The Department of Consumer Affairs in the Ministry of Consumer Affairs, Food and Public Distribution issued Consumer Protection (E-commerce) Rules 2020 ("E-commerce Rules 2020"), which came into force on 23 July 2020.
These Rules have been a topic of discussion for quite a while. The Government, in 2019, released the draft Consumer Protection (e-Commerce) Guidelines, 2018. These guidelines were to apply only to the Business-to-Consumer E-Commerce entities. Then in November 2019, the Central Government released the Consumer Protection (e-Commerce) Rules 2019. The E-commerce Rules 2020 can be said to be similar to the rules that have come before it, but, some new obligations have been imposed on the e-commerce entities.
E-Commerce Entity Defined
One thing that is common between the E-commerce Rules 2020 and its predecessors are the term "e-commerce entity". Under the E-commerce Rules 2020, it has been defined 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. Under E-commerce Rules 2020, an e-commerce entity can be categorized into inventory e-commerce entity and marketplace e-commerce entity.
Inventory e-commerce entity has been defined as 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. On the other hand, the marketplace e-commerce entity means an e-commerce entity which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.
The E-commerce Rules 2020 apply to all goods and services bought or sold over the digital or electronic network including digital products. However, they do not apply to any activity carried out in personal capacity not being part of any professional or commercial activity undertaken on a regular or systematic basis.
It is really interesting to note that E-commerce Rules 2020 are also applicable to an e-commerce entity which is not established in India, but systematically offers goods or services to consumers in India.
This would mean that the E-commerce Rules 2020 would apply to both local and international e-commerce entities irrespective of where they are established.
Disclosure of Information
Under E-commerce Rules 2020, every e-commerce entity must provide information such as the legal name of the e-commerce entity, principal geographic address of its headquarters and all branches, names and details of its website and contact details, in a clear and accessible manner on its platform and such information should be displayed prominently to its users.
Every marketplace e-commerce entity is also required to provide information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism, and any other similar information which may be required by consumers to make informed decisions.
Furthermore, every marketplace e-commerce entity also must provide information relating to available payment methods, the security of those payment methods, any fees or charges payable by users, the procedure to cancel regular payments under those methods, charge-back options, if any, and the contact information of the relevant payment service provider.
The E-commerce Rules 2020 provide an elaborate list of information that has to be provided by a seller offering goods or services through a marketplace e-commerce entity as well as every inventory e-commerce entity.
Grievance Redressal Mechanism
Grievance has been defined to mean any complaints to an e-commerce entity regarding violations of the Consumer Protection Act, 2019 and the rules made under it.
Every e-commerce entity is required to 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 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.
It is interesting to note that the E-commerce Rules 2020 clearly state that no marketplace seller shall falsely represent itself as a consumer and post reviews about goods or services or misrepresent the quality or the features of any goods or services. Same obligation is imposed on inventory e-commerce entity.
Violation of IPR
E-commerce Rules 2020 imposes a duty on every marketplace e-commerce entity to take reasonable efforts to maintain a record of relevant information allowing for the identification of all sellers who have repeatedly offered goods or services that have previously been removed or access to which has previously been disabled under the Copyright Act, 1957, the Trade Marks Act, 1999 or the Information Technology Act, 2000. It further states that the e-commerce entity can terminate the access of such seller to its platform on a voluntary basis.
Manipulation of Prices
It is pertinent to note that 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.
The E-commerce Rules 2020, certainly give more power to the consumers and further strengthen their rights. These rules have come at the right time. There have been several cases where the sellers have tried to gain money by manipulating prices of the goods, especially during the on-going pandemic. These rules will put a stop to such a practice that harms the customers and makes essential goods inaccessible to them. Further, the E-commerce rules, restrict the sellers to post fake reviews of products on marketplaces. This will prove to be a great step as a lot of times fake good reviews and high ratings are awarded to goods of extremely low quality, which in turn influence the consumers.
It was clearly the need of the hour to bring in such a robust grievance redressal mechanism in place. The Government has taken a step in the right direction by introducing E-commerce Rules 2020. There were no such rules that existed to regulate the ever-growing e-commerce industry. The rules regarding unfair trade practices and false advertising is in line with the Consumer Protection Act, 2019.
However, the E-commerce Rules 2020 are not devoid of flaws. They do not discuss the issue of delivery charges which are sometimes exorbitant in nature. Some maximum limit should be imposed on the sellers charging delivery charges. Another issue that is not addressed is that of "add-on charges". Several times, sellers advertise low prices at the start of the purchasing process, but later on, several additional charges, taxes, fees, which are unavoidable are imposed/disclosed towards the end. This concept is called 'drip pricing' and is used by several online sellers to gain consumers interest and mislead them by quoting a low price.
Overall, the E-commerce Rules 2020 have managed to cover the relevant issues that have plagued the e-commerce industry for a long time.
(Siddharth Batra is Partner at Satram Dass B & Co. and Archna Yadav is an associate at Satram Dass B & Co.). Views are personal only