Insights
Proposed e-commerce guidelines
August 1, 2019The Ministry of Consumer Affairs, on 2 August 2019, released draft guidelines on e-commerce for preventing fraud, unfair trade practices and protecting consumer interests. The proposed guidelines are applicable to Business-to-Consumer (B2C) e-commerce, of goods, services and digital content products. These guidelines define an e-commerce entity as a company incorporated under the Companies Act 2013 or a foreign company u/s 2(42) thereof, or an office, branch or agency in India that is owned or controlled by a person resident outside India and includes an electronic service provider or partnership or proprietary firm, whether inventory or market place model or both, conducting the e-commerce business.
The guidelines provide for the following key provisions:
General conditions
Within 90 days of the notification of the guidelines, e-commerce entities must comply with certain conditions, including, registration as a legal entity under Indian law, submission of a self-declaration to the Department of Consumer Affairs stating that it is in compliance with these guidelines, the promoter or KMP should not have been convicted of any criminal offence in the last five years, compliance with IT (Intermediaries guidelines) Rules 2011, payments for sale must be facilitated in conformity with RBI guidelines, display of details of sellers on its website.
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Specific conditions
E-commerce entities shall not
- Directly or indirectly influence the price of goods;
- Adopt any unfair trade practice that influence decisions of consumers;
- Misrepresent or exaggerate quality or features of the goods and services
E-commerce entities shall
- display terms of contract between the e-commerce entity and 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;
- mention safety and health care information of the goods and service advertised for sale;
- ensure that personally identifiable information of customers are protected and that such data collection, storage and use complies with provisions of the Information Technology (Amendment) Act, 2008;
- 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;
- accept return of goods if delivered late from the stated delivery schedule or delivery of defective, wrong or spurious products and not of the characteristics/features as advertised;
- provide information on available payment methods;
- effect all payments towards accepted refund requests of the customers within a period of maximum of 14 days;
notify the seller, if it is informed by the consumer or comes to know by itself or through another source, about any counterfeit product being sold on its platform. If the seller is unable to provide any evidence that the product is genuine, it shall take down the listing and notify the consumers of the same; - be held guilty of contributory or secondary liability if it makes an assurance vouching for the authenticity of the goods sold on its market place – or if it guarantees that goods are authentic
Liabilities of sellers
Sellers transacting or advertising their products on an e-commerce platform are, inter alia, required to have a prior written contract with the said platform in order to undertake or solicit sale or offer. Additionally, they should:
- provide all information required to be provided either by law or by any other mandatory regime for disclosing contractual information and compliance with that regime will be treated as sufficient;
- display single-figure total and break up price for the goods or service, that includes all compulsory charges such as delivery, postage, taxes and handling and conveyance charges;
- comply with mandatory display requirements as per Legal Metrology (amendment) rules 2017 for pre-packaged commodities;
- provide mandatory safety and health care warnings and shelf life that a consumer would get at any physical point of sale;
- provide fair and reasonable, delivery terms, or directly reference the shipping policy;
- be responsible for any warranty/guarantee obligation of goods and services sold;
- be upfront about how exchange, returns and refund process works and who bears the costs of return shipping
Consumer grievance redress procedure
E-commerce entities must provide transparent and effective consumer protection at par with that provided by other forms of commerce. They must publish the name and details of the Grievance Officer on its website to whom complaints may be notified. This officer should redress complaints regarding products availed through the entity’s website within one month of receipt of complaint. Consumers should also be provided the facility to lodge/register complaints over phone, email or website, for which they be given a tracking number. A mechanism/system to converge this process with the National Consumer Helpline must also be provided.
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SAM & Co comment
This move comes shortly after the Department of Industrial policy and Promotion (now Department for promotion of Industry and Internal Trade) revised its norms for foreign direct investment in e-commerce by way of Press Note 2 of 2018, which came into effect from 1 February 2019, and is indicative of the broader regulatory overhaul for e-commerce entities in India. Given that e-commerce is set to grow substantially, owing to rising disposable incomes, rapid urbanization, and the increasing adoption and penetration of technology, this is a welcome move to enhance consumer protection.
