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What are the recent Amendments in E-Commerce Rules in India?

9 min read

By Stuti Hasmukh Oswal

The word E-Commerce means buying and selling products or services online via internet. E- Commerce stands for Electronic Commerce. The trend of buying things online has increased in this ongoing pandemic. Due to Covid-19 Pandemic, lockdown was imposed in the country and all the shops, malls and stores were shut completely. During these times, many people turned towards online shopping as it was one of the most convenient and safest option.

As the E-Commerce business is growing in the country the Ministry of Consumer Affairs, Food and Public Distribution introduced the Consumer Protection (E-Commerce) Rules, 2020 in order to provide protection to the consumers from unfair trade practices and listen to their concerns. The rules mention about the duties, responsibilities and liabilities of the E- Commerce businesses.

Recently, the Ministry of Consumer Affairs, Food and Public Distribution has proposed amendments in the Consumer Protection (E-Commerce) Rules, 2020. The proposed amendments have been released and the Government has sought comments, suggestions and views on the said amendment draft.

Thus, this article deals with the new amendments proposed and its impact on the e-commerce market in India and its rapid growth.

Why are the amendments being suggested?

The Ministry of Consumer Affair, Food and Public Distribution has laid down several reasons as to why the amendments are being sought. They are as follows:

  • Cheating and Unfair Trade Practices

The Ministry has received numerous complaints from the consumers in relation with unfair trade practice and cheating carried out by the E- Commerce businesses. From April 2019 to November 2019 nearly 5620 fraud dockets have been registered under the E-Commerce platform at the National Consumer Helpline.

To improve these numbers and make sure that all the grievances are taken care of by such e- commerce entities amendment are being made in the rules introduced by the Ministry.[1]

  • Fake E-Commerce Websites

Online shopping has become a trend and lots of people order from various websites and applications. It becomes difficult for a person who is not so tech oriented to find out the authenticity of the website or the application. A large number of people have been cheated through these fake online shopping websites.

Recently, the Mumbai Police have arrested an IT expert from Gujrat who has scammed over 22,000 people by creating fake online shopping websites. An amount of more than Rs. 70 Lakh have been reported to be involved in this case.[2]

  • No Proper Grievances Redressal

E-Commerce is business carried out completely online. There are no faces of the seller or buyer involved. All that is visible to the buyer is the seller’s name. If the buyer wishes to complain or address any problem with the goods or services received by it then a portal or service to register the same must be available to them.

Many of the E-Commerce websites do not have proper grievance redressal systems in place and a few which have them tend to overlook and ignore the problems that the consumers are facing with their product. A blind eye is turned towards the consumers once the sellers have sold their goods to them.

  • Non- Compliance of rules and regulations

Once you open a business online it is your duty to follow and comply with all the provisions required which are laid down by the government. Many E-Commerce entities have been avoiding to not following the required procedures and methods introduced by the Government to ensure smooth functioning of the businesses.

When such E-Commerce businesses duck from these compliances it becomes difficult for the Government to keep a check on them and ensure that no frauds and illegal activities are taking place.

  • Misleading and deceiving the Consumers

Various E-Commerce websites upload fancy images of their products and services to attract consumers. The images vary far beyond the actual product that they are selling. These websites have been fraudulently selling their goods and services by posting unreal pictures of the product. Only after the product is delivered to the consumer is the time he or she realizes that it was a scam.

What are the amendments proposed?

Seeing a rise in the E-Commerce sector, the Ministry of Consumer Affairs, Food and Public Distribution introduced the Consumer Protection (E- Commerce) Rules in the year 2020. The rules had a few loopholes and needed some amendments according to the Ministry as they received various issues and complaints from consumers, traders, organizations and associations in relation to the conduct of E-Commerce businesses.

Hence the following amendments are proposed:

  • Appointment of a Chief Compliance Officer and Resident Grievance Officer

Every E-Commerce entity is required to appoint a Chief Compliance Officer in order to make sure that the business is complying with all the provisions of the Consumer Protection Act, 2019 and following all the rules of the Consumer Protection (E-Commerce) Rules, 2020. He will be a nodal person who shall co-ordinate with all the Government bodies and agencies to ensure such compliances.

These entities are also required to appoint a Resident Grievance Officer who will take care of all the consumer complaints and resolve the same within a particular time. Such an appointment will help the Government to ensure that the aggrieved consumer’s plea is being acknowledged and taken care.

  • Registration

To eliminate the issue of people creating fake websites for online shopping, the Government has proposed that every E-Commerce entity will be required to obtain a registration number after registering themselves with the Department for Promotion of Industry and Internal Trade.

The Registration number will be displayed on the website as well as the invoice of the ecommerce businesses. This will help the consumers to identify the websites and make sure they do not fall prey to fake online shopping websites.

Registration of E-Commerce entities will help the Government collect database. With this data the Government will be able to take immediate action against those E-Commerce businesses who are in non-compliance of rules and regulations.

  • Fair Market Competition

It has been proposed by the Ministry that wherever the entities are providing imported goods to the consumers they are required to add the details of the importer and state the origin of the product. They are also required to insert similar domestic products along with the options of imported goods.

A filter mechanism is to be put in with regards to the origin of the goods and shall also suggest various options and alternatives. This amendment will help to provide a range of products to the consumers to choose from and will remove the discrimination seen with the domestic sellers.

