibits the sale of products of a direct selling company through e-commerce platforms, without the written consent of the direct selling company. Which means in a direct selling model there are no sales through retail outlets, and the sales are done through distributors.
India Direct Selling Association (IDSA), in 2017, also wrote to e-commerce companies such as Amazon India, Flipkart, Snapdeal, Shopclues and Paytm, to take required action to stop unauthorised and illegal sale of products from direct selling companies. This included the sale of products from member companies such as Amway, Oriflame, Avon Beauty Products, Herbalife International, Modicare and Tupperware on their platforms.
Amway has filed cases like this in the past and in recent months against e-commerce companies including Snapdeal and online pharma seller 1mg.com and has successfully obtained injunctions in these instances.