This article talks about the new rules notified by the government for e-commerce companies. The new rules will be pertinent to all electronic retailers registered in India or abroad but offering goods and services to Indian consumers. With the new consumer protection rules, shoppers can expect their life to get easier.
New rules for e-commerce companies have been notified by the government, including the mandatory display of ‘country of origin’ on their products. It also stated any non-compliance will attract penal action. The total price of goods and services offered for sale along with the break up of other charges will have to be shown by the e-commerce players. They need to point out the ‘expiry date’ of good, ‘country of origin’ of goods and services, required for enabling the consumer to make an informed decision. Display information regarding refund, return, exchange, warranty and guarantee, delivery, and shipment. E-commerce entities are not allowed to manipulate the price of goods and services and should not impose cancellation charges on consumers. A ticket number has to be provided by them for each complaint lodged, through which consumers can track the status of the complaint.
On July 8, 2019, the Consumer Protection Bill, 2019 was introduced in Lok Sabha by the Minister of Consumer Affairs, Food and Public Distribution, Mr. Ram Vilas Paswan. The bill attempts to replace the Consumer Protection Act, of 1986. The bill was introduced to address the new set of challenges faced by consumers in the digital age. Even though the digitization has been successful in providing an large variety of choices, easy access, convenient payment mechanisms, improvised services, and shopping as per experience. But this new era of digitization brought in challenges related to consumer protection.
On 6th August 2019, the Indian parliament passed the Consumer Protection Bill,2019. The bills aim to provide an effective and timely administration and settlement of consumer disputes. The new act, that is the Consumer Protection Act,2019 received the assent of the President of India and was published in the official gazette on 9 August 2019.
Key highlights of the Consumer Protection Act,2019
The Consumer Protection Act includes the e-commerce transactions which the Consumer Protection Act of 1986 did not include. It has broadened the definition of ‘consumer’. It now distinguishes ‘consumer’ any person who buys any goods, whether through offline or online transactions, electronic means, teleshopping, direct selling, or multi-level marketing. The prior act did not expressly include e-commerce transactions, and this unfilled space has been addressed by the New Act.
There are around four consumer rights defined within the bill. Starting with, the consumers have a right to be protected against trading of goods and services which are dangerous to the life and property of consumers. They have the right to be aware of the quality, purity, quantity, standard and price of the goods. They have a right to seek redressal against unjust or prohibitory trade practices. Last but not the least they have also have right to have access to the collection of goods or services at competitive prices.
Central Consumer Protection Authority (CCPA) will be set up by the central government to protect, promote, and enforce the rights of consumers. Matters relating to a violation of consumer rights, unfair trade practices, and misleading advertisements will be regulated by it. It will also have an investigation wing led by a Director-General, which may administer investigation or inquiry into such violations.
CCPA will perform the subsequent functions, including:
- inquiring into violations of consumer rights, investigating and launching prosecution at the suitable forum
- passing orders to recollect goods or pull out services that are hazardous, remuneration of the price paid, and discontinuation of the unfair trade practices, as defined within the Bill;
- providing directions to the concerned manufacturer/ endorser/trader/publisher/ advertiser to either modify a false or misleading advertisement or discontinue it;
- imposing sanctions, and;
- providing safety notices to consumers in case of unsafe goods and services.
Penalties for misleading advertisement: Penalty of up to Rs. 10 lakh and imprisonment for up to two years may be imposed by CCPA on a manufacturer or an endorser for false or misleading advertisement. The fine may extend to Rs 50 lakh and imprisonment of up to five years, in case of a subsequent offense.
The endorser of a misleading advertisement can also be prohibited by the CCPA for a period of one year from endorsing the particular product or service. The prohibition period may extend to three years for every subsequent offense
E-Filing of Complaints: The Consumer Protection Act provides flexibility to the buyer to file complaints with the jurisdictional consumer forum located at the place of residence or work of the buyer. This is unlike the earlier practice of filing it at the place of purchase or where the vendor has its registered office address. The Act also contains provisions to file complaints electronically for consumers and through video conferencing hearing and examining the parties. This is aimed to provide procedural ease and also to reduce inconvenience and harassment for the consumers.
Consumer Disputes Redressal Commission: It will be set up at the district, state, and national levels. A complaint can be filed by the consumer with CDRCs in relation to (i) restrictive or unfair trade practices; (ii) faulty goods or services; (iii) overcharging or misleading charging; and (iv) the offering of goods or services for sale which may be dangerous to life and safety. Complaints in case of an unfair contract that can be filed with only the State and the State CDRC will hear National Appeals from a District CDRC; The National CDRC will hear appeals from the State CDRC. The final appeal will be heard by the Supreme Court.
