The Consumer Protection Act, 2019, to promote, protect and enforce consumer rights took effect on Monday, and the Consumer Protection (E-Commerce) Rules, 2020, under the Act to make online retailers more accountable.
The e-commerce rules will apply to all electronic retailers offering goods and services to Indian consumers, whether registered in India or overseas, Union minister Ram Vilas Paswan said in a video-conference on Monday. E-commerce entities that do not comply will face penal action, the minister added.
The new law establishes the Central Consumer Protection Authority (CCPA), besides consumer protection councils, consumer disputes redressal commissions and allows mediation, apart from mandating product liability and punishment for manufacture or sale of products containing adulterated or spurious goods. The CCPA will be assisted by a director general of investigation as is the case of the Competition Commission of India (CCI).
The e-commerce rules will be notified before the end of this week, a consumer affairs ministry official said. The rules cover marketplaces working as aggregators, and inventory-led models where the retailer owns the stocks.
“What we have visualized in the e-commerce rules is the details they should provide on the sellers, mandatory consumer redressal contacts, and have clear-cut agreements with the sellers so that the e-commerce entity also takes responsibility for consumers, who make payments in that gateway against goods displayed on that platform," the official said on condition of anonymity.
Rules on direct selling will, however, take some more time.
E-tailers must compulsorily display details about return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism, and any other similar information that may be required by consumers to make informed decisions. Consumers will also be informed about seller details.
Companies are also not allowed to “manipulate the price" of goods and services offered on their platforms to gain unreasonable profit or discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Act.
“The clause on manipulation of price by e-commerce companies appears irrelevant since the earlier argument on capital dumping was that most times, these companies wanted to reduce the price to enhance sales volume. For a country with a market size of around $25 billion, the guidelines should take a deeper view of the e-commerce ecosystem, covering all prevailing business models between consumers, marketplaces and sellers," said Sreedhar Prasad, internet business expert and former partner at KPMG.
The clause on differential treatment of sellers is an interesting one, considering that many e-commerce companies have investments in brands or exclusive sellers, which they would be providing differentiated services, primarily marketing support, Prasad added.
“We hope to see compliance of the Act by e-commerce marketplaces in entirety," said Kush Agarwal, a member of the All India Online Vendors Association. He added that while implementation is possible, there will be some hiccups in certain aspects, including displaying all details and appointment of a grievance officer.
E-commerce companies must also compulsorily display ‘country of origin’ on their products. While larger firms can comply with many of the new guidelines, smaller e-tailers may find some of them challenging.
Abhishek Rajan, chief operating officer of Paytm Mall, said, “Paytm Mall does not charge anything from customer on returned products. We prominently display the seller details such as the name of the merchant, location, and whether they are brand-authorized or not. For the existing catalogue, we have already started getting all requisite information from the sellers and would complete the process in due course. For new products being listed on the platform, we will get it completed as soon as possible. After that this information will be part of standard-listing templates. We do have an undertaking with the sellers that makes it mandatory for them to provide accurate and complete product information and should not be in violation of any legal provision."
“There cannot be effective implementation of such guidelines without bringing a corresponding change in the IT Act and Rules. In a country where there’s no clarity on the definition of e-commerce and no centralized regulatory body to regulate foreign digital platforms, these rules make hardly any difference," said Virag Gupta, a Supreme Court lawyer.
Gireesh Chandra Prasad in Delhi and Tarush Bhalla in Bengaluru contributed to the story.