Consumer Protection E-Commerce Rules, 2020

This article was written by Kavya Lagali, a student 0f Gujrat National Law University. 

In the era of science and innovation, where almost everything is progressing towards digitalization, the realm of business and trade is not any exclusion. While it was usual for people to purchase and sell products and commodities through shops or outlets, the opportunity to shop online from the comfort of their homes and offices has become a boon to people with hectic schedule. Furthermore, since this practice takes place entirely on the virtual platform, where the transactional participants, such as buyers and sellers don’t get a chance to have an actual encounter or physically connect on the virtual marketplace, it poses a high risk of confronting Commercial deception and malpractice to the players involved in it. Therefore, as a move to regulate this arena and protect people from being defrauded, the government, last year, came up with a legislation called Consumer Protection (E-commerce) Rules, 2020, with an ultimate goal to secure the concerns of the consumers actively involved with electronic commerce by way of incorporating e-commerce organizations within the purview of consumer protection legislation.

And these rules were promulgated by the government[1] pursuant to its powers sanctioned under provision 101(1)(zg) of the Consumer Protection Act, 2019[2].

Proem: An overview

The new e-commerce regulation stipulates a sophisticated framework for the e-commerce entities to monitor and prohibit wrongful trade practices as well as deceptive marketing of retailers on their forum. It has also suggested the entities to keep a check on the vendors from manipulating the prices and advised them to institute an appropriate intrinsic control mechanism to resolve the grievances of the consumer.

Further to that, the act of consumer protection and the rules on e-commerce has explicitly mandated the e-commerce organization to not have any direct or indirect influence on the prices of commodities and services up for sale and rather ensure a fair competition environment for all vendors without any bias or prejudice towards any.[3] And prior to the enactment of legislation on consumer protection and the e-commerce rules, such constraints against e-commerce to not manipulate the purchase price of commodities or services and compulsion to secure a fair competitive field were limited only to those e-commerce organizations that had acquired capital from international sources. But now, as these limitations form a part of both the consumer protection legislation and e-commerce regulation, the government has made sure to initiate a uniform standard code to govern all e-commerce entities operating within India by eliminating all such discrepancies. [4]

Obligations that are prescribed for the e-commerce entities:

The new E-commerce rules of 2020 outlines some obligations that the E-commerce businesses are required to conform with. And those obligations are as follows:

1. The e-commerce rules has obligated all the E-commerce organizations to furnish certain personal data and information about their organization and officers on their official forum or portal:

And the information that was mandated by the rules are:

• Registered official name of the E-commerce enterprise;
• Geographical location and address of the entity’s main office and its divisions’;
• the name of the company and the URL of the entity’s official website; and
• The e-commerce entities have been obligated to furnish contact information of their customer service and grievance officers such as e-mail id, fax number, landline number, and cell phone numbers.

2. As mandated by the rules, all E-commerce organizations must compulsorily establish a grievance redressal framework suitable to their institution and recruit a grievance redressal officer for solving grievances addressed to the organization by the consumers. And whereas the obligation of e-commerce entity is concerned, they have to make sure to furnish the details of their grievance redressal officer such as his name, contact information, along with the job position of such officer must be displayed on the organization’s official website. Consumer complaints must be acknowledged within 48 hours of receipt, and the grievance officer must resolve the issue within a month of its receipt.
3. Moreover, they are also mandated to recruit nodal officer, residing within the boundaries of country, to see to it that their e-commerce organization is functioning in compliance with the legislation of consumer protection and the regulation of E-commerce rules.
4. Whenever an e-commerce organization sells imported commodities and facilities to a particular customer, the rules have made it mandatory for the E-commerce entities to indicate and disclose the importer’s identity such as his name and contact information.
5. Under the E-commerce rules, all the e-commerce entities have been directed to restrain themselves from charging unduly high cancellation fees to their customers.
6. The consumer’s consent to shop or avail any commodity or service should not be recorded automatically by an E-commerce organization; instead it must be indicated through an action either explicitly and affirmatively.
7. The rules of e-commerce explicitly prohibit e-commerce organizations from altering and exploiting the purchase price of products and services to make disproportionate profits from their consumers.[5]

Obligations prescribed for Marketplace E-commerce entities

Specific conditions that were prescribed by e-commerce rules and required to be met by marketplace E-commerce businesses, are mentioned below:

