E-Commerce Rules, 2020 – Consumer Protection in E-Commerce Markets in India

Recently, the government of India notified the Consumer Protection (E-Commerce) Rules, 2020 (hereinafter referred to as ‘Rules'), under the Consumer Protection Act, 2019 (hereinafter referred to as ‘Act’), effective from 24 July 2020. These Rules introduce much needed updates to the existing e-commerce regime making it more efficient, accountable and transparent. The Rules stipulate obligations for e-commerce entities and sellers and provides for a dispute redressal mechanism in the form of Central Consumer Protection Authority empowered to penalize defaulters or those violating consumer rights. This article discusses the relevant provisions of the Rules and obligations it imposes on various parties concerned with e-commerce and discusses the framework laid down by the Rules. Scope and Applicability The Rules apply to all goods and services sold over digital or electronic network, all models of e-commerce, e-commerce retail and unfair trade practices adopted by parties involved in e-commerce. Peculiarly, these Rules apply not only to entities established in India but also to entities established in another country but offering goods and services to consumers in India. An e-commerce entity, according to the Rules, is defined as any person who owns, operates or manages digital or electronic facility or platform for e-commerce but does not include a seller offering his goods or services for sale on such entities. These include ‘inventory e-commerce entities’ which owns inventory of goods and services and sells them directly to the consumers, including single and multi-brand retailers, and ‘marketplace e-commerce entities’ which provide an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers. The Rules prescribe duties and obligations for e-commerce entities, inventory e-commerce entities, marketplace e-commerce entities and sellers. Duties of e-commerce entities The Rules prescribe the following duties for the e-commerce entities:

  • The e-commerce entities shall be (i) registered as a company in India or (ii) registered as a ‘foreign company’ covered under Companies Act, 2013 (iii) or an office, agency or branch outside India but controlled by a person resident in India, as per the provisions of Foreign Exchange Management Act, 1999.

  • The e-commerce entities shall appoint a nodal person or designated functionary to ensure compliance with the provisions of the Act and the Rules.

  • The entities are required to establish a grievance redressal mechanism including appointment of a consumer grievance redressal officer. The officer is required to acknowledge the receipt of a complaint within 48 hours from its receipt and redressal within one month from the date of receipt.

  • Every e-commerce entity shall provide the following information in a clear and accessible manner on its platform – (i) legal name of the entity (ii) address of entity’s headquarters and all branches (iii) name and details of the website (iv) contact details.

  • In case the entity offers imported goods, it is mandatory to mention the name and details of the importer from whom such goods were procured.

  • The e-commerce entities are barred from imposing cancellation charges on consumers unless similar charges are also borne by the e-commerce entity from the seller.

  • The e-commerce entity shall record the consent of the consumer for each purchase explicitly (including through tick-checkbox) and shall not automatically assume consent.

  • The entity shall not manipulate the price of the goods or services, engage in unfair trade practices, discriminate between consumers of the same class or make arbitrary classification of consumers affecting their rights.

Liabilities of marketplace e-commerce entities The Rules prescribe the following liabilities for the marketplace e-commerce entities:

  • The marketplace e-commerce entity can avail benefits of exemptions from liability under provisions of Information Technology Act, 2001 as an intermediary. However, other provisions of the Act will still be applicable to such entities.

  • Every such entity shall require the sellers to furnish an undertaking ensuring that the descriptions, images and other content pertaining to the goods and services on their platform is accurate and corresponds directly to the appearance, nature, quality, purpose and other features of such goods or services offered by the seller.

  • Every marketplace e-commerce entity shall provide the following information to its users in a clear and accessible manner – (i) details of sellers offering goods and services including rating or aggregate feedback about such seller (ii) tracking number for each complaint lodged by the consumer (iii) information concerning return, refund, exchange, warranty and guarantee, delivery, shipment, modes of payment and grievance redressal mechanism (iv) information about payment methods including any fees or charges, procedure for cancellation of payment, charge back options and contact of payment service provider (v) explanation of ranking algorithms for products and services and its importance.

  • The entities are obligated to maintain a record of information and identification of all sellers who have repeatedly offered goods and services which have been previously removed under the Copyright Act 1957, Trade Marks Act, 1999 or Information Technology Act, 2000.

Duties of Sellers on Marketplace The Rules prescribe the following duties for the sellers:

  • The seller shall have a prior written contract with the e-commerce entity in order to sell its goods or services through such entity.

  • The seller shall ensure that the advertisement of its goods or services is consistent with the actual product along with its characteristics and usage and the seller shall not falsely represent itself as a consumer and post reviews about its goods and services.

  • The sellers cannot refuse to take back goods or services purchased or agreed to be purchased or refuse to refund payment if the goods or services are defective, deficient or do not conform to the advertisement or are delivered later than the stated delivery schedule.

  • The seller shall provide its information for display on the e-commerce entity including total price along with break up showing all charges, taxes and fees, mandatory notices under relevant law, expiry dates, all relevant details of the product including country of origin of the product, details of importer (if imported), guarantees and warranties, delivery and shipment details.

Duties and liabilities of inventory e-commerce entities The Rules prescribe the following duties and liabilities for the inventory e-commerce entities:

  • The inventory e-commerce entities shall provide the following information displayed prominently to the consumers – (i) information concerning return, refund, exchange, warranty and guarantee, delivery and shipment, cost of return, mode of payment etc. (ii) mandatory notices required by law (iii) payment methods including any fees or charges, procedure for cancellation of payment, charge back options and contact of payment service provider (iv) price of good or service including breakup showing all charges, taxes and fees and (v) tracking number for each complaint made by a consumer.

  • The entity shall ensure that the advertisement is consistent with the actual product along with its characteristics and usage and shall not falsely represent itself as a consumer and post reviews about its goods and services.

  • The entity cannot refuse to take back goods or services purchased or agreed to be purchased or refuse to refund payment if the goods or services are defective, deficient or do not conform to the advertisement or are delivered later than the stated delivery schedule.

  • If the entity explicitly or implicitly vouches for the authenticity of goods and services sold by it or guarantees that the said goods and services are authentic, the entity shall bear the liability for action related to the authenticity of the goods or services.

Contravention In case the aforementioned provisions are violated by any of the concerned parties, the aggrieved person can approach the Central Consumer Protection Authority established under the Consumer Protection Act, 2019, which is empowered to penalize the defaulters. Conclusion The Rules provide much needed provisions to strengthen the protections afforded to the consumers against e-commerce entities, thereby catching up with the ever-evolving information technology industry. The Rules provide separate duties and obligations for each party involved in e-commerce transactions and categorises e-commerce entities into different groups depending upon its mode of business i.e. inventory e-commerce entity and marketplace e-commerce entity. The provisions for separate duties and obligations are comprehensive and provide an effective mechanism for disclosure of relevant information which aids the consumer in making an informed decision concerning their purchases. Further, the Rules provide that each e-commerce entity shall provide for a grievance redressal mechanism along with a separate officer designated to redress consumer complaints. In addition to this, the Rules require payment service providers and sellers to provide their contact details to the consumers. These provisions strengthen the grievance redressal system for the consumers and provide an effective remedy for complaints. Lastly, the consumer has been provided with a remedy to approach the Central Consumer Protection Authority with complaints against the aforementioned parties involved in e-commerce transactions and the authority is well empowered to penalize the defaulters.

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