August 13, 2020

CONSUMER PROTECTION (E-COMMERCE) RULES, 2020: IS THE UNRULY HORSE BEING TAMED?

Sumit Gupta*

INTRODUCTION

The government across jurisdictions have always maintained a delicate balance between the competing interest of consumers and the dynamics of the market. True to its nature, markets have undoubtedly been inclined towards profit maximization while customers have always exploited the scant margin of competition in the market. The internet revolution has opened a new avenue of business through e-commerce. The Organization for Economic Cooperation and Development (OECD) has defined e-commerce as “a new way of conducting business over networks which uses non-proprietary protocols that are established through an open standard-setting process such as the Internet.” The rapid popularity and acceptance of e-commerce have brought a paradigm shift in the realm of marketing and trading in India. In India, e-commerce has already spawned thousands of entrepreneurs, thus encompassing a more comprehensive range of goods and services. The advent of e-commerce has posed new challenges regarding the applicability of traditional law, thus entrusting a heavy responsibility on the legislature to tread cautiously via framing rule to regulate e-commerce. The challenges included unfair trade practices, the validity of e-contracts, jurisdiction in disputes, privacy concerns, pricing regulations etc. Albeit, the e-commerce platform tried to resolve the grievances of the customers, but the need was felt to streamline the functioning of the same. As e-commerce gained enormous popularity, it was pertinent to the government to revamp the consumer protection law to safeguard the interest of consumers. Besides, a vibrant and effective regulatory mechanism was crucial for the success of e-commerce in India.  Intending to streamline the law surrounding e-commerce, the Central government notified the Consumer Protection (E-commerce) Rules, 2020.

CONSUMER PROTECTION (E-COMMERCE) RULES, 2020

The 2020 rules provide an exhaustive list of stakeholders encompassing e-commerce entities, sellers, e-commerce inventories and marketplace e-commerce entity. This rule made some sweeping changes by enlarging the applicability to goods and services bought or sold over the digital or electronic network including digital products, all models of e-commerce which include inventory e-commerce business, e-commerce retail sector and any form of unfair trade practices happening in all the models of e-commerce. A cursory glance of the rule would amply demonstrate that the interest of the consumers has been kept at a higher pedestal.

The rule makes it mandatory for e-commerce platforms to display the total price of goods/services offered for sale, which will also include a proper break-up of other charge levied by these entities. They are also obligated to mention expiry date, country of origin et al. to enable the consumer to make an informed decision before buying any product.

Further, this rule has defined a clear-cut definition of all the relevant entities related to e-commerce. This act has also delineated the duties and liabilities of each entity involved in the e-commerce transaction. In the following section, the author is going to outline the duties of each entity involved in the e-commerce transaction.

The primary issue faced by the consumer revolved around the poor redressal mechanism provided by these entities. The new rule has made an obligation on these entities to appoint grievance officer exclusively made to deal with the complaint of the consumer. In addition, the particulars of that officer would be displayed at the appropriate site. Further, every e-commerce would be obligated to appoint one nodal person to ensure the compliance of entity conforming with the provision of this rule. The rule also took note of the issue such as arbitrary cancellation charge levied on the customer if the order is cancelled. This rule mandate that these entities are not allowed to levy the cancellation charge from the customers unless the e-commerce entity also undertakes to bear similar charges if it unilaterally cancels the order placed by the customer for any reason whatsoever.

The issue of consent has often been a point of contention in transaction related to e-commerce. The rule has made it explicitly clear that the consent of the customer would only be recorded if the consent arising therein is explicit and affirmative. The rule has forbidden the entities to record an automatic consent, the practice which has been followed by these entities since the beginning. The issue of quality and the matching of the good displayed on these platforms has also been a bone of contention between e-commerce entities and the consumer. Towards the same, market e-commerce has been obligated to secure an undertaking from the seller regarding the correct description and image of the goods.

Interestingly, this rule has also made contact between the consumer and the seller much more direct than the previous position. Earlier, e-commerce acted as a bridge between the sellers and the consumers and these entities did not share information regarding the seller to the consumer. But from now onwards, the e-commerce entities are bound, upon a request made by the consumer in this regard, to disclose the detail of the seller for better dispute resolution mechanism.

There has been an existing dispute between the seller and the consumer regarding the return of good and subsequent refunding. Earlier, the consumers were forced to accept the replacement for defective good and was not able to return and process the refund procedure. The new rule maps out this dispute and clearly established that the sellers cannot refuse to refund the consideration in case the goods or services turn out to be defective, do not match with the correspondent item on an e-commerce platform or the delivery got delayed. The seller is also bound to appoint a consumer grievance officer in order to redress complaints clearly and effectively.

Similarly, the rules also delineated the duties and obligation of inventory e-commerce entities align with the requirement mentioned for sellers and marketplace e-commerce entities.

CONCLUSION

This rule clearly strikes a delicate balance between the obligations of the marketplace e-commerce entities and sellers on the platform. Every player of e-commerce has been entrusted with the responsibilities to follow the set rules and liabilities while conducting business on an e-commerce platform. The legislature also ensured mandatory compliance by providing that any contravention of the provision of Rules would attract the provision of the Consumer Protection Act, 2019.

A perusal of the Rules makes it abundantly clear that the legislature has, indeed, walked that extra mile to cover every aspect of e-commerce entity. However, there has been conspicuous absent of limited liability partnership from the definition of e-commerce entities enumerated in the rule. This might leave a grey area as to whether an e-commerce business can be conducted by a limited liability partnership which is entirely owned and controlled by Indian residents. This question needs further elaboration either by the judiciary or by the legislature.

Nonetheless, the rule provided a minimal scope for ambiguities arising and the consumer have been entrusted with the abundance of information, thus enabling them to make an informed decision. This resurrection of the Consumer Protection Act blended with Consumer Protection (e-commerce) Rules, 2020 has set the tone for a more robust and vibrant framework for e-commerce sector in India.

It is against these contexts; it is pertinent to have a close look on how the application of this rule pans out for e-commerce sector in India and consequently how the judiciary interprets the provisions of this rule.

 

(Sumit Gupta is a student of NUJS, Kolkata. Views expressed here are personal)