  • Restrictions on “Flash” and “Back to Back” Sales

The Government has not prohibited the conventional flash sales but has brought in restrictions in order to curb the malpractice and unfair trade practices carried out by the E-Commerce platforms. Those sales which lead to increase in prices, reduces the choices available to the consumers and prevent free and fair competitions shall not be allowed.

  • Negligence on the part of Seller

The provision of Fall-Back Liability has been proposed by the Government to protect the consumers. In case if an E-Commerce seller fails to deliver the goods or services due to his negligent conduct, omission or commission then he shall be liable for the loss incurred by the consumer.

  • Stop misleading and mis-selling products and services

The E-Commerce entities are forbidden to misrepresent or mislead the consumer about the product merely for sale. The product is required to have accurate and complete description mentioned so that the purchaser is aware of what he is buying. The products which have an expiration date shall mention the same in the description.

The E-Commerce entity shall be liable if they deceive the consumers by providing false or half information regarding the products or services that they offer.

What will be the impact of such Amendments?

  • On the Consumers:

The main objective of bringing such amendments is to protect the consumers from being cheated, defrauded and conned. Upon bringing in such amendments, the rights of the consumer are strengthened. The appointment of the Resident Grievance Officer will help them efficiently to register their complains and get a solution for the same. An aggrieved consumer will not have to wait for months after the purchase just to obtain a solution to his grievance. Such an initiate will change the face of the redressal mechanism.

Previously, if a consumer cancels an order a fee was charged as compensation for such cancelation called as ‘Cancelation Charges’ but if the E-Commerce platform cancelled a particular order of a consumer the said rule of compensation towards the consumer would not be applicable. The new amendments have taken into consideration of such unfair practices and proposed that if any E-Commerce entity cancels an order then they will be liable to compensate the consumer.

The amendments have also upheld the consumer’s right to choose and right to information. It has made sure that a consumer is given a variety of products and services to choose from. It has also made sure that all the information regarding the product is given to the consumer so that he can make a correct choice for himself.

Overall, the said amendments had impacted the consumer positively.

  • On the E-Commerce Players

The amendments bring a lot of restrictions, obligations and liabilities for the E-Commerce entities. Appointing a Chief Compliance Officer and a Resident Grievance Officer will increase the expenses of the entities.

Restrictions and prohibitions upon Flash and back-to-back sales will impact the entity’s sales performances and the entity overall. One of the major reasons as to why the consumers are attracted to such online shopping are the Flash Sales provided by the E-Commerce entities.

Imposing the liability of non-compliance of the order placed by a consumer upon the E-Commerce platform will further impact the financial aspect of the E-Commerce entities. If due to some genuine reasons an E-Commerce entity is not able to fulfill an order, to make them liable for the same will be unjust.

The only advantage of the amendment is that the discrimination between sellers will reduce and all the E-Commerce players will get a fair and equal opportunities.

  • On the Market:

Most of the E-Commerce business are funded by the foreign investors. When the Government brings in some many restrictions and liabilities upon the E-Commerce businesses such investors might hesitate to make further investments. Such amendments are being brought up suddenly which creates unpredictability and scares the foreign investors. Such a behaviour will also impact the country’s economy.

The rapid growth that took place in E-Commerce will slow down. The major E-Commerce players will not be affected a lot as they have the capital and strength required to sustain these amendments. It will affect the smaller E-Commerce players as they are still in the growing stage and are quite unstable yet.

  • On the Local Businessmen:

The local businessmen seem to be quite happy with the restrictions and prohibitions brought by the Government upon the E-Commerce entities. This is because they have been complaining about the unfair trade practices and policies followed by the E-Commerce businesses from the beginning itself.

The business of the such local providers have fallen since past few years because of the E-Commerce players. The E-Commerce players provide deep discounts on a continuous basis which a normal local businessman cannot afford to do so.

Therefore, by prohibiting such flash and back-to-back sales the local business man will get a fair chance to compete in the market.

Conclusion

The Confederation of All India Traders (CAIT) have said that:

“The rules, when implemented, will certainly purify the highly “vitiated” E-Commerce business of India due to “unethical and illogical” business practices of foreign funded E-Commerce companies.”

These amendments will direct the E-Commerce entities to follow certain standards and rules to conduct its business. This is quite necessary for the E-Commerce entities as many people, organizations and agencies have complained regarding their business conduct.

The image that has been built of E-Commerce platforms are cheaters, anti-competitive and unfair trade practice followers. It is time for them to change this image. Complying and providing support to the amendments will help the E-Commerce platforms to do the same.

The said amendments are not yet final. The Ministry of Consumer Affairs, Food and Public Distribution is awaiting feedbacks, reviews and comments from everyone regarding the amendments in order to make sure everyone is benefited from the same.

Reference

  1. Press Information Bureau, Government of India, Ministry of Commerce & Industry- Fraud by E-Commerce Companies, available at https://pib.gov.in/Pressreleaseshare.aspx?PRID=1595849 (last visited 23rd June,2021)
  2. ABP Live – Fake shopping websites duping people with attractive discounts, exposed by Mumbai Police, available at https://news.abplive.com/technology/republic-day-sale-fake-shopping-websites- duping-people-with-attractive-discounts-check-12-portals-exposed-by-mumbai-police-1440780 (last visited 23rd June,2021)