6 August 2020

     THE CONSUMER PROTECTION (E-COMMERCE) RULES, 2020 

The Government of India recently notified the provisions of the Consumer Protection (E-Commerce) Rules, 2020 (E-Commerce Rules) under the Consumer Protection Act, 2019 (Act) from 24 July 2020. This update summarizes and analyses the E-Commerce Rules which lists down the scope, duties and liabilities of the e-commerce entities.

SCOPE AND APPLICABILITY OF THE E-COMMERCE RULES

• The E-commerce Rules shall apply to all goods and services bought or sold over digital or electronic network including digital products, 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.
  
  
• These E- Commerce Rules shall apply to an e-commerce entity which is not established in India, but systematically offers goods or services to consumers in India.
  
  
• The E-Commerce Rules now provide for several key definitions to understand the applicability of the E-commerce Rules. Key definitions are as follows:
  
  ``e-commerce entity`` defined as any person who owns, operates, or manages digital or electronic facility or platform for e-commerce;
  
  ``inventory e-commerce entity`` which is an e-commerce entity which owns the inventory of goods or services and sells such goods or services directly to the consumers; and
  
  ``marketplace e-commerce entity`` which is defined to mean an e-commerce entity which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.
  

DUTIES OF E-COMMERCE ENTITIES

• An e-commerce entity shall be incorporated as a company under the Companies Act, 1956 or the Companies Act, 2013, or an office, branch, or agency outside India which is owned or controlled by persons resident in India.
  
  
• This entity shall 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 or the rules there-under.
  
  
• Every e-commerce entity shall disclose on its platform all the information about themselves, including their legal name, location of offices, details of website, and contact details of customer care and a grievance officer; and location from where goods are imported, the details of the importer or the seller.
  
  
• No e-commerce entity shall adopt any unfair trade practice.
  
  
• Every e-commerce entity shall establish an adequate grievance redressal mechanism and shall ensure that the grievance officer acknowledges the receipt of any consumer complaint within forty-eight hours and redresses the complaint within one month from the date of receipt of the complaint.
  
  
• No e-commerce entity shall impose cancellation charges on consumers cancelling after confirming purchase unless similar charges are also borne by the e-commerce entityif they cancel the purchase order unilaterally for any reason.
  
  
• Every e-commerce entity shall only record the consent of a consumer for the purchase of any good or service offered on its platform where such consent is expressed through an explicit and affirmative action, and no such entity shall record such consent automatically, including in the form of pre-ticked checkboxes.
  
  
• No e-commerce entity shall manipulate the price of the goods or services offered on its platform or discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Consumer Protection Act.
  

LIABILITIES OF MARKETPLACE E-COMMERECE ENTITIES

• E-Commerce Rules recognizes that marketplace e-commerce entities may seek benefit of being regarded as an intermediary by complying with the Information Technology (Intermediary Guidelines) Rules, 2011. Accordingly, the marketplace e-commerce entities are now required to disclose on their platforms i.e. (a) details of sellers; (b) information relating to return;(c) refund, exchange, warranty and guarantee; (d delivery and shipment, payment methods, and grievance redressal mechanism; terms and conditions; details of the grievance officer; ensure that descriptions, images, and other content pertaining to goods or services on their platform is accurate and corresponds directly with the appearance, nature, quality, purpose and other general features of such good or service.
  
  
• Every marketplace e-commerce entity shall include in its terms and conditions generally governing its relationship with sellers on its platform, a description of any differentiated treatment which it gives or might give between goods or services or sellers of the same category.
  
  
• Every marketplace e-commerce entity shall take reasonable efforts 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:
  

DUTIES OF SELLERS ON MARKETPLACE

• Sellers offering goods and services through a marketplace e-commerce entity are required to, not to adopt unfair trade practices.
  
  
• Ensure that advertisements are consistent with the goods or service.
  
  
• There is no misrepresentation of facts or falsely post false reviews on the platform.
  
  
• No seller shall refuse to take back goods, or withdraw or discontinue services purchased or agreed to be purchased, or refuse to refund consideration, if paid, if such goods or services are defective, deficient or spurious, or if the goods or services are not of the characteristics or features as advertised or as agreed to, or if such goods or services are delivered late from the stated delivery schedule.
  
  
• Execute a written contract with the marketplace e-commerce entity; and
  
  
• Appoint a grievance officer and ensure that the grievance officer acknowledges the receipt of any consumer complaint and redresses within 1 month of the receipt of the complaint;
  

DUTIES AND LIABILITES OF INVENTORY E-COMMOERCE ENTITIES

• Shall disclose all the information related to return, refund, warranty and guarantee, all information about payment methods, all mandatory notices and information as required by applicable laws, grievance redressal and total price.
  
  
• Shall not falsely represent itself and post reviews about its goods and services.
  
  
• Ensure that all the advertisement are consistent with the goods and services
  

The provisions of Consumer Protection Act, 2019 shall apply for violation of the provisions of the E-commerce Rules.

MHCO Comment: The new norms empower the central government to act against unfair trade practices on e-commerce platforms. They require e-commerce entities to facilitate easy returns, address customer grievances and prevent discriminating against merchants on their platforms. These E-commerce Rules do, at instances, seem to address consumer issues and lay out wider guidelines which can be adopted for change in market practice and technology. Further it also imposes duties on the e-commerce entities and seller to set up a grievance redressal mechanism which will help the consumer to address their complaints.