In exercise of its powers conferred by sub-clause (zg) of sub-section (1) of section 101 of the Consumer Protection Act, 2019, the Central Government on July 23, 2020 notified the Consumer Protection (E-Commerce) Rules, 2020 (hereafter referred to as E-commerce Rules).
The E-Commerce Rules were brought to address the emerging concerns in the trade that is now shifting more towards the online mode. They were formulated after the government received complaints from small businesses and traders, that the two dominant platforms, Amazon and Flipkart, are disregarding the local laws.
Table of Contents
- Scope of the E-commerce Rules
- Duties of E-commerce entities
- Liabilities of the Marketplace E-Commerce entities
- Duties of Sellers on Marketplace
- Contravention of Rules
- Proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020
- Criticisms of the Proposed Amendments
Scope of E-commerce Rules
The rules shall apply to: –
(a) all goods and services bought or sold over a digital or electronic network including digital products;
(b) all models of e-commerce, including marketplace and inventory models of e-commerce;
(c) all e-commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats; and
(d) all forms of unfair trade practices across all models of e-commerce
However, the Rules do not apply to a natural person’s activity being carried in a personal capacity that is not a part of any professional or commercial activity undertaken on a continuous or systematic basis.
Further, the Rules are clear that they apply to e-commerce entities established outside India, but systematically offers goods or services to consumers in India.
Duties of E-commerce entities
The Rules also enlist the following duties of the E-commerce entities-
- To ensure compliance with the provisions of the Consumer Protection Act, 2019 or the rules made thereunder, an e-commerce entity shall have to appoint a nodal person of contact or else a senior designated functionary who is an Indian resident.
- The legal name of the e-commerce entity, geographic address of the entity’s headquarters and all its branches, website’s name and details, e-mail address, fax, landline and mobile number of customer care and grievance officer has to be prominently displayed by the e-commerce entity in a clear and accessible manner on its platform.
- No unfair trade practices whether in the course of business on its platform or otherwise shall be adopted by an e-commerce entity.
- Adequate grievance redressal mechanisms have to be necessarily established by the e-commerce entity. While establishing the redressal mechanisms, the entity has to take into regard the number of grievances ordinarily received by such entity from India. For redressal of the consumer’s grievances, the entity shall have to appoint a grievance officer and display the name, contact details, designation of such officer on its platform.
- The grievance officer so appointed should acknowledge receipt of any complaint within 48 hours and should be redressed within 1 month from the date of receipt of the complaint.
- If the entity offers to sell imported goods or services for sale, it shall have to mention the name and details of any importer from whom it has purchased such goods or services, or who may be a seller on its platform
- Best effort will be put by the e-commerce entity to become a partner in the merging process of the National Consumer Helpline of the Central Government.
- Cancellation charges on consumers cannot be imposed by an e-commerce entity on consumers who cancel the purchase of any good or service after they confirm their purchase unless the e-commerce entity also bears similar charges if they cancel the purchase order unilaterally for any reason.
- Only the consent of a consumer for the goods and services offered by the entity on its platform shall be recorded by the e-commerce entity where such consent is expressed through explicit and affirmative action. No such entity can automatically record the consent of a consumer.
- All payments shall be effected towards the accepted refund requests of the consumers as prescribed by the Reserve Bank of India or any other competent authority under any law for the time being in force, within a reasonable period of time or as prescribed under applicable laws.
- No manipulation in the prices of the goods and services shall be done by the e-commerce entity with a view to gain unreasonable profit. Nor the e-commerce entity shall discriminate between the same class of consumers or make any arbitrary classification of consumers.
Liabilities of the Marketplace E-commerce entities
The E-commerce Rules define “Marketplace e-commerce entity” as an e-commerce entity that provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.
- Undertaking from every marketplace e-commerce entity shall be required to ensure that the images, quality, description etc. of the goods and services on their platform are accurate and also directly match with the actual quality and description of the good or service.
- It is necessary for such entity to provide the below-given information in a clear and accessible manner on its platform and displayed prominently: –
- All details of the sellers offering their goods and services, including name of business, their geographic address, customer care number, rating or feedback about such seller, any other necessary information that would enable the consumers to make an informed decision at the pre-purchased stage. Such entity can on a request being made by a consumer in writing after making a purchase of any good or service on such entity’s platform, provide the consumer with the address of the entity’s headquarter and branches or any other necessary information for communication with the seller for an effective resolution of the dispute;
- A ticket number to track the status of each lodged complaint;
- Any other information required by the consumer to make an informed decision such as return, exchange, warranty, mode of payment etc.
- Information on available payment methods, the security of those payment methods, any fees or charges payable by users, the procedure to cancel regular payments under those methods and the contact information of the relevant payment service provider;
3. Such entity in its terms and conditions shall include generally governing its relationship with sellers on its platform, a description of any differentiated treatment which it gives or might give between goods or services or sellers of the same category.