Jurisdiction of CDRC – The District CDRC will hear complaints the price e of goods and services will not be more than Rs One crore. When the value is more than One crore but does not exceed Rs Ten crore, there the State CDRC will entertain complaints. The complaints of goods and services having value more than 10 crores be heard by the National CDRC
The concept of product liability has been introduced by the Consumer Protection Act, 2019, and brings within its scope, the product manufacturer, product service provider, and product seller, for any claim for compensation. The term ‘product seller’ is defined to incorporate an individual who is involved in placing the merchandise for a commercial purpose and intrinsically would come with e-commerce platforms also.
The defense that e-commerce platforms merely act as ‘platforms’ or ‘aggregators’ won’t be accepted. There are increased liability risks for manufacturers as compared to product service providers and product sellers, considering that under the Act, manufacturers are going to be liable in product liability action even where he proves that he wasn’t negligent or fraudulent in making the express warranty of a product. Certain exceptions are provided under the Act from liability claims, such as, that the merchandise seller won’t be liable where the merchandise has been misused, altered, or modified.
On July 23, 2020, the Ministry of Consumer Affairs, Food, and Public Distribution has notified the Consumer Protection (E-Commerce) Rules, 2020 under the Consumer Protection Act, 2019 (“Act”), with an aim to prevent unfair trade practices in e-commerce and protect interests and rights of consumers.
Consumer Protection Rules, 2020
The government has notified new rules for e-commerce companies on 23rd July 2020. The rules will bear on all electronic retailers (e-tailers) registered in India or abroad but offering goods and services to Indian consumers.
The Rules will be relevant to :
- all goods and services purchase or vend over digital or electronic networks,
- all types of e-commerce, and
- all forms of e-commerce retail, with the exception of natural persons carrying out in their personal capacity (which is not part of any professional or commercial activity undertaken on a regular or systematic basis)
The rules are planned to supplement the Consumer Protection Act,2020, by controlling all online business exercises and exchanges. The rules have looked to administer all such e-commerce exercises by setting down obligations and liabilities to be followed by internet business elements, commercial center internet business elements, sellers on the marketplace, and stock online business substances. The act characterizes ‘e-commerce’ under section 2 (16), as “buying or selling of goods or services including digital products over the digital or electronic network”
Some of the important definitions under the rules are:
Rule 3(b) defines an “e-commerce entity” to mean any individual who possesses, works, or oversees a digital or electronic facility or platform for electronic trade, yet does exclude a seller offering his goods or services available to be purchased on a commercial center e-commerce entity.
Rule 3(f) defines an “inventory e-commerce entity” to mean an e-commerce entity that possesses a stock of goods and services and sells such goods and services straightforwardly to the buyers and will incorporate single-brand retailers and multi-channel single-brand retailers.
Rule 3(g) defines “marketplace e-commerce entity” to mean an e-commerce entity which gives an information technology platform on a digital or electronic network to encourage exchanges among buyers and sellers.
Rule 3(i) defines “platform” to mean an online interface as any software including a site or a section thereof and applications including the mobile application.
Rule 3(l) defines “user” to mean any individual who gets to or profits any computer resource of an e-commerce entity.
These definitions successfully include all partners for the internet business area from commercial centers to aggregators and stock drove models where the retailers own the stocks. They are taken inside the domain of the rules. Aside from these definitions, the Rules coordinate with the Information Technology Act,2000 (“IT Act”) for any word or articulation that has not been explicitly defined in Rules.
Obligations of E-commerce Entities
The rules order the e-commerce entities to be one of the accompanying sorts of enlisted entity:
- The company incorporated under the Companies Act, 1956 of Companies Act,2013
- The foreign company covered under Section 2(42) of Companies Act,2013
- Office, branch, or agency outside India owned or controlled by a person resident in India under Section 3(v)(iii) of the Foreign Exchange Management Act, 1999.
The above-mentioned entities have the accompanying obligations to be attempted under the rules:
- Provide the following data in a reasonable and available on its platform which will be shown to its users.
- Lawful name of the e-commerce entity
- Chief location of its headquarters and all branches
- Name and details of its website; contact details for customer care and grievance officer
- Should not embrace any unlawful exchange practice, regardless of whether in course of business or something else.
- Establish a satisfactory complaint redressal instrument and appoint a grievance officer for the same who shall recognize receipt of any complaint within 48 hours and redress the same within one month. Contact data for such a grievance officer is to be shown on the platform.
- In the case of the entity offering imported goods and services, declare the name and subtleties of any importer from whom it has brought such goods and services.
- Make each attempt on best effort basis, to turn into an accomplice in the convergence process of the National Consumer Helpline of the Central Government.
- Should not force dropping charges on users except if the e-commerce entity itself has to bear the same.
- Should effect all payments towards accepted refund requests of the buyers as endorsed by the Reserve Bank of India or some other equipped authority under any law.
- Should not manipulate the costs of goods and services offered on its platform to increase nonsensical benefit. Not to discriminate between purchasers of a similar class or make any subjective characterization of buyers influencing their privileges under the act.
