The Central Government has recently notified the long-pending e-commerce rules under the Consumer Protection Act, 2019 to better regulate the ever-growing e-commerce market, especially to monitor the dominance of foreign players such as Amazon and other market leaders namely Flipkart, Snapdeal, etc.
The aim is to provide better transparency to consumers whereby the much talked about the requirement to disclose the country of origin of the product is also covered.
The Central Government on July 23, 2020 notified the Consumer Protection (E-Commerce) Rules, 2020 (“Rules”). We have summarised the important aspects of the Rules hereunder to provide a brief overview.
Applicability:
The Rules shall apply to the following:
All goods and services bought or sold over the digital or electronic network including digital products;
All modes of e-commerce, including marketplace and inventory models;
All e-commerce retail, including multi-channel single-brand retailers and single-brand retailers in single or multiple formats;
All forms of unfair trade practices across all models of e-commerce; and
Any e-commerce entity which is not established in India, but systematically offers goods or services to consumers in India.
Some important definitions:
The Rules has clearly distinguished between different types of e-commerce entities and has also defined the buyer and seller on the platform:
1. “E-commerce entity” 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;
2. “Inventory e-commerce entity” means 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. “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;
4. “Seller” means the product seller as defined under the Consumer Protection Act, 2019 and shall include any service provider;
5. “Product Seller” as per the Consumer Protection Act, 2019 in relation to a product, means a person who, in the course of business, imports, sells, distributes, leases, installs, prepares, packages, labels, markets, repairs, maintains, or otherwise is involved in placing such product for commercial purpose and includes—
(a) a manufacturer who is also a product seller; or
(b) a service provider,
but does not include—
i. a seller of immovable property, unless such person is engaged in the sale of a constructed house or in the construction of homes or flats;
ii. a provider of professional services in any transaction in which, the sale or use of a product is only incidental thereto, but furnishing of opinion, skill or services being the essence of such transaction;
iii. a person who:
(a) acts only in a financial capacity with respect to the sale of the product;
(b) is not a manufacturer, wholesaler, distributor, retailer, direct seller or an electronic service provider; or
(c) leases a product, without having a reasonable opportunity to inspect and discover defects in the product, under a lease arrangement in which the selection, possession, maintenance, and operation of the product are controlled by a person other than the lessor.
6. “User” means any person who accesses or avails any computer resource of an e-commerce entity.
The Rules is largely divided into 3 parts:
1. Duties of all E-commerce entities;
2. Marketplace E-commerce entities; and
3. Inventory based E-commerce entities.
Duties of E-Commerce Entities
1. Appoint nodal officer: Appoint a nodal person or an alternate senior designated functionary, resident in India to ensure compliance with the provisions of the act or rules.
2. Disclosures: E-commerce entity need to disclose the following on its platform:
(a) The legal name of the E-commerce entity;
(b) Principal geographic address of its headquarters and all branches;
(c) Name and details of its website;
(d) Contact details like e-mail address, fax, landline and mobile number of customer care and grievance officer;
3. No unfair trade practice: Avoid adoption of any unfair trade practice, whether in the course of business on its platform or otherwise.
4. Grievance Redressal Mechanism:
(a) Every E-commerce entity shall establish an adequate grievance redressal mechanism and appoint a grievance officer.
(b) Display the name, contact details, and designation of such officer on the platform.
(c) The officer must acknowledge the receipt of complaints within 48 hours and redress the same within 1 month from the date of receipt of the complaint.
5. Display “country of origin’ of products:
(a) Display details about the Seller, their geographic address, customer care number, any rating, or other feedback.
(b) 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.
6. Become a partner of the National Consumer Helpline: It shall endeavor on a best effort basis to become a partner in the convergence process of the National Consumer Helpline of the Central Government.
7. No cancellation charges: No E-commerce entity shall impose cancellation charges on consumers canceling after confirming purchase unless similar charges are also borne by the E-commerce entity if they cancel the purchase order unilaterally for any reason.
8. Consent of consumers: Record consent, of the consumer for the purchase of any good or service, where it is expressed through affirmative and explicit action, and shall not record consent automatically, including in form of pre-ticked checkboxes.
9. Manipulation or discrimination: No E-commerce entity shall manipulate the price of goods or services to gain unreasonable profit or discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights.
Marketplace E-Commerce Entity
I. Liabilities of Marketplace e-commerce entity
1. Exemption from third-party information liability: If the Marketplace e-commerce entity fulfills the provisions of Section 79 of the Information Technology Act, 2000 then it shall not be held liable for any third party information, data, or communication link made available or hosted on its platforms.
2. Undertaking: Take undertaking from Sellers that descriptions, images, and other content pertaining to 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.
3. Disclosure of the following information:
(a) Seller details: details about the Sellers offering goods and services, including the name of their business, whether registered or not, their geographic address, customer care number, any rating or other aggregated feedback about such Seller, and any other information necessary for enabling consumers to make informed decisions at the pre-purchase stage. Further on receipt of a written request by a consumer after the purchase of any goods or services, provide him required information of the Seller for effective dispute resolution;
(b) Ticket number for complaints: provide a ticket number for each complaint lodged through which the consumer can track the status of the complaint;
(c) Exchange or refund: 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;
(d) Payment methods: information on 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;
(e) Explain listing mechanism on the platform: an explanation of the main parameters which, individually or collectively, are most significant in determining the ranking of goods or Sellers on its platform and the relative importance of those main parameters through an easily and publicly available description drafted in plain and intelligible language.