4. Every marketplace e-commerce entity shall take reasonable efforts to maintain a record of relevant information allowing for the identification of all sellers who have repeatedly offered goods or services that have previously been removed or access to which has previously been removed or access to which has previously been disabled under the Copyright Act, 1957, the Trade Marks Act, 1999 or the Information Technology, 2000. Access of such seller shall not be terminated by such e-commerce entity to its platform, but may do so on a voluntary basis.
Duties of Sellers on Marketplace
- Sellers offering their goods or services through a marketplace e-commerce entity should not adopt any unfair trade practice while offering it on the entity’s platform or otherwise.
- Seller posting reviews about goods or services or misrepresenting the quality or features of any goods or services by falsely representing itself as a consumer should not be done.
- No seller offering goods or services through a marketplace e-commerce entity shall refuse to take back goods, or withdraw or discontinue services purchased or agreed to be purchased, or refuse to refund consideration, if paid, if such goods or services are defective, deficient or spurious, or if the goods or services are not of the characteristics or features as advertised or as agreed to, or if such goods or services are delivered late from the stated delivery schedule: Provided that in the case of late delivery, this shall not be applied if such late delivery was due to force majeure.
- The sellers offering their goods or services through a marketplace e-commerce entity shall:
- have a prior written contract with the respective e-commerce entity
- appoint a consumer grievance officer and ensure that he acknowledges receipt of any consumer complaint in 48 hours and within 1 month from the date of receipt of the complaint redresses it.
- ensure that advertisements for the marketing of goods or services are consistent with the real features and operating conditions of that goods or services.
- Provide legal name, principal geographic address of headquarters and all branches, e-mail address, its customer care contact details to the e-commerce entity.
5. Following information shall be provided by the sellers offering goods or services through a marketplace e-commerce entity to the said entity to be displayed on its platform or website:
- all contractual information required to be disclosed by law;
- total price in the single figure of any good or service, along with breakup price displaying delivery, handling, convergence charges, tax etc.;
- all relevant details about goods and services including country of origin;
- name, contact number, designation of the grievance officer;
- details of importer including name and guarantees related to the authenticity of the imported goods;
- definite information of returns, exchange, refund including information to costs of return shipping in a clear and accessible manner;
- details of delivery and shipment of goods or services;
- relevant guarantees or warranties applicable to such goods or services.
Contravention of Rules
The Rules clarify that in case of any violation of the provisions of these Rules, the provisions of the Consumer Protection Act, 2019 shall apply.
Proposed Amendments to the Consumer Protection (E-commerce) Rules, 2020
After the notification of these Rules, several representations from the aggrieved consumers, traders etc. were received by the government complaining about unfair trade practices observed in the e-commerce system such as flash sales, selling products that are close to expiry date etc.
Thus, to prevent all this the draft of the proposed amendments to the e-commerce Rules was shared by the Government. The amendments were introduced with an aim to bring transparency in the e-commerce platforms and further strengthen the regulatory regime to curb the prevalent unfair trade practices.
The proposed amendments are as follows: –
- Appointment of Chief Compliance Officer and a Resident Grievance Officer. This would ensure effective compliance with the provisions of the Act and Rules and also strengthen the grievance redressal mechanism on e-commerce entities.
- Registration of every e-commerce entity with the Department for Promotion of Industry and Internal Trade (DPIIT) to receive a registration number which would be prominently displayed on the company’s website. Registration of these entities will help to create a database of genuine e-commerce entities.
- Prohibition of deliberate misrepresentation of goods or services by such entities.
- All marketplace e-commerce entity and inventory e-commerce entity to provide best before or use before date. This will enable consumers to make an informed purchase decision.
- Where an e-commerce entity offers imported goods or services, it shall incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives to ensure a fair opportunity to domestic goods. This will ensure that the domestic manufacturers and suppliers also get fair and equal treatment.
- Provisions of Fall-back liability for every marketplace e-commerce entity have been provided, to ensure that consumers are not adversely affected in the event where a seller fails to deliver the goods or services due to negligent conduct by such seller in fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity.
Criticisms of the Proposed Amendments
Public comments were sought by the government on these key amendments till July 6, 2021. However, at a meeting on July 3, several e-commerce firms urged the Union Consumer Affairs Ministry to extend the deadline for the submission of comments. Therefore, the deadline was extended till July 21. However, the proposed amendments were criticized for posing several restrictions and seeks to regulate P2B (Person to Business) and B2B (Business to Business) which are beyond the Consumer Protection Act.
The amendments are criticized for being a deterrent for the industry’s growth.
Further, the amendments are considered as failures in providing a level playing field between online and offline e-commerce/retail.
The e-commerce rules were notified by the Ministry of Consumer Affairs, Food and Distribution to address the concerns of the consumers and to protect them from the unfair trade practices. Speaking about the e-commerce rules and their amendment, the Consumer Affairs Ministry Leena Nandan said, “We have received a lot of suggestions and views… now, taking them into account, we will come out with whatever is the best formulation from the consumer’s perspective.”
Asked about when the Rules are going to be finalized by the government, she said that it is difficult to give a timeline because there are so many issues that have come up and all of them require a lot of deliberation and discussion.