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Direct Sales and Direct Marketing

August 10, 2016

The Direct Sales and Direct Marketing Act B.E. 2545 (A.D. 2002) as amended by No. 2 B.E. 2550 (A.D 2007) (“DSA”) aims at protecting consumers from overly aggressive sales and marketing techniques.

 

The meaning of Direct Sales refers to the presentation and offer of goods or services for sale directly to customers in their dwelling or at any place other than in retail shops individually visited by the consumers through the direct sales agent or independent distributors engaged in the either a one-level or multi-level sales.

 

Direct Marketing is defined as marketing goods and services by way of communicating a long-distance message to promote goods/services directly to consumers, with the expectation that the consumer will respond by purchasing products/services.

 

1. Registration of Direct Sale and/or Direct Marketing Business

Direct sales and marketing businesses need to be registered under the DSA before commencing operations. The Office of the Consumer Protection Board (“OCPB”) will be in charge of such registrations. The registration application must be accompanied by various requested documents providing information on the business, as well as a description of the offered goods/services and the procedure for selling the products or services.

In the case of Direct Sales, a remunerative plan must be included as well. The remunerative plan should detail the remunerative payment calculations and shall contain such other details as shall be prescribed by the OCPB. Other instructions on the nature of the plan include restrictions on the methods of describing payments calculations and unreasonable persuasion of an independent distributor to buy products.

After the application of registration has been approved, the applicant’s name will appear on the OCPB website to show the registered direct sale and marketing business publicly. The OCPB website also provides information on registration, a list of companies in direct sale and marketing and general operational information.

 

2. Role of the OCPB

The OCPB is empowered to apply settlements and conditions as it sees fit and has the power to warn the public about certain goods and services that may be detrimental or prejudicial and to disclose the identity of the direct sales business operator, agent, or distributor offering such products or services. No further definition of these terms is provided, meaning that the OCPB has a high amount of discretion.

The OCPB is to act as an advisor, administrator, and general overseer in the purpose for consumer protection. The OCPB will consider consumer complaints, supervise direct sales operator, judge appeals to the order of the registrar, advise the Cabinet on the direct sales issues, oversee the performance of the competent officials and government agencies in the area. It will further lay down rules and notifications, and suggest regulations to assist in the execution of the DSA.

Their head office address at The Government Complex Commemorating His Majesty The King’s 80th Birthday Anniversary, 5th December, B.E.2550 (2007), Chaeng Watthana Road, Thung Song Hong, Khet Lak Si, Bangkok.

 

3. Protection of Consumers

All sales documents must be in Thai and contain the seller’s and buyer’s names, the purchase date, the delivery date of merchants or services and information describing the consumer’s right to terminate (must be conspicuously printed).

Consumers must be provided with copies of the merchandise or service sales documents. Otherwise, they are not bound by the particulars therein.

Consumers are entitled to have a “cooling-off period” in a direct sales or marketing agreement being seven days after the delivery of the merchandise or service. During this time, consumers have the right to change their minds, prior to the expiration of those seven days, by terminating the agreement and returning the merchandise.

Merchants are required to give a full refund to consumers within 15 days after receiving the termination notification. However, in case the merchandise has been damaged by the consumer, the consumer must be responsible for such damage. A description of the goods and services to be excluded from this seven-day delay will be provided by future regulations, as will be the general procedures for returning goods.

Pyramid direct sales and direct marketing are prohibited. Thus, customers cannot receive a special bonus or discount from the merchants for recommending other consumers to buy merchandise from a particular website.

In the case of direct sales, the business operator is also required to enter into written agreements with its independent distributors or direct sales agents. The agreement must contain details of the remunerative payments and details of the fees payable to the business operator, the membership admission fee and promotion material cost (which shall not exceed rates to be fixed by the board).

 

4. Penalties

Penalties for any violation of its rules vary depending on the offense. The maximum imposable sentence is five years of imprisonment, and fines not to exceed 500,000 THB. Penalties can apply to enterprises, managers, legal representatives or persons in charge of operations, unless the offense was committed without their knowledge.


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