Consumer Protection (E- commerce) Rules, 2020

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Consumer Protection (E- commerce) Rules, 2020

Introduction

The Ministry of Consumer Affairs, Food and Public Distribution (Ministry) vide its notification no. GSR 462(E) dated 15 July 2020 (Notification) has notified certain provisions of the Consumer Protection Act, 2019 (CPA 2019) replacing the Consumer Protection Act, 1986. Pursuant to the power conferred under the CPA 2019, the Ministry has notified the Consumer Protection (E- commerce) Rules, 2020 (E-commerce Rules) on 23 July 2020.

The E-commerce Rules aim to prevent unfair trade practices and protect the rights of consumers in an online setup.

Scope and applicability

The E-commerce Rules apply to the following:

(i) all goods and services (including digital products) bought or sold over any digital/ electronic platform – this may include all forms of online services such as cab hailing, ticketing and video/ audio streaming;

(ii) all models of e-commerce including marketplace and inventory based models;

(iii) all e-commerce retail, including multi- channel single brand retailers and single brand retailers in single or multiple formats;

(iv) all forms of unfair trade practices across all models of e-commerc.

(v) all e-commerce entities (not established in India) but systemically offering goods or services to consumers in India.

The The E-commerce Rules do not apply to any activity of a natural person carried out in its personal capacity, not being part of any professional or commercial activity undertaken on a regular/ systemic basis.

Important definitions

(i) E-commerce entity means any person who owns, operates or manages digital/ electronic facility or a platform for electronic commerce. It does not include a seller offering goods or services for sale on a marketplace e-commerce entity. The e- commerce entity is required to be:

(a) A company incorporated under the Companies Act, 1956 or the Companies Act, 2013; or

(b) A foreign company covered under the Companies Act, 2013; or

(c) An office, branch or agency outside India, owned or controlled by a person resident in India as provided under the Foreign Exchange Management Act, 1999.

(ii) Marketplace e-commerce entity means an e- commerce entity which provides an information technology platform to facilitate transactions between buyers and sellers.

(iii) 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. It includes single brand retailers and multi- channel single brand retailers.

(iv) Platform means an online interface in the form of any software including website and mobile applications.

(v) Seller means a person who, in the course of business, imports, sells, distributes, prepares, packages, labels, markets, repairs, maintains, or otherwise is involved in placing such product for commercial purpose. A seller includes any service provider and a manufacturer who is a product seller.

Duties of e-commerce entities

The key duties of e-commerce entities are as follows:

  • The entity is required to appoint a nodal/ senior person of contact who is resident in India for ensuring compliance with the CPA 2019 and its the rules.
  • The entity is required to provide, in a clear and accessible manner, information of its legal name, principal geographic address of its headquarters and all branches, details of its website, and contact details of customer care and the grievance officer.
  • The entity must not adopt unfair trade practices in any form.
  • The entity must establish an adequate grievance redressal mechanism and appoint a grievance officer.
  • The grievance officer must acknowledge the grievance within 48 (forty-eight) hours and ensure redressal of the complaint within 1 (one) month from the date of receipt of the complaint.
  • The entity must not impose cancellation charges on consumers cancelling after confirming purchase unless similar charges are also borne by such entity, if they cancel the purchase order unilaterally for any reason.
  • The entity must not manipulate the price of the goods or services offered on its platform so as to gain unreasonable profit by imposing any unjustified price on consumers.

Liabilities of marketplace e-commerce entities

The key duties of a marketplace e-commerce entity are as follows:

  • The entity must require sellers to issue an undertaking to the effect that descriptions, images and other content pertaining to goods or services on their platform are accurate and correspond directly with the nature, quality purpose and features of such goods or services.
  • In the terms and conditions governing the relationship with sellers, the entity must include description of any differentiated treatment which it gives or might give between goods, services or sellers of the same category.
  • The entity must take reasonable efforts for maintenance of record of all sellers of goods and services that have been previously removed or access to which has been disabled under Copyright Act, 1957, Trade Marks Act, 1999 or the Information Technology Act, 2000.
  • The entity must provide the following information in a clear and accessible manner on its platform:

(a) Details about the sellers such as name of business, registered address, any ratings or feedback, country of origin of the goods or services etc., to enable the customers to make decision at the pre-purchase stage

(b) Information regarding refund, return, exchange, warranty, and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism.

(c) Information on available payment methods, the security of those payment methods, any fees or charges payable by the users and contact details of the payment service provider.

(d) Explanation of the main parameters for determining the ranking of goods or sellers on the platform.

Duties of sellers on marketplace

The key duties of the sellers on an e-commerce marketplace are:

  • The seller must not adopt unfair trade practices in offering the goods or services on the online platform.
  • The seller must not refuse to take back goods, withdraw or discontinue the services purchased, or refuse to refund consideration, if such goods or services are defective, deficient, unlike the characteristics shown in the advertisement or are delivered late, except in the cases of late delivery due to force majeure.
  • The seller must have a prior written contract with the respective e-commerce entity in order to undertake/ solicit sales or offer on the e-commerce marketplace.
  • The seller must appoint a grievance officer for the redressal of grievances of customers.
  • The seller must ensure that advertisements of goods or services are consistent with the actual characteristics and usage conditions of such goods or services.
  • The seller must provide the total price of goods and services, compulsory and voluntary charges, all mandatory notices, expiry date, country of origin, details of importer, guarantees, terms of exchange, returns, refunds and details related to delivery and shipment on the online ecommerce platform.

Duties and liabilities of inventory e-commerce entity

The key duties and liabilities on inventory e-commerce entity are as follows:

  • The entity must provide accurate information regarding refund, return, exchange, warranty, delivery, mode of payment, types and security of available payment methods, fees and charges, grievance redressal process and other similar important information.
  • The entity must not engage in misrepresentation of the quality of the goods or services or post false reviews about the same by posing as a consumer.
  • The entity must not refuse to take back goods, withdraw or discontinue the services purchased or refuse to refund consideration, if such goods or services are defective, deficient, unlike the characteristics shown in the advertisement or are delivered late, except in the cases of late delivery due to force majeure.
  • The entity must ensure that the advertisements of goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services.
  • In case an inventory e-commerce entity has vouched for the authenticity of the goods or services sold by it (whether explicitly or implicitly), it would bear the appropriate liability in any action related to the authenticity of such goods or services.

Contravention of the E-commerce Rules

Violation of the provisions of the E-commerce Rules shall be dealt with under the provisions of CPA, 2019.

Conclusion

The E-commerce Rules have a wide ambit wherein they apply not only to the regular buying and selling of products on an online platform, but also to non- conventional online services.

The E-commerce Rules create various layers of protection for consumers and help them in making informed decisions by mandating detailed information of goods and services offered. The rules place the consumers and the sellers/ e- commerce entities on a similar footing and disallow any imbalance in the position of consumers on one hand and sellers/ e- commerce entities on the other.

The E-commerce Rules are a novel piece of legislation, being the first of its kind. While the E-commerce Rules have provided a comprehensive framework of regulation, the implementation of the same is yet to be tested.