Liabilities of Marketplace E-Commerce Entities
It is important for all such entities to get an undertaking from the sellers that the depictions, pictures and other substance relating to the goods or services on their platform is exact and compares straightforwardly with the appearance, nature, quality, reason and other general highlights of such goods and services.
Aside from the abovementioned, the marketplace e-commerce entity is additionally needed to give the information on its platform in a reasonable and accessible manner:
- regarding the insights relating to the seller, which includes the name of the business (regardless of whether enlisted or not, address, customer care number. Data relating to any feedback or criticism and any other data important for empowering buyers to make informed decisions at the purchase stage.
- Ticket number for every grievance lodged for tracking the status
- Data relating to refund, return, exchange, warranty and guarantee delivery and shipment, methods of payment, and complain redressal system.
- Information on available payment techniques, the security of those strategies, any expenses or charges payable by the users, strategy to drop regular payments, charge-back choices, and data of the relevant payment service provider
- If an entity is giving differentiated treatment between goods or services or sellers of the same category, the equivalent ought to be referenced in the terms and conditions overseeing relationships with sellers on the platform. Further, the marketplace e-commerce entity is needed to keep up a record of all significant data taking into consideration recognizable proof of all sellers who have again and again offered goods and services that have been eliminated or access to which has been incorporated under the Copyright Act, Trademark act of Information Technology Act
Obligations of sellers on Marketplace
The Rules accommodate a detailed rundown of obligations that sellers are needed to attempt or follow, a portion of the significant ones are as per the following:
- Not to embrace any out of line/unfair trade practice in the case of during offer on an online business platform or something else
- Not to decline to reclaim goods or pull back or suspend service bought or consented to be bought or decline to refund consideration if such goods or services are blemished, insufficient or deceptive or if such goods or services are conveyed late from the expressed delivery plan.
- Structure a composed agreement with individual marketplace e-commerce entity on whose platform they propose to embrace or request deal or offer their goods or services
- Guarantee that ads for advertising are steady with the genuine qualities of the products or administrations
- Furnish the e-commerce entity with legitimate name, address of headquarter and branches, name and detail of the website, email address, client care subtleties, GSTIN, and PAN subtleties.
Obligations and Liabilities of E-Commerce Entities
All e-commerce is to compulsorily give, in a reasonable and available way, the data. With respect to return, refund, exchange, guarantee and assurance, delivery and shipment, methods of payment, and complaint redressal mechanism. They ought to likewise give other data identifying with the notice under applicable laws, payment strategies and security, legally binding data needed to be unveiled by law, the complete cost in a single figure with separation cost, and ticket number for all objections for tracking.
Further, all such stock-based e-commerce entities elements ought to guarantee that no bogus portrayal of itself as a purchaser is made on its platform. It ought not to post a survey about goods and services itself or distort the quality or features of the goods or services. The commercials ought to be steady with genuine qualities, access, and utilization conditions of such goods or services.
The entity ought not to decline to reclaim products or pull back or cease services bought or consented to be bought or decline to refund consideration if such goods or services are flawed, inadequate, or deceptive or if such goods or services are delivered late from the expressed delivery plan. Anyway, in the event that the late delivery is because of power majeure, a special case can be made.
At long last, if the substance in any way swears to for the blindness of goods or services, it will bear the obligation in any activity identified with the genuineness of such goods or services.
To summarize, it can be said that E-commerce rules plan to get straightforward arrangements of information and divulgence by e-commerce platforms to the purchasers. Rules additionally try to put check on the act of particular treatment being accorded to some sellers. This gives space and fair treatment to the individual and small sellers on such platforms and furthermore precludes the probability of unfair trade practices by large sellers. Generally, with increment in e-commerce activity particularly in present occasions, E-Commerce Rules are a step to give redressal to consumer complaints against online business platforms and furthermore endorse certain accepted procedures to be trailed by e-commerce platforms for the advantage of buyers.
Frequently Asked Questions
- How is the consumer-defined in the act?
According to the act; a person is called a consumer who uses the services and buys any good for self-use. If a person purchases any good and use any service for resale or commercial purposes, he is not considered a consumer. This definition covers all types of transactions i.e. both online and offline.
- What is the meaning of an e-commerce entity?
It can be explained broadly under E-Commerce Rules and it means any person who owns, operates, or manages digital or electronic facility or platform for e-commerce is known as an e-commerce entity.
3. To whom the E-Commerce Rules are applicable?
The E-Commerce Rules appertain to all e-commerce transactions incorporating goods or services, including e-commerce entities which are not established in India but methodically offer goods or services to consumers in India, with the only exception being individuals in certain limited circumstances.
- What is meant by the marketplace e-commerce entity?
An e-commerce entity can be defined as an entity that provides an information technology platform on a digital or electronic network. It eases transactions between buyers and sellers.
- What is the penalty for the violation of the rule?
The provisions under the Consumer Protection Act, 2019 shall apply for any breach of the provisions of these rules.