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Consumer protection in e-commerce in India

ecommerce

 

To bring greater parity between e-commerce companies and their brick-and-mortar competitors, India's Ministry of Consumer Affairs announced the draft Consumer Protection (E-Commerce) Rules 2019.
 
The objective of the rules is to set guiding principles for e-commerce in India for preventing fraud, unfair trade practices and protecting the rights and interests of consumers.

Section 3 of the draft lays down general conditions for carrying out e-commerce transactions, where businesses need to comply with within 90 days upon the publishing of the notification in the gazette. This includes requirements to comply with Information Technology (Intermediary Guidelines) Rules, 2011 and ensure that any personally identifiable data of the customers are protected. The Reserve Bank of India (RBI) has set guidelines for facilitation of payments for sale by the e-commerce entity. The e-commerce entities will also have to furnish details about sellers, including the identity of their business, legal name, principal geographic address, name of the website, the products they sell, and how they can be contacted by customers.

The draft rules have highlighted that an e-commerce company cannot directly or indirectly influence the price of the goods or services. This is to ensure that a level playing field is maintained between the various players in the market. The e-commerce entities are further prohibited from adopting any trade practice for promoting the sale of goods or provision of services which may influence the purchase decisions of the consumers. The rules have also studied issues like false reviews by the sellers in order to misrepresent the quality and features of the goods and have explicitly forbidden entities from doing so.

E-tailers are now supposed to display their contract with the sellers and provide clear information regarding return, refund, exchange, warranty/guarantee, delivery so that the consumer is in a position to make an informed decision, further return of goods shall be accepted if they are delivered late or are defective and the payment for the same shall be returned within a period of 14 days. False advertising activities have also come under the scrutiny of the rules which now mandates the entities to ensure that the advertisements for the marketing of goods or services are consistent with the actual characteristics, access, usage conditions of such of goods or services and any health and safety information of the goods and services.

As most e-commerce entities follow the marketplace model, under which the e-tailers merely function as intermediaries, the menace of counterfeit products has been ever-growing. In order to curb this, the rules lay down that if any e-commerce entity is informed by the consumer or comes to know by themselves or through any third party about any counterfeit product that is sold on their platform and is satisfied after due diligence, it shall notify the seller and if the product is found to be not genuine, it shall take down the listing. Such an entity shall be held guilty of contributory or secondary liability if it makes an assurance vouching for the authenticity of the goods sold on its marketplace – or if it guarantees that goods are authentic.

The rules have also laid down liabilities of the sellers that are listed on these e-commerce platforms. Sellers need to display single-figure total and break up price for the goods or service, that includes all compulsory charges such as delivery, postage, taxes and handling and conveyance charges as well as comply with display requirements as per the Legal Metrology (Amendment) Rules 2017 for any pre-packaged commodities that they are selling. The aim of creating liabilities on the seller is to make sure that there are fair and reasonable delivery terms, the goods and services shall have a warranty/guarantee obligation in order to safeguard the rights of the consumer on an online platform as well so that it becomes aligned with the responsibilities of a brick-and-mortar store.

The rules include services under its ambit which show that they recognise that there has been a shift from the traditional model of buying and selling goods and that services also cater to a huge market in today’s day and age. 

The e-commerce sector has seen many policy relaxations from the easing of the local sourcing norms in single-brand retail to allowing 100% in the marketplace model. The e-commerce market in India is predicted to grow by 1,200% to 200 billion rupees, making the draft consumer protection rules the need of the hour.

To learn more about opportunities in e-commerce industry, visit Retail and E-Commerce sector page