Analysis Of Consumer Protection (E-Commerce) Rules, 2020

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Introduction

Consumer Protection Act 2019 came into force on Jul 20, 2020[1]. After few days of coming of Consumer Protection Act, 2019, the Department of Consumer Affairs in the Ministry of Consumer Affairs, Food, and Public Distribution issued Consumer Protection (E-Commerce) Rules, 2020, on Jul 17, 2020. To avoid ambiguity in laws, Department for the Promotion of Industry and Internal Trade ensured that these rules will not overlap with the Data Protection Bill.[2]These rules apply to all electronic-retailers registered in India or abroad offering goods and services to Indian consumers. They align with the draft of the National E-commerce Policy released by the Government in 2019. These new rules elaborate the scope and applicability with addition of many provisions making online retailers more accountable and businesses more transparent.

This article has discussed all the new provisions added in the rules, what all these rules refer to, the relevance of these rules in today’s scenario, criticism of the regulations and presents a conclusion.

Major Provisions of the Rules

  1. Applicability of the rules under Consumer Protection (E-commerce) Rules, 2020 [Rule 2]

The major matter of regulation under these rules is an e-commerce entity. The rules have broadly defined the term e-commerce as any person who owns, operated, or manages digital or electronic facility or platform for e-commerce.

  1. Consumer Protection (E-commerce) Rules, 2020 [Rule 3 (1) (b)]

After defining the term e-commerce entity, different provisions for the applicability of these rules have been identified.These rules apply to every e-commerce transaction or e-commerce retail (including multi-channel single brand retailer and single brand retailer in single or multiple formats), which will involve goods or services. These rules apply to those e-commerce entities also which are not established in India but offering products or services to consumers in India.

  1. Consumer Protection (E-commerce) Rules, 2020 [Rule 2(2)]

These rules apply to India’s e-commerce entities as well as outsiders, irrespective of their operations, if they are offering services to Indian consumers.

  1. Duties of e-commerce entities-Consumer Protection (E-commerce) Rules, 2020 [Rule 4]
  2. E-commerce entity will have to appoint a nodal person or senior designated official who will keep a check on the functioning of the entity and make sure that the e-commerce platform follows every rule of Consumer Protection Act e-commerce rules.
  3. E-commerce entity will have to set up a grievance redressal mechanism by appointing one grievance officer. Name, contact details, and designation of officers should be displayed on the website or in the e-commerce platform.
  4. The grievance officer will have to ensure that the consumer’s complaint will be acknowledged within 48 hours of the complaint and will take action on the complaint within one month from the date of receipt of the complaint.
  5. The prices of goods or services offered in the platform should be reasonably charged, and manipulation of the cost is prohibited to gain unreasonable profit. This clause was introduced during the pandemic as demand for essential items like sanitizers and masks; many sellers were overcharging the retail price for their profit. Hence this problem can be curbed. Also, in the case of M/s Cargo Tarpaulin Industries v. Sri Mallikarjun[3], National Consumer Disputes Redressal Commission held that it is an offense to sell the goods at a price higher than the MRP.
  6. If your platform offers the imported goods or services, then the name and details of such importer or seller details have to be mentioned in the platform by the owner.
  7. These rules specifically said that e-commerce platforms would not charge any cancellation charges unless any similar costs borne by them.
  8. E-commerce platforms should ensure that the consumers’ refund requests should be given into effect within a reasonable time and should follow the rules prescribed by RBI or applicable laws.
  9. Duties of marketplace e-commerce entity Consumer Protection (E-commerce) Rules, 2020 [Rule 5]
  10. All marketplace e-commerce entity have to follow the sub-sections of Section 79 of the Information Technology Act, 2000, which talks about the exemption from the liability of the intermediary in certain cases.
  11. Description of the products and information should be verified by the seller and details about the seller such as a geographic address (whether it is registered or not), customer care numbers, feeding, or ratings in a clear manner so that consumers can make informed decisions.
  12. E-commerce entity should provide ticket numbers for the complaint registered by consumers to track its status, information regarding refund, grievance redressal mechanism, etc. to help the consumers in making informed decisions.
  13. Entities should maintain a record of all the sellers that have been removed or restricted previously to offer goods or services under the Copyright Act, 1957, the Trade Marks Act, 1999, or Information Technology Act to get information easily.
  14. Duties of sellers on the marketplace Consumer Protection (E-commerce) Rules, 2020 [Rule 6]
  15. Any seller who is offering goods or services on an e-commerce entity shall refrain from posting reviews about products by impersonating him as a consumer to misrepresent the quality or features of goods. Federal Trade Commission v. Cure Encapsulations Inc.[4]was the first case against fake reviews on Amazon where the defendant has paid some money to generate fake reviews to increase its rating and, hence, promote its product. From these provisions, these practices will be easily curbed.
  16. Before selling products, the seller should have written contracts with the marketplace e-commerce entity through which the seller intends to sell the goods or services.
  17. Advertisements of the goods or services offered by the seller should be consistent with the actual characteristics of such goods or services.
  18. The seller should provide legal name, geographic address of headquarters and all branches, the name and details of the website, contact details, customer care number, and applicable GSTIN and PAN details to the marketplace e-commerce entity.
  19. The seller cannot refuse to take back goods, withdraw or discontinue services purchased or agreed to be purchased, or refuse to refund paid amounts, if products or services are defective, deficient or spurious, or do not conform to the advertised features, or agreed delivery schedule.
  20. Duties of inventory e-commerce entities under Consumer Protection (E-commerce) Rules, 2020[Rule 7]

