Enhanced Protections For Consumers Targeted By Direct Sales and Marketing Operators

By Piyawannee Watanasakolpunt and Suthasinee Neamsum

Amendments to Thailand’s Direct Sales and Direct Marketing Act (No.3) B.E. 2560 (2017) became effective on 14 September 2017. The new amendments make significant changes to the definition of “direct marketing” and impose additional duties and liabilities for both direct sales and direct marketing business operators.

Selling products or services through an electronic commerce system is considered “direct marketing”, and the entity engaging in such activity must be registered with both the Department of Business Development (“DBD”) and the Office of Consumer Protection Board (“OCPB”).  Under the amended version, certain e-commerce businesses  to be set out in a separate regulation from the OCPB will not be considered part of “direct marketing”.

Direct seller must be an entity

Only a registered juristic person (i.e., registered partnership, limited partnership, limited company or public limited company) is eligible to  register as a direct sales.  The business operator’s managers, partners, and directors must meet certain qualifications, such as not being bankrupt, adjudged incompetent, or imprisoned for certain serious crimes.  There are also capital requirements for the entity (a minimum  paid-up capital of  not less than THB 500,000 for partnerships or THB 1 million for companies).  Individuals may only register for direct marketing activities, not direct sales.

Duties and liabilities of business operator

The additional duties and liabilities of the business operator are as follows:

  1. The business operator must pay a deposit guarantee when registering as a direct sales or direct marketing operator.  The deposit can be used by the OPCB to compensate any injured customers of the business operator.
  2. The business operator faces joint liability with its independent distributors for any defect or damage to the goods and services which may arise due to such independent distributors violating its obligations under the Direct Sale and Direct Marketing Act.
  3. The business operator must submit an operations report to the OPCB and notify the OPCB of its relocation, dissolution or any business acquisition.