Consumer Protection (E-Commerce) Rules, 2020

Context:

A parliamentary panel has submitted its report on ‘The Consumer Protection (E-Commerce) Rules, 2020’.

Key recommendations:

1. The government should offer a more clear-cut definition of what constitutes ‘unfair’ trade practice.
2. The government should spell out a practical legal remedy to tackle the issue.
3. Fix a cap on delivery charges levied by e-commerce firms.
4. Provide for penal provisions for violation of rules related to misinformation.
5. The Ministry of Consumer Affairs, Food and Public Distribution should issue broad guidelines for the fixation of delivery charges charged by the marketplace entities along with a cap on the highest limits of the delivery charges in peak hours of service.
6. The Ministry should also clearly define ‘drip pricing’— wherein the final cost of the product goes up due to additional charges, and provide for protecting consumers against this by including penal provisions for violation.

What’s the issue?

While e-commerce enterprises offer many benefits, the development of the segment has rendered consumers vulnerable to new forms of unfair trade practices, violation of privacy and issues of unattended grievances.

Predatory pricing is one such issue and it may result in competition being wiped out and prove detrimental to consumers in the long run.

1. Predatory pricing is a short-term strategy, adopted by some of the market giants with deep pockets to sustain short-term losses and reduce the prices of their products below the average variable costs.
2. This may lead to wiping out competition from the market and could be detrimental to the consumers in the long run.

What the recent rules specify?

1. The Consumer Protection (E-Commerce) Rules, 2020, notified on July 23, regulate all commercial transactions sold over a digital or electronic network.
2. The e-com rules currently recognise two e-commerce business models, namely, marketplace model and inventory-based model.
3. The rules have separate specified provisions for marketplace- and inventory-based entities.
4. The e-com rules require that all information on the return, refund, exchange, warranty and guarantee, delivery and shipment of the goods or services being sold, including their country of origin, be provided on the platform.
5. Such details enable consumers to make an informed decision.

Please note:

1. The Consumer Protection (E-commerce) Rules, 2020 are notified under the new Consumer Protection Act, 2019.
2. The Consumer Protection (E-commerce) Rules, 2020 are mandatory and are not advisories.