The Consumer Protection Act, 2019 came into force on 20th July 2020. It introduced significant changes to the 1986 act. Few days after it came into force, the Ministry of Consumer Affairs, Food, and Public Distribution notified the Consumer Protection (E-Commerce) Rules, 2020. These rules aim to meet the needs of consumers around digitalization and growing e-commerce. They focus on ensuring the smooth functioning of the Consumer Protection Act, 2019 and providing a framework to regulate the marketing, sale, and purchase of goods and services online. This piece of work aims to present an overview of these rules for better understanding.
The rules provide a broad definition of ‘e-commerce’, as per the definition, e-commerce means-
- 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.
Applicability of Rules
These rules apply to-
- All e-commerce retail, including:
- multi-channel single-brand retailers and
- single-brand retailers in single or multiple formats;
- All goods & services bought or sold over e-platform; and
- All models of e-commerce; including the marketplace model and inventory model.
- All forms of unfair trade practices (as defined under the CPA, 2019) across all models of e-commerce.
These rules will also be applicable to-
- Entities which are not established in India but systematically offer goods or services to consumers in India.
Rules will not apply to
- Any natural person;
- carrying out any activity in a personal capacity;
- not being part of any professional or commercial activity undertaken on a regular basis.
Appointment of an Official
The rules state that:
- An E-commerce entity will have to appoint a nodal person or senior designated official;
- The official has to keep a check on the functioning of the entity and;
- Make sure that the e-commerce platform follows every rule of CPA, 2019 and e-commerce rules.
Grievance Redressal Mechanism
As per clause 4 of rule 4, every E-commerce entity has to:
- Set up a grievance redressal mechanism by appointing one grievance officer;
- The officer will look into the grievances reported by the consumers and provide an effective solution for the same.
- The E-commerce has to display on its platform the name, contact details, and designation of such officers.
- The grievance officer has to ensure that the consumer’s complaint is acknowledged within 48 hours of it being reported and;
- Take an action on the complaint within one month from the date of receipt of the complaint.
Manipulation of Prices
As per clause 11 of rule 4, any unfair practise of unjust price determination of products or services offered on e-commerce platforms for gaining any unreasonable profit from the consumers by taking advantage of circumstances or market conditions is specifically rebuked. This rule is pertinent in the present pandemic scenario, wherein the prices of masks and sanitizers were hiked.
Duties of E-Commerce Entities under the Rules
All E-commerce entities are required to:
- Display basic information such as their name, contact details and address prominently on the platform;
- Make efforts to participate in the National Consumer Helpline, for quick resolution of consumer complaints;
- Mention the name and details of the importer for imported goods or services;
- Make all refunds according to RBI prescriptions and within a reasonable period; and
- Ensure consumer consent for the purchase of goods or services is expressed through an explicit and affirmative action. It should not be in an automatic manner such as a pre-ticked checkbox.
Due Diligence by Sellers
- The seller needs to enter into a contract with a marketplace e-commerce entity. It needs to provide disclosures regarding its legal name, principal geographic address of its headquarters and all branches, the name and details of its website, its e-mail address, customer care contact details such as fax, landline, and mobile numbers and where applicable, its GSTIN and PAN.
- There should be no false representation by the seller. They are not allowed to misrepresent themselves as consumers and post reviews for the products, or falsely claim about the quality of goods and services.
- The seller cannot refuse the refund of the amount received by him/her, on account of any goods or services sold vide marketplace e-commerce platform.
In case of any non-compliance or contravention, the provisions of CPA, 2019 will apply to the E-commerce rules. In such cases of violations, the E-commerce entities may need to comply with sanctions resulting in fines or punishments or directions given by the authorities.
With the advancement of technology and the dilution of the border on the internet, the world is witnessing a boom in e-commerce industries. During the current pandemic situation, the presence of these platforms has grown multi-folds, common platforms include Amazon, Flipkart, Alibaba, Myntra, etc. have grown because of their contactless deliveries and wide product range. Owing to such high presence of these platforms, the CPA, 2019 and the E-commerce rules were much awaited. They not only strengthen the regulatory framework but also provide mechanisms to curb malpractices and seek effective remedies.
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