Amendments to Consumer Protection (E-commerce) Rules 2020

Context:

For the purposes of preventing unfair trade practices in e-commerce, the Central Government proposed Amendments to the Consumer Protection (E-commerce) Rules, 2020.

GENESIS OF CONSUMER PROTECTION LAWS IN INDIA

• The e-Commerce platform is operating all over the world; however, laws governing e-Commerce are not globally uniform. With the ever evolving nature of the Telecommunication and Trade & Commerce, the old set of rules and practices governing communication and trading is largely incompatible with the emerging system of communication and trading practices in a borderless world created by the Internet.
• Thus, in order to pave the way for the development of internationally uniform and compatible e-Commerce rules and practices, the United Nations Commission on International Trade Law (UNCITRAL) established by the United Nations General Assembly in 1996 has adopted the Model Law of Electronic Commerce in 1996.
• The UNCITRAL Model Law on e-Commerce was drafted in order to serve as a document that the various countries of the world could use and evaluate and amend their own laws. On the basis of these Model Laws, India has enacted the Information Technology (IT) Act 2000.
• In India various offences relating to Internet are enumerated in the Information Technology Act, 2000 and the Information Technology (Amendment) Act, 2008.
• The Information Technology Act, 2000 deals with contractual aspects of use of electronic records. Another Act viz. Consumer Protection Act, 1986 (COPRA), which is considered as the magna carta of consumer protection in India, was an Act of the Parliament of India enacted in 1986 to protect the interests of consumers in India. It was replaced by the Consumer Protection Act, 2019, which provides for the establishment of consumer councils and other authorities for the settlement of consumer’s grievances and matters connected therewith.
• Section 94 of the Act provides that, for the purposes of preventing unfair trade practices in e-Commerce, and also to protect the interest and rights of consumers, the Central Government may take such measures in the manner as may be prescribed.
• Section 101 empowers the Central Government to make rules to prevent unfair trade practices in e-Commerce. In the light of this background that the Consumer Protection (E-Commerce) Rules, 2020 has been notified on 23rd July, 2020, in an attempt to create more uniformity and transparency for buyers.

About Consumer Protection (E-commerce) Rules, 2020:

• The Consumer Protection (E-commerce) Rules, 2020 (“Rules”) were notified by the Government of India on 20.07.2020.
• Ministry: Ministry of Consumer Affairs
• The Rules are intended to complement the Consumer Protection Act, 2020 (“Act”) to by regulating all e-commerce activities and transactions.
• The Rules have sought to govern all such e-commerce activities by laying down duties and liabilities to be adhered by e-commerce entities, marketplace e-commerce entities, sellers on marketplace, and inventory e-commerce entities.
• The Act defines ‘e-commerce’ under Section 2(16), as “buying or selling of goods or services including digital products over digital or electronic network”.

Scope of Rules

1. All goods and services bought or sold over digital or electronic network including digital products;
2. All models of e-commerce, including marketplace and inventory models of e- commerce;
3. All e-commerce retails, including multi-channel single brand retailers and single brand retailers in single or multiple formats; and
4. All forms of unfair trade practices across all models of e-commerce

However, the Rules except activities carried out by a natural person in personal capacity not being part of any professional or commercial activity undertaken on a regular or systematic basis.

Definitions

Some of the important definitions under the Rules are:-

1. Rule 3(b) defines “e-commerce entity” to mean any person who owns, operates or manages digital or electronic facility or platform for electronic commerce, but does not include a seller offering his goods or services for sale on a marketplace e-commerce entity.
2. Rule 3(f) defines “inventory e-commerce entity” to mean an e-commerce entity which owns the inventory of goods or services and sells such goods or services directly to the consumers and shall include single brand retailers and multi-channel single brand retailers.
3. Rule 3(g) defines “marketplace e-commerce entity” to mean an e-commerce entity which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.
4. Rule 3(i) defines “platform” to mean an online interface in the form of any software including a website or a part thereof and applications including mobile applications;
5. Rule 3(l) defines “user” to mean any person who accesses or avails any computer resource of an e-commerce entity.

These definitions effectively include all stakeholders in the e-commerce sector from marketplaces to aggregators and inventory led models where the retailers own the stocks, are taken within the purview of the Rules. Apart from these definitions, the Rules integrate with the Information Technology Act, 2000 (“IT Act”) for any word or expression that has not been expressly defined in the Rules.

Duties of E-Commerce Entities

The Rules mandate the e-commerce entities to be one of the following types of registered entity:

