Consumer Protection & E-Commerce

INTRODUCTION

“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work – he is the purpose of it. We are not doing him a favour by serving him. He is doing us a favour by giving us the opportunity to serve him.”

–Mahatma Gandhi

The advent of “Internet” has an effect on almost all the domains of human life. Marketing of goods and services is not an exception to it. Internet has given birth to e-commerce by enabling information technologies like, electronic data transfer and electronic money transfer that makes commercial transactions easily to be done online.

E-commerce takes place in a virtual online environment, where buyers and sellers do not contact face-to-face. Which involves increased competition and lower prices, more choice in products and services offered, and the convenience of shopping from sellers from around the world, not constrained by time and space. But the general expectations of e-consumer remain the same that the product he/she receives should be of the expected standard of quality and if it is found defective, then there should be a remedy for the same. In the system of e-commerce, gaining consumers’ faith is more challenging than in offline trade. As on the e-commerce platform buyers and sellers are not physically acquainted with each other. Mutual trust and faith depend upon how authentic information is as shared by the seller and the effectiveness of the transaction from both sides.

Consumer Protection

E-Commerce being global in nature, efforts are being made at the national and international level to ensure the protection of consumers in e-commerce. Consumer Protection means the protection of consumers from a variety of unfair trade practices and the rationale behind such protection is to avoid the exploitation of consumers. Generally, the established commercial entities are well organized with a well-dominating position in the market which allows them to easily exploit consumers. It was John F. Kennedy, the former President of United States of America, who for the first time laid down four basic rights of a consumer, while announcing the “Bill of Consumer Rights” in US Congress (1962), which includes: 1) Right to Safety, 2) Right to Information, 3) Right to Choose and 4) Right to be Heard. Later two more rights were added to the list, which are; Right to Redress and Right to Consumers’ Education.

In India, e-commerce is flourishing not only because it has access to the internet, but also because its business units have expanded to areas far from its geographic location and can conduct business from anywhere in the world. Obviously, the internet has provided powerful tools for consumers to access products and services online. E-commerce is not only a technology, but has become an indispensable part of doing business around the world. Despite its enormous growth, e-consumers also expects consumer protection standards and regulations to protect them from unfair trade practices and to address their concerns in e-commerce. Therefore, the Ministry of Consumer Affairs, Food and Public Distribution on July 23, 2020 notified the Consumer Protection (E-Commerce) Rules, 2020. The primary objective of these rules is to regulate the E-commerce sector in India and protect e-consumers from unfair trade practices on various online platforms.

Various Threats to an E-Consumer

Clearly, E-Commerce has become a very important part of everyone’s lives as it has made purchase and sell of goods easy for both consumers and retailers but at the same time it also poses threat to consumer as their basic rights like data privacy and interest at various e-commerce portal. Following are some benefits enjoyed by consumers and business houses on e-commerce platforms:

global access and greater choice
increased competitiveness and quality of service,
mass customization and personalized products and services,
elimination of intermediaries and product availability,
greater efficiency and lower financial costs,
new business opportunities and
new products and services, etc.

The following list includes some of the primary threats faced by e-consumers which shows that e-commerce is intimidating the risk of the violation of consumers’ basic rights in the conduct of e-commerce transactions:

Unfair trade practice and misleading advertisements.
Language barriers.
E-commerce offers made by anonymous traders.
Uncertainty of merchantability goods.
complicated refund policies.
Lack of clear and sufficient information regarding the identity of seller.
Non-fulfilment of returns or refund policies.
Long and tedious process of refund procedure.
Data security and online scam.
Identity theft and frauds.
Late or no delivery of goods or defective products without any exchange or refund policy.
Lack of consumer awareness of their rights and duties.
Absence of Cash on delivery system.
Fraudulent entities that take money without providing goods or service.
No- existence of customer care.
Protection of personal data or privacy.
Non-compliance with the legal provisions.

Consumer protection (e-commerce) Rules 2020

Prior to these rules, complaints related to e-commerce were majorly decided according to Consumer Protection Act 2019 along with various other legislations as there were no specific regulations concerned with the protection of e-consumers on various e-commerce platforms. The Consumer Protection (E-commerce) Rules, 2020 is an amalgamation of Consumer Protection Act 2019, Indian exchange control laws (IEC Regulations) and the Information Technology Act 2000, to ensure fair play in technology and data driven e-commerce world.

Salient Features Of The Rules 2020

The Consumer Protection (E-Commerce) Rules, 2020 has been brought to regulate all goods and services bought and sold over online platforms; all models of e-Commerce, including marketplace and inventory models of e-Commerce; all e-Commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats; and all forms of unfair trade practices across all models of e-Commerce. However, these rules do not apply to any activity of a natural person carried out in a personal capacity not being part of any professional or commercial activity undertaken on a regular or systematic basis. Furthermore, these rules also apply to an e-commerce organisation, which is not established in India, but systematically offers goods or services to consumers in India.

