To protect consumers from online fraud, the Ministry of Consumer Affairs has introduced draft Consumer Protection (E-Commerce) Rules, 2019 (Rules) to regulate e-commerce platforms operating in India. The Ministry published the draft Rules to obtain stakeholder feedback with the aim of notifying them under the amended Consumer Protection Act, 2019. The Rules propose to regulate price manipulation and quality control by e-commerce entities, inter alia requiring them to adhere to a strict set of guidelines to enable consumers to make informed decisions on purchases, prevent fraudulent transactions and unfair and deceptive trade practices, control sale of counterfeits.
Some of the highlights of the Rules include:
- E-Commerce entities (“Entities”) entitled to conduct e-commerce business in India must:
- be registered under Indian laws and must certify compliance with the proposed Rules;
- not be promoted or managed by (which includes all key members of the management team) anyone convicted of a criminal offense carrying a punishment of 5 years by any Court of competent jurisdiction. This applies globally and is not restricted to India;
- comply with the provisions of IT(Intermediaries Guidelines) Rules, 2011;
- must confirm to Reserve Bank of India (RBI) guidelines for payment facilities.
- Entities must ensure a level playing field by refraining from influencing the price of goods/services sold through their portals. This provision aims to maintain some parity between brick and mortar stores and e-commerce platforms whilst also ensuring that smaller players are not adversely affected through predatory pricing and deep discounting.
- They may not adopt unfair or deceptive practises to influence consumer decisions, which includes false or exaggerated consumer reviews, product features, etc.
- Entities must provide details in a clear and transparent manner about sellers on their platforms, including their legal name, principle geographic address, contact details, name of their website, products sold, etc.
- In addition, Entities must display the terms of the contract with the seller relating to return, refund, exchange, warranty, guarantee, delivery, shipment, mode of payments, grievance redressal mechanism, etc. to enable consumers to make informed decisions.
- Entities also have to ensure:
- there is no false or misleading advertising regarding product characteristics;
- other relevant details including health and safety information, payment methods and security of the methods, shelf life of the product, breakup of price including all charges is clearly mentioned;
- personally identifiable information of consumers is protected and stored/used in compliance with Indian law.
- Entities must unconditionally accept return of goods that are delivered late or in a defective condition, which includes counterfeit and wrongly advertised products, providing refunds within 14 days.
- They must act against counterfeit products sold on their platforms, taking down listings that they believe to be fake.
- Entities must set up a grievance redressal mechanism to redress consumer complaints within one month.
To ensure enhanced protection the Rules also require Sellers on e-commerce platforms to independently comply with certain requirements such as :
- Entering into a written contract with Entities before soliciting sales on their platforms;
- Ensuring all legally mandated information relating to sales such as unit price, taxes, fees, delivery charges, display requirements under Legal Metrology Rules, etc. are provided;
- Providing fair and reasonable delivery terms;
- Being responsible for warranty obligations of the products/services sold.
The proposed Rules promise to protect customers against misuse and misrepresentation on ecommerce platforms by subjecting e-commerce entities and vendors to clearly defined standards and rules. The final Rules are expected to be notified under the Consumer Protection Act, 2019 after feedback and possible amendments from industry and stakeholders.