• Company incorporated under Companies Act, 1956 or Companies Act, 2013
• Foreign company covered under Section 2(42) of Companies Act, 2013
• Office, branch or agency outside India owned or controlled by person resident in India under Section 3(v)(iii) of the Foreign Exchange Management Act, 1999.
• Appoint a nodal person of contact or an alternate senior designated functionary who is resident in India, to ensure compliance with the provisions of the Act or the rules made thereunder. 
• Every e-commerce entity shall provide the following information in a clear and accessible manner on its platform, displayed prominently to its users, namely:–
  • legal name of the e-commerce entity; o principal geographic address of its headquarters and all branches;
  • name and details of its website; and
  • contact details like e-mail address, fax, landline and mobile numbers of customer care as well as of grievance officer. 
• No e-commerce entity shall adopt any unfair trade practice, whether in the course of business on its platform or otherwise. 
• Every e-commerce entity shall establish an adequate grievance redressal mechanism having regard to the number of grievances ordinarily received by such entity from India, and shall appoint a grievance officer for consumer grievance redressal, and shall display the name, contact details, and designation of such officer on its platform. 
• Every e-commerce entity shall ensure that the grievance officer referred to in sub-rule (4) acknowledges the receipt of any consumer complaint within forty-eight hours and redresses the complaint within one month from the date of receipt of the complaint. 
• Where an e-commerce entity offers imported goods or services for sale, it shall 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. 
• Every e-commerce entity shall endeavour on a best effort basis to become a partner in the convergence process of the National Consumer Helpline of the Central Government. 
• No e-commerce entity shall impose cancellation charges on consumers cancelling after confirming purchase unless similar charges are also borne by the e- commerce entity, if they cancel the purchase order unilaterally for any reason. 
• Every e-commerce entity shall only record the consent of a consumer for the purchase of any good or service offered on its platform where such consent is expressed through an explicit and affirmative action, and no such entity shall record such consent automatically, including in the form of pre-ticked checkboxes.
• Every e-commerce entity shall effect all payments towards 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 e-commerce entity shall–
• manipulate the price of the goods or services offered on its platform in such a manner as to gain unreasonable profit by imposing on consumers any unjustified price having regard to the prevailing market conditions, the essential nature of the good or service, any extraordinary circumstances under which the good or service is offered, and any other relevant consideration in determining whether the price charged is justified;
• discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Act

Liabilities of Marketplace E-Commerce Entities

All such entities are required to get an undertaking from the sellers that the descriptions, images and other content pertaining to the goods or services on their platform is accurate and corresponds directly with the appearance, nature, quality, purpose and other general features of such good or service.

Apart from the above, the marketplace e-commerce entity is also required to provide the following information on its platform in a clear and accessible manner:

1. Details about the sellers, including name of business (whether registered or not, address, customer care number, any rating or feedback and any other information necessary for enabling consumers to make informed decision at purchase stage
2. Ticket number for each complaint lodged for tracking the status
3. Information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism
4. Information on available payment methods, security of those methods, any fees or charges payable by users, procedure to cancel regular payments, charge-back options and contact information of the relevant payment service provider

In case the entity gives any differentiated treatment between goods or services or sellers of same category, the same should be mentioned in the terms and conditions governing relationship with sellers on platform. Further, the marketplace e-commerce entity is required to maintain a record of all relevant information allowing for identification of all sellers who have repeatedly offered goods or services that have been removed or access to which has been disabled under Copyright Act, Trademark Act or Information Technology Act.

Duties of Sellers on Marketplace

The Rules provide for an elaborate list of duties that sellers are required to undertake or follow, some of the important ones are as follows:

• Not to adopt any unfair trade practice whether during offer on e-commerce platform or otherwise
• Not to refuse to take back goods or withdraw or discontinue services purchased or agreed to be purchased or refuse to refund consideration if such goods or services are defective, deficient or spurious or if such goods or services are delivered late from the stated delivery schedule.
• Form a written contract with respective marketplace e-commerce entities on whose platform they propose to undertake or solicit sale or offer their goods or services
• Ensure that advertisements for marketing are consistent with the actual characteristics of the goods or services
• Provide the e-commerce entity with legal name, address of headquarter and branches, name and detail of website, email address, customer care details, GSTIN and PAN details.

Duties and Liabilities of E-Commerce Entities

All e-commerce entities are to mandatorily provide, in a clear and accessible manner, the information regarding return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism. They should also provide other information relating to notices under applicable laws, payment methods and security, contractual information required to be disclosed by law, total price in single figure with breakup price, and ticket number for all complaints for tracking.

Further, all such inventory based e-commerce entities should ensure that no false representation of itself as a consumer is made on its platform and it should not post review about goods and services itself or misrepresent the quality or features of the goods or services. The advertisements should be consistent with actual characteristics, access and usage conditions of such goods or services.

The entity should not to refuse to take back goods or withdraw or discontinue services purchased or agreed to be purchased or refuse to refund consideration if such goods or services are defective, deficient or spurious or if such goods or services are delivered late from the stated delivery schedule. However in case the late delivery is due to force majeure, an exception can be made.

Finally, if the entity in any manner vouches for the authenticity of goods or services, it shall bear the liability in any action related to the authenticity of such goods or services.

Conclusion

To sum up it can be said that E-commerce rules aim to bring transparency in provision of information and disclosure by the e-commerce platforms to the consumers. Rules also seek to put check on the practice of preferential treatment being accorded to some sellers. This provides space and equitable treatment for individual and small sellers on such platforms and also rules out possibility of unfair trade practices by large sellers. In addition to regulating the Indian origin e-commerce platforms, the E-commerce Rules also regulate foreign based e-commerce platforms under Rule 4(1)(a). Overall with increase in e- commerce activity especially in present times, E-Commerce Rules are a step to provide redressal to consumer grievances against e-commerce platforms and also prescribe certain best practices to be followed by e-commerce platforms for benefit of consumers.

Source: PIB

Source of Info: Department of Consumer Affairs