Inventory e-commerce entities also have to follow the same mandate as explained above for sellers on marketplace e-commerce entity.

  1. Penalty for violation under Consumer Protection (E-commerce) Rules, 2020 [Rule 8]

Provisions of the Consumer Protection Act, 2019 are applicable for the violation of these rules.

Contemporary relevance of the Rules

The e-commerce industry has already been flourishing, but the Covid-19 pandemic has impacted its growth significantly. Online portals like Flipkart, Amazon, and Big Basket have flourished to the maximum. Consumers, to fulfill their insatiable demand, started using these portals more largely; this created so much competition in the market, and companies have begun using malpractices to survive. This has created a need to have a specific regulation to deal with this issue. There were no provisions regarding the appointment of grievance officers to redress the grievances of consumers. These rules have defined those provisions by substantiating the requirements of unfair trade practices and misleading advertisements to prevent the interest of consumers.  Therefore, Consumer Protection (E-commerce) Rules, 2020, is a much-needed piece of legislation in these times to prevent the consumers from unfair trade practices and other practices of e-commerce platforms and to bring uniformity in the market.

A critical analysis

Although formulating these rules is a step in the right direction, it still has some flaws in it. These rules do not restrict the delivery charges taken by e-commerce entities that have been charged higher than the normal charges. No provision has been added to deal with the practice of several e-commerce platforms dripping their prices (showing the low base prices, but the price gets increased at the time of final payment) to lure customers. Several consumers face problems due to the no-provision of promised goods or services and inefficient customer care services is also one of the issues which have not been addressed.

Limited liability partnerships have been omitted from the definition of e-commerce entities, which leaves the open question of whether e-commerce business can be conducted by limited liability partnership or not. Indian residents entirely own these. Rules are needed to be cleared in terms of Rule 4(1)(a) and provisions of Indian exchange regulations else it will cause adverse impact to foreign e-commerce, which is accessible to Indian consumers due to the absence of clarification.

Conclusion

According to the present scenario of consumer affairs and advancement in the online marketing industry, these rules were much awaited. These rules strengthened the rights of consumers and will help in eliminating several problems of consumers, such as influencing the customers through false advertising. It will also aid in curbing the malpractice of fake reviews and will maintain the smooth functioning of the industry. Although these rules have covered many points to improve consumers’ present conditions and prevent fraud, some problems still need to be addressed. I suppose the government can make the required demands by inserting the necessary provisions in these rules. Overall, these rules will manage the ongoing relevant issues related to the e-commerce industry, and if some changes are made in these rules, it will suffice the purpose of future needs also.

By-

Kalyani Pandey

Dharmashastra National Law University 

 

[1]Peter Noronha, Consumer Protection Act 2019 Comes Into Force: Key Things To Know, NDTV, (Jul 20, 2020, 4:12 pm IST), https://www.ndtv.com/business/consumer-protection-act-2019-comes-into-force-today-here-are-key-things-to-know-2265811

[2]Surabhi Agrawal &KritikaSunjea, Efforts to line up e-commerce and data laws, The Economic Times (Apr 01, 2020),  https://economictimes.indiatimes.com/news/economy/policy/efforts-on-to-line-up-e-commerce-data-laws/articleshow/74922822.cms

[3]B. Kori M/s Cargo Tarpaulin Industries v. Sri Mallikarjun B. Kori [Revision Petition No. 2132 of 2007]

[4]Federal Trade Commission v. Cure Encapsulations Inc., Cure Encapsulations, Inc., Federal Trade Commission, (Jun 04, 2019), https://www.ftc.gov/enforcement/cases-proceedings/172-3113/cure-encapsulations-inc

 

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