The Rules specify the duties of e-commerce entities, liabilities of marketplace e-commerce entities, duties of sellers on marketplace and duties and liabilities of inventory e-commerce entities. The Rules also clarify the distinct scope of responsibilities between the marketplace platform and the sellers on the marketplaces. This clarity will help in effective enforcement of the provisions mentioned in the Rules and creating a compatible business atmosphere. In order to understand the directive of the Rules, the salient features of these rules are as under:

Appointment of a nodal person:

Every e-commerce entity is to appoint a nodal person of contact or an alternate senior designated functionary who is resident in India, to ensure compliance with the provisions of the Act 2019 and the Rules 2020. Some e-commerce entities have already set up separate legal and compliance departments whose role is to ensure that there are no slippages in compliance under the applicable legislations.

Providing certain information:
- E-commerce entities are required to provide on its platform certain information like; legal name, main geographic address of its headquarters and of all branches; name and details of its website; and contact details like e-mail id, fax, landline and mobile numbers of customer care services and of the grievance officer.
- Marketplace e-Commerce entity is required to provide details about the sellers which should include the name of their business (whether registered or not), their geographic address, customer care number, ratings or other feedback about the seller.
- Both Marketplace and Inventory E-Commerce entities are required to make available information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal policies, available payment methods, the security of transactions, any fees or charges payable by users, the procedure to cancel regular payments under the mentioned payment methods, and the contact information of the payment service provider.
Grievance redressal mechanism:
- Every e-Commerce entity shall establish an adequate consumer grievance redressal mechanism and shall appoint a grievance officer for the same, and shall display its name, contact details, and designation of the officer on its platform.
- The grievance redressal officer is required to acknowledge the receipt of any consumer complaint within 48-hours and redress the complaint within one month from the date of receipt of the complaint.

• Cancellation charges: No E-Commerce entity shall levy cancellation charges on consumers for cancelling their order after confirming purchase unless similar charges are also borne by the e- Commerce entity, if they cancel the purchase order unilaterally for any reason.

• Recording consent of consumer: Every E-Commerce entity shall record the consent of a consumer through an explicit and affirmative action only, for the purchase of any good or service offered on their platform and not automatically, including in the form of pre-ticked checkboxes.

Timely refunds: Every E-Commerce entity is required to address all refund request within a ‘reasonable period of time’, which would not only differ from one e-commerce entity to another, it would also differ from a consumer to consumer and be driven by factors such as what was the mode of payment, the processing bank and the time period underlying the returns.
- No manipulation of price: No e-commerce entity shall manipulate prices to gain unreasonable profits. The primary objective behind this obligation is to ensure that a level playing field is maintained for all sellers and to prevent the use of unfair methods by e-commerce entities to influence the consumers to favour a particular seller
- Record of sellers: Every marketplace e-Commerce entity is required 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.
- Prohibition of fake reviews: These rules prohibit inventory e-Commerce entities and the sellers from posting fake customer reviews about their own goods or services, or misrepresenting their qualities or features.
- Advertisements for marketing of goods or services: Every inventory e-Commerce entity and seller on marketplace is required to 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.
- Importer/country of origin: Where an e-Commerce entity offers imported goods or services for sale, the name and details of the importer shall be mentioned. A seller on a marketplace shall provide all relevant details about the goods and services offered for sale including country of origin, which are necessary allowing the consumer to make an informed decision before purchasing the product.
- Return services: In case of defective or spurious goods, or deficient services, or goods/services not conforming to characteristics as advertised, or late delivery of the goods/services, no inventory e-Commerce entity shall refuse to take back such goods, or withdraw or discontinue such services or refuse to refund consideration, if paid.

Conclusion

Enforcement mechanism of the e-commerce should be such that the interest of the e-consumers could be protected beyond any doubt. If the Consumer Protection (E-Commerce) rules 2020 are implemented and enforced in its true spirit then only benefits of the e-commerce could be ensured in its full potential and the consumers of today electronic global world could be equipped with the protection at par with the conventional consumers.

References:

245^th report on the Consumer Protection (E-Commerce) Rules 2020 https://rajyasabha.nic.in/
https://consumeraffairs.nic.in/theconsumerprotection/consumer-protection-e-commerce-rules-2020
https://www.mondaq.com/
http://www.nlujlawreview.in/

This article is written by SAHEBA SHAMS, 1^st year student pursuing BA-LL.B from Osmania University, Hyderabad.