The e-commerce industry in India has undergone unprecedented growth in the last few years. By 2021, the industry is estimated to worth $84 billion, according to Deloitte. While the advent of the e-commerce industry has proved to be a boon for sellers and consumers alike, it has also posed several challenges from regulatory and legal perspectives, with laws still evolving.
In this context, the Indian government has made sweeping changes to address the unique issues arising in this digital age and the growing e-commerce industry in the form of the Consumer Protection (E-Commerce) Rules, 2020.
These rules apply to all e-commerce transactions involving goods or services over digital or electronic networks and include e-commerce entities that are not established in India but offer the sale of goods and services to India’s consumers.
There are several compliance requirements, duties, and liabilities set out for the e-commerce entities. A few notable rules are:
- A commitment not to adopt any unfair trade practices.
- Establishing an adequate consumer grievance redressal mechanism with a timeline of 48 hours for acknowledgment and one month for redressal of consumer complaints.
- Complete details of the importer provided on the platform in case of imported goods.
- No cancellation charges to be levied on consumers cancelling after confirming purchase unless similar charges are also borne by the e-commerce entity if they cancel the purchase.
- E-commerce entities to record the consent of a consumer for the purchase of any good or service offered on its platform only where such consent is expressed through an explicit and affirmative action, and not automatically.
- No manipulation of the price of the goods or services offered to gain unreasonable profit; and no discrimination between consumers of the same class or making any arbitrary classification of consumers.
- Compliance with the provisions of Information Technology (Intermediaries guidelines) Rules, 2011.
In particular, the addition of the grievance redressal forum was much needed and will add to consumers’ confidence when making purchases online. These obligations are intended to provide confidence to consumers while making purchases online and they provide much-needed transparency in a purchase transaction.
”The addition of the grievance redressal forum was much needed and will add to consumers’ confidence while making purchases online.”
Ranjan Narula
Shabnam Khan
Availability of counterfeit goods
One of the more rampant and recurring issues facing e-commerce is the sale of counterfeit products online. In particular, as most e-commerce portals are set up as a marketplace, they have control over what is displayed and what is sold. The e-commerce rules oblige e-commerce retailers to register their business entity locally, inform legitimate brands targeted by infringers, and refund customers that receive counterfeit goods.
Further, as part of the liabilities, e-commerce entities must make reasonable efforts to maintain records of all sellers who may have been previously banned on account of complaints received under the Copyright Act, Trade Marks Act, or Information Technology Act.
Fake reviews
Countering fake reviews and ratings is becoming another challenge for e-commerce platforms. Under the Consumer Protection Act, 2019, which the new e-commerce rules are intended to complement, it is mandated that a) e-commerce entities would not falsely represent themselves as consumers or post reviews as well as misrepresent or exaggerate the quality or the features of the goods and services they offer on their platform; and b) the seller would not falsely represent itself as a consumer and post reviews about goods or services or misinterpret the quality or the features of any goods or services.
Seller’s obligation
Sellers are bound by specific duties while selling goods/services on e-commerce platforms. Among the many other requirements outlined under the new rules, sellers essentially will not adopt any unfair trade practices to promote their goods, and ensure that advertisements are transparent, consistent with the goods or services.
In addition, aspects such as misrepresentation of facts, refusal to take back/withdraw goods or services, or refuse refunds for goods or services which are spurious, defective, etc, have been made as crucial obligations of the seller.
Furthermore, sellers are required to execute a prior written contract, appoint a grievance officer, clearly specify terms of the refund, exchange, returns, guarantees, or warranties applicable, and provide adequate details about the country of origin of the goods and services. The focus seems to be to weed out rogue sellers that overpromise on quality and warranties and further, make them liable for the quality of goods they offer.
”The e-commerce rules are also intended to bring parity between e-commerce platforms and their brick-and-mortar stores.”
Country of origin
An issue that has been under discussion lately is the display of country of origin information. This issue has gained traction during the COVID-19 pandemic with more countries looking to be self-reliant in local manufacturing.
India’s government has rolled out “Atmanirbhar Bharat” (self-reliant India) and stressed the ‘Make in India’ campaign. Some leading e-commerce platforms have announced that listings that fail to provide information on the country of origin may lead to enforcement action, including the suppression of the listings on their platforms. Including country of origin information would ensure that the buyer has adequate knowledge of where the articles were manufactured and which entity is responsible for its import.
Transparency and accountability are the fundamentals of the new rules. The e-commerce rules are also intended to bring parity between e-commerce platforms and their brick-and-mortar stores. For example, the Legal Metrology Act, 2009 requires that every product sold by brick-and-mortar stores displays the retail price, country of manufacture/origin, etc. The new e-commerce rules are making the same mandatory for online stores.
The e-commerce entities are stepping up to meet the rules mandated by the new e-commerce rules. The new rules have set the tone for a more robust and vibrant framework for India’s e-commerce sector.
Ranjan Narula is the managing partner at RNA Technology and IP Attorneys. He can be contacted at: rnarula@rnaip.com
Shabnam Khan is an associate partner at RNA, Technology and IP Attorneys. She can be contacted at: skhan@rnaip.com
Image: Shutterstock.com / yurakrasil
