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Direct sales comes under scrutiny

PHUKET: The Thai Cabinet has approved a move by the Office of Consumer Protection Board (OCPB) to enforce mandatory deposits on all persons and companies trading online in direct sales and marketing.

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By The Phuket News

Saturday 10 March 2018, 10:00AM


While online direct sales and direct marketing is spiralling online, the OCPB is pushing to protect consumers. Photo: PhotoMIX-Company

While online direct sales and direct marketing is spiralling online, the OCPB is pushing to protect consumers. Photo: PhotoMIX-Company

Government Spokesperson Lt Gen Sansern Kaewkamnerd confirmed that the approval came on Feb 20, when the Cabinet approved a draft proposal of a ministerial regulation to amend the Direct Sales and Direct Marketing Act 2017.

The Act itself, which mandates that direct sales and direct marketing operators be registered as such with the OCPB, was subject to a raft of amendments late last year, of which law firm Tilleke & Gibbins noted, “While the new provisions will enhance consumer protection, they will also impose more stringent regulations and obligations on business operators.”

The amendments significantly changed the definition of “direct marketing,” which now refers to the marketing of goods and services by means of communicating information, in order to directly offer goods and services for sale to remote consumers, with the expectation that consumers will accept the purchase of such goods and services from the direct marketing operators.

However, Tilleke & Gibbins pointed out, “It should be noted that, under a new ministerial regulation that is in the consideration and legislation process, the sale and purchase of goods and services in some circumstances may not fall under the definition of “direct marketing,” and thus no direct marketing registration will be required.”

Exactly which circumstances constituted no need to register has yet to be made clear, though in the Feb 20 approval is was made plain that regular sales of goods and services under traditional e-commerce models was not to be included under the new requirements.

Under the amendments last year were definitions for “partnership” and “company,” which were not previously defined. “These new definition are intended to limit applicants who qualify for direct sales registration to certain juristic persons (i.e., such applicants must be registered partnerships, limited partnerships, private limited companies, or public limited companies),” reported Tilleke & Gibbins.

“Individuals are only allowed to apply for direct marketing registration, not direct sales registration,” the report added.

Meanwhile, juristic persons that qualify for direct sales registration are required to fulfil statutory requirements, including the need to have paid-up capital of B500,000 or more for partnerships, and B1 million or more for companies.

Also, juristic persons applying for direct sales and direct marketing registration must not have had their direct sales or direct marketing registration revoked within a period of five years prior to the application submission date.

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“Furthermore, managing partners, directors, managers, or persons who have the power to manage the partnership or company must not be: (1) bankrupt; (2) adjudged to be incompetent or quasi-incompetent; (3) imprisoned by a final judgement, excluding imprisonment for negligence or

misdemeanours; (4) a managing partner, director, manager, or person who has the power to manage a partnership or another company which has already been granted a direct sales or direct marketing registration; and (5) a managing partner, director, manager, or person who has the power to manage a partnership or a company whose registration has been revoked within a period of five years prior to the application submission date,” Tilleke & Gibbons noted.

“Individuals applying for direct marketing registration must not have had their direct marketing registration revoked within a period of five years prior to the application submission date, and must not have any of the five disqualifications mentioned above,” the law firm added.

Under the Feb 20 approval, applicants are required to provide a guarantee to the registrar, as follows:

Direct sales

  • Operators with income before expenses of not more than B25 million per year, B25,000 guarantee;
  • Income before expenses of B25mn up to B50mn per year, B50,000 guarantee;
  • income before expenses B50mn up B100mn per year, B100,000 guarantee;
  • income before expenses of more than B100mn per year, B200,000 guarantee.

Direct marketing

  • Ordinary person, B5,000 guarantee;
  • Partnerships or company, B25,000 guarantee;
  • Ordinary person with income before expenses of not more than B25mn per year, B5,000 guarantee;
  • Partnerships or company with income before expenses of not more than B25mn per year, B25,000 guarantee;
  • income before expenses of B25mn up to B50mn per year, B50,000 guarantee;
  • income before expenses of B50mn up to B100mn per year, B100,000 guarantee;
  • income before expenses of more than B100mn per year, B200,000 guarantee.

“The guarantee is needed for direct sales and direct marketing business registration to prevent any problems and obstacles to electronic commerce,” the OCPB noted in its proposal to the Cabinet.

“Consumers can quickly be compensated (for wrongdoing) with no need to wait for the court,” it noted.

 

 

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