4. Disclosure of differential treatment: Specify in the terms and conditions generally governing the relationship with Sellers on its platform, a description of any differentiated treatment which it gives or might give between goods or services or Sellers of the same category.
5. Record information of Sellers selling counterfeit products: 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. Provided that it is not required to terminate the access of such Seller to its platform, but may do so on a voluntary basis.
II. Seller responsibility under marketplace model:
1. No unfair trade practice: No Seller offering goods or services through a Marketplace e-commerce entity shall adopt any unfair trade practice whether in the course of the offer on the E-commerce entity’s platform or otherwise.
2. Should not post fake reviews: No such 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.
3. No refusal to take back goods: Sellers offering goods or services through a Marketplace e-commerce entity shall not refuse to the following:
(a) To take back goods; or
(b) Withdraw or discontinue services purchased or agreed to be purchased, or
(c) Refuse to refund paid consideration,
if such goods or services are defective, deficient or spurious, or if the goods or services are not of the characteristics or features as advertised or as agreed to, or if such goods or services are delivered late from the stated delivery schedule (except in case of force majeure events).
4. Any Seller offering goods or services through a Marketplace e-commerce entity shall:
(a) Written contract: Have a prior written contract with the respective E-commerce entity for undertaking sale;
(b) Appoint a grievance officer for consumer grievance redressal and ensure that the grievance officer acknowledges the receipt of any consumer complaint within 48 hours and redresses the complaint within 1 month from the date of receipt of the complaint;
(c) No misleading advertisements: Ensure that the advertisements for the marketing of goods or services are consistent with the actual characteristics, access, and usage conditions of such goods or services.
(d) General Details: Provide to the E-commerce entity 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, GSTIN and PAN details.
5. Any Seller offering goods or services through a Marketplace e-commerce entity shall provide the following information to the E-commerce entity to be displayed on its platform or website:
(a) Price: Total price along with the breakup price for the good or service, showing all the compulsory and voluntary charges such as delivery charges, postage and handling charges, conveyance charges and the applicable tax, as applicable;
(b) The expiry date of the good being offered for sale, where applicable;
(c) Details of Country of Origin: All relevant details about the goods and services offered for sale by the Seller including country of origin which are necessary for enabling the consumer to make an informed decision at the pre-purchase stage;
(d) Grievance officer: the name and contact numbers, and designation of the grievance officer for consumer grievance redressal or for reporting any other matter;
(e) Importer: name and details of importer, and guarantees related to the authenticity or genuineness of the imported products;
(f) Exchange or refund: accurate information related to terms of exchange, returns, and refund including information related to costs of return shipping in a clear and accessible manner;
(g) Delivery: relevant details related to delivery and shipment of such goods or services;
(h) all mandatory notices, information and contractual information required by applicable laws; and
(i) any relevant guarantees or warranties applicable to such goods or services.
Inventory Based E-Commerce Entity
Duties and liabilities of Inventory e-commerce entities:
1. Disclose the following information to its Users:
(a) Accuracy of information: accurate information related to return, refund, exchange, warranty and guarantee, delivery and shipment, cost of return shipping, mode of payments, grievance redressal mechanism, and any other similar information which may be required by consumers to make informed decisions;
(b) Payment methods: information on available payment methods, the security of those payment methods, the procedure to cancel regular payments under those methods, any fees or charges payable by Users, chargeback options, if any, and the contact information of the relevant payment service provider;
(c) Price: total price along with the breakup price for the good or service, showing all the compulsory and voluntary charges, such as delivery charges, postage and handling charges, conveyance charges and the applicable tax;
(d) Ticket number for complaints: a ticket number for each complaint lodged, through which the consumer can track the status of their complaint;
(e) all mandatory notices, information, and contractual information required by applicable laws.
2. Should not post fake reviews: No Inventory e-commerce entity shall falsely represent itself as a consumer and post reviews about goods and services or misrepresent the quality or the features of any goods or services.
3. No misleading advertisements: Ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services;
4. No refusal to take back goods: No Inventory e-commerce entity shall refuse to the following:
(a) To take back goods; or
(b) Withdraw or discontinue services purchased or agreed to be purchased, or
(c) Refuse to refund paid consideration,
if such goods or services are defective, deficient or spurious, or if the goods or services are not of the characteristics or features as advertised or as agreed to, or if such goods or services are delivered late from the stated delivery schedule (except in case of force majeure events).
5. Responsibility: Any Inventory e-commerce entity which explicitly or implicitly vouches for the authenticity of the goods or services sold by it, or guarantees that such goods or services are authentic, shall bear appropriate liability in any action related to the authenticity of such good or service.
Penal Provision
Respective penalties specified under the Consumer Protection Act, 2019 shall apply here in case of contravention of any provisions of Consumer Protection (E-Commerce) Rules, 2020.
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