• The e-commerce organization of a market place have to make sure that the descriptions, pictures, and perhaps other data regarding products or services on an e-commerce platform must be accurate and simply refer to the look, nature, performance, quality and other fundamental aspects of their commodity and service.
• As directed by the e-commerce rules, all the marketplace organizations are obligated to provide the appropriate information to consumers for them to make accurate inferences. – information concerning the sellers of products and services, such as the label of their enterprise, as to if registered or not, their location, customer support number, and any review or other consolidated feedback about these retailer, also the grievance officer is directed to allot a ticket number for every grievance so that the customer addressing the grievance can track its status – information about return, reimbursement, swapping of product, and guarantee.
• Also each market place business can include an explanation of any differing consideration it offers to items or services or dealers in the same section, if any, in its terms of service.[6]

Obligations prescribed for marketplace sellers:

• As per the new e-commerce rules of 2020, no vendor should portray oneself as a purchaser and submit false reviews of products and services, or of their characteristics or attributes.
• Moreover, no supplier is supposed to refuse to take any items back or retract or terminate services that were purchased or offered to buy or refuse to reimburse for the products or services sold by the seller if the commodities or services offered by the salesperson are flawed or fail to comply with any attributes or functions referred to on their online platform or if they are delivery is delayed and delivered at a time exceeding the expected time of delivery.[7]

Obligations and liabilities of Inventory e-commerce entities

As per the e-commerce rules, 2020, each inventory e-commerce organization are under an obligation to furnish the certain information as compelled by the rules and those requirements are as follows:

Authentic and veracious information regarding returns initiated by the customers, reimbursements made by the vendors, exchanges placed by the customers for the products, warranties and guarantees available to the purchased product, delivery of the product and its shipment, shipping costs that arises from return of the product, methods of payments, grievance redress mechanisms, mandatory notices and information required by applicable legislation, the total display of the single figure and the division price and token number allotted to each complaint so that the customer addressing can track the status of his grievance . Moreover, these e-commerce entities have been directed to refrain from displaying misleading ads and practicing deceptive marketing strategies to sell their products. Hence, the e-commerce rules has restricted these entities from advertising any content that is not consistent with the qualities and attributes of the product displayed.[8]

When an e-commerce inventory assures the genuineness of the commodities and services it sells, then any action[9] relating to the authenticity of the good or the service shall be liable appropriately.[10]

[1] Likhitha Agrawal, Analysis of consumer protection (e-commerce rules, 2020), IRALR, September 18, 2020 accessed July 27, 2021, ANALYSIS OF CONSUMER PROTECTION (E-COMMERCE) RULES, 2020 (iralr.in).

[2] The consumer protection (e-commerce) rules, 2020, Department of Consumer affairs, July 23, 2020, accessed July 27, 2021, E commerce rules.pdf (consumeraffairs.nic.in).

[3] Rule 4: Duties of E-commerce entities, consumer protection Act, accessed July 27, 2021, Rule 4: Duties of e-commerce entities (consumerprotection.in).

[4] Sarthak Sarin, Consumer Protection (e-commerce) rules: An Overview of Consumer protection (e-commerce rules), Inc42 media, November 1, 2020, accessed July 27, 2021, An Overview Of Consumer Protection (E-Commerce) Rules (inc42.com).

[5] Rule 4: Duties of E-commerce entities, Consumer Protection Act, accessed July 27, 2021, Rule 4: Duties of e-commerce entities (consumerprotection.in).

[6] Rule 5: Liabilities of marketplace e-commerce entities, Consumer protection Act, Accessed July 27, 2021, Rule 5: Liabilities of marketplace e-commerce entities (consumerprotection.in).

[7] Rule 6: Duties of Sellers on Market place, Consumer protection Act, accessed July 27, 2021, Rule 6: Duties of sellers on marketplace (consumerprotection.in).

[8] Rule 7: Duties and Liabilities of Inventory e-commerce entities, Consumer protection Act, accessed July 27, 2021, Rule 7: Duties and liabilities of inventory e-commerce entities (consumerprotection.in).

[9] Consumer protection (e-commerce) rules, 2020, Tax Guru, accessed July 27, 2021, Consumer-Protection-E-Commerce-Rules-2020.pdf (taxguru.in).

[10] The consumer protection e-commerce rules, 2020, Modaq, August 11, 2020, accessed July 27, 2021, Consumer Protection (E- Commerce) Rules, 2020 Comes Into Force – Consumer Protection – India (mondaq.com).