E-Commerce Guidelines for Consumer Protection, 2019: An Attempt to Reign the E-Commerce Sector

Posted On - 30 September, 2019 • By - Sindhuja Kashyap

The Department
of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution,
on August 02, 2019[1] have issued
the e-commerce guidelines  for consumer
protection, 2019 (“Guidelines”) in
order to safeguard the interest of the consumers. The Guidelines are open for
views or comments from stakeholders and the deadline for such comments has, on
September 16, 2019, been extended from September 16, 2019 to October 31, 2019.[2] The
Guidelines are only applicable to Business-to-Customer e-commerce entities. The
Guidelines are also applicable to all B2C e-commerce entities involved in
digital content products.

Key Highlights

In this article, we shall
discuss the salient features of the Guidelines as follows:

  • E-commerce entity

The e-commerce entity has been defined as a company
or a foreign company, as defined in the Companies Act, 2013/1956 or an office,
branch or agency as covered under FEMA 1999, owned or controlled by a person,
resident outside India and includes an electronic service provider or a
partnership or proprietary firm, whether inventory or market place model or
both and conducting the e-commerce business.  

  • General conditions for carrying out an e-commerce
    business

All e-commerce entities carrying
out or intending to carry out e-commerce business in India shall have to be a
registered legal entity and shall be required to comply with the conditions
mentioned in the Guidelines within 90 days. Further, the entities are required
to submit a self-declaration confirming compliance of the Guidelines to the
department. The Guidelines mandates that no e-commerce entity shall have a
promoter of key managerial personnel who has been convicted of any criminal
offence, punishable with imprisonment in the last 5 years by any Court of
competent jurisdiction. Further, it is mandatory for the e-commerce entities to
comply with the provisions of the Information Technology (Intermediaries
guidelines) Rules, 2011 and in case of facilitation of any payments for sale,
guidelines of Reserve Bank of India shall be complied with. All details about
the sellers supplying the goods and services on an e-commerce platform
(including identity of their business, legal name, principal geographic
address, name of website, contact details, the products they sell) shall be
displayed by an e-commerce entity on their website.

  • Activities not to be undertaken by the
    e-commerce entity

The e-commerce entity shall
not indulge in any unfair trade practice that may influence the transactional
decisions of consumers in relation to products and services or influence the
price of the goods and services. Further, the e-commerce entity shall not be
indulged in falsely representing the customers or posting false reviews on
their behalf. The quality or features of the goods and services shall at no
point be exaggerated or misrepresented to the customers by the e-commerce
entity.

  • Liabilities of the e-commerce entity
    • Informed Choice: An e-commerce entity shall have an
      obligation to display all the terms relating to refund, exchange,
      warranty/guarantee, delivery and shipment etc. and such other information as
      may be required to enable a customer to make informed decisions. Further, all
      safety and health care information of the goods and services are always
      required to be duly advertised for sale.
    • No deception: An e-commerce entity shall ensure the
      images or information as displayed in the advertisement are always consistent
      with the actual goods or services and its features.
    • Payment Security: An e-commerce entity shall ensure that
      adequate information is provided regarding the methods of payment available and
      the security of the same, information regarding cancellations, refund, charge
      back options and any additional costs if applicable shall also be made
      available on the website.
  • Personal Data: An e-commerce entity shall have the
    duty to safeguard and protect all personal data of the customers and shall
    ensure compliance of the Information Technology (Amendment) Act, 2008.
  • Return of Product: An e-commerce entity shall not deny
    any return of goods if the return is being made due to delay in delivery,
    delivery of defective or spurious or wrong products and or deception from the
    product received with the advertisement. Further, all payments towards any
    accepted requests for refund shall be made no later than 14 days from the date
    of acceptance of such a refund request.
  • Counterfeit Product: An e-commerce entity, upon receiving
    information either directly or indirectly, about any counterfeit product being
    sold on its platform, shall satisfy itself of the legitimacy of the
    information. Post due diligence, the e-commerce entity shall notify the seller
    and in the absence of any evidence of the genuineness of the product by the
    seller, it shall delist the product from its platform and notify its customers
    accordingly.
  • Contributory Liability: E-commerce shall have the liability of
    all the products being sold on its platform that it assures or guarantees to be
    authentic and shall be guilty of contributory or secondary liability if such
    assurance or guarantee is found untrue or false.
  • Liabilities of Sellers

Any seller selling or
advertising its product or services on an e-commerce platform shall have the
following liabilities:

  • To have a written contract with the
    e-commerce entity prior to such sale or advertisement.

    • To provide all information regarding
      the contract with the e-commerce entity as required either by law or by any
      other similar regime;
    • To provide both single figure total and
      also a break-up price for the goods or services being sold. Such a display of
      charges shall include an express display of all compulsory charges such as
      delivery, postage, taxes and handling and conveyance charge.
    • To ensure compliance with Legal
      Metrology (amendment) Rules 2017 for pre-packaged commodities;
    • To ensure that each consumer shall be
      mandatorily provided with the safety and health care warnings of the goods or
      services and also the shelf life of any product being provided at any physical
      point of sale. Further, the seller shall also be mandatorily required to
      provide the shipping and delivery policies for the customers.
    • The seller shall at all times be
      responsible for all and any warranty/guarantee obligations with regard to the
      products/services being sold.
    • The Seller shall ensure that there is
      clarity between itself and e-commerce entity, on the process of exchange,
      returns and refunds of goods and the cost incurred therein.
  • Consumer grievance redress procedure

The Guidelines mandates
that every e-commerce entity shall mandatorily publish on its website the name
and contact details of the Grievance Officer. Further a clear mechanism is
required to be stipulated on the website regarding the complaints and their redressal.
The Guidelines mandates redressal of the complaint within one month from the
date of receipt of such complaint by the Grievance Officer. An e-commerce
entity shall ensure that the consumers are provided with the facility to get
their complaints by various methods such as vide email, over the phone or on the
website. Each complaint shall have a unique complaint number and the same shall
be provided to the respective customer for the purpose of tracking the status
of their complaint. Guidelines state that the consumers shall be provided with
transparent and effective consumer protection that is not less than the level
of protection offered in other forms of commerce. Such a statement is vague and
subject to varied interpretations by various entities, thereby increasing the
probability of its misuse. Further, each e-commerce entity is required to
provide a mechanism or system wherein any grievance redress mechanism shall be
permitted to be converged with National Consumer Helpline.

Conclusion

The Guidelines seem to be in clear compliance with Rule 11 of
Information Technology (Intermediaries Guidelines) Rules, 2011 (“Intermediary
Guidelines”). While the Intermediary Guidelines fail to provide a time
limit for redressal of a complaint and tracking of the status of each
complaint, the Guidelines have taken a step ahead to ease the process for the
consumers. These Guidelines once approved is likely to become part of rules to
the Consumer Protection Act, 2019, thereby having better enforceability in the
court of law.
While there already existed various similar governing laws for brick
and mortar stores, new guidelines repeating the same could have been avoided by
making adequate changes to the already existing law. However, it would be
interesting to see how soon the Guidelines sees the light of the day and
interpretation of the same by varied e-commerce entities.

Contributed By – Sindhuja Kashyap
Designation – Associate

King Stubb & Kasiva,
Advocates & Attorneys

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