Indian Kanoon - Search engine for Indian Law

8. Amway Corporation is stated to be a member of the World Federation of Direct Selling Associations (‗WFDSA') and is stated to operate in more than 100 countries and territories worldwide. Explaining the DSBM, Amway states that such a model offers an ―unparalleled opportunity‖ to Indian customers ―to own and operate their own business by enrolling themselves as a Direct Seller‖ with Amway and sell its ―high-quality consumer products on a principal-to-principal basis under a Direct Seller Contract‖. In terms of the said contract, the Direct Sellers undertake ―the sale, distribution and marketing of ‗Amway Products' and services and to register as Preferred Customers‖. Amway claims to have provided opportunities to about 5,00,000 active independent Amway Direct Sellers. It provides training to such Direct Sellers and Distributors and also offers a digital learning portal for Amway Business Owners (‗ABOs').

9. Amway claims that it has a ―Code of Ethics‖ for Amway Direct Sellers. All products of Amway are stated to be marked with an express declaration that they are ―sold only by Amway Business Owners‖.

10. According to Amway, its products bear a ―unique code‖. This is stated to be located on the ―upper surface of the cap of the product packaging‖ which allows Amway ―to track the distributor channel, selling the said product to an end customer‖. The imprinting of these unique codes is stated to ensure prevention of the circulation and sale of any counterfeit Amway products through unauthorized trade channels. According to Amway, the trust of its Direct Sellers and their customers receives the highest attention and it has a ―Customer Product Refund Policy‖, covering all Amway Products, which allows a customer who is not completely satisfied, to return the product within 30 days of the purchase of invoice/delivery. This refund policy is applicable to ―products in saleable condition, and partially used products (30%) accompanied with an invoice‖. According to Amway, it has a nationwide presence with 130 sales offices, 4 regional warehouses, 3 regional hubs and 34 city warehouses catering to over 8900 pin codes across the country. It is the founder member of the Indian Direct Sellers Association (‗IDSA') which is stated to be an ―autonomous self-regulatory body for the direct selling industry in India‖.

11. According to Amway, the DSGs are stated to have been issued by the notification dated 26th October, 2016 of the Department of Consumer Affairs at the request of IDSA in order to prevent fraud and to protect the rights and interests of consumers.

12. The central issue highlighted in Amway's Suit CS (OS) 480/2018 filed in this Court against Pioneering Products, and Black Olive Enterprises (Defendant Nos. 1 and 2 respectively) who are sellers on Amazon's online platform, Cloudtail (Defendant No. 3) another seller on Amazon's platform and stated to be an ―affiliate/associate company of Amazon‖, and Amazon (Defendant No. 4), was that Amway cannot sell its products through channels of e-commerce/online portals or mobile apps. According to Amway, sale of its products through any e-commerce or online portal in the absence of a written contract with Amway, is unauthorised both in terms of its ―Code of Ethics‖ as well as clause 7 (6) of the DSGs. Amway claims that it has not provided any written consent to any of its Direct Sellers to undertake or solicit sale, or offer its products through third party e-commerce websites/ mobile apps. Amway is unable to guarantee the authenticity and quality of such products which are purchased from unauthorised sources and its product refund policy does not apply to such unauthorised purchases.

16. On 22nd September, 2017, Amway sent a cease and desist notice to Amazon, asking it ―to remove reference to any statement/advertising/display of ‗Amway products' from its website.‖

17. Amazon is stated to have replied to Amway by a letter dated 11 th October, 2017, denying Amway's contentions and emphasizing that it merely provided an online platform for sale of various consumer goods and products by different registered sellers/vendors; that it did not monitor or control the transactions occurring on its website or mobile application, and that Amway could initiate action against its vendors/sellers, who were engaged in selling Amway products online without its authority or consent or selling spurious and counterfeit products under its name. According to Amway, Amazon's stand was contrary to Amazon's ―exclusion policy‖ that did not allow on its online portal the sale of products by a person in the following situations: