The Government of India has recently unveiled the draft of the E-Commerce Guidelines for Consumer Protection, 2019, seeking inputs from stakeholders. The Ministry has given time until September 16, 2019 for the stakeholders to provide their suggestions, and to understand the applicability of the Guidelines in general.
The two-fold objective of the Guidelines is:
to ensure maximum consumer protection by checking fraud and unfair trade practices; and to protect the legitimate rights and interests of the consumers.
The prime highlight of the Guidelines is the priority given to the interests of the customers transacting online. The guidelines consist of six sections in all, starting from definitions, general conditions for carrying out e-Commerce activities, liabilities of e-Commerce entities and sellers, and customer’s grievance redressal procedure.
Applicability of the Guidelines
The guidelines are applicable to every “E-Commerce entity” which is defined as “a company incorporated under the Companies Act, 1956 or the Companies Act, 2013 or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in Section 2 (v) (iii) of 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; provided that “e-Commerce Entity” does not include any entity or business notified otherwise by the Government for the said purpose from time to time. The Guidelines are applicable to all Business-to-Customer (B2C) E-commerce websites operating in India like Flipkart, Amazon, Paytm Mall, Myntra, Jabong, Ajio and others. They are to abide by the Guidelines within 90 days from the date of publication in the Official Gazette. There are speculations that the guidelines would also be applicable to online food delivery apps like Swiggy, Uber Eats, Zomato, etc. and cab services like Uber and Ola.
The Guidelines apply to consumers as defined under the Consumer Protection Act, 1986. They also apply to sellers who intend to sell their products on ecommerce platforms.
Protection of Consumer Interests
The consumers have been given prime importance under the Guidelines. They require e-commerce entities to display the terms of a contract between the entity and the seller and clarify the conditions relating to sale, return, exchange, delivery, guarantee, and mode of payment for the product so that the consumers are not left guessing. Also, every detail relating to the seller including the legal identity, business name, principal geographical address and how they can be contacted over phone or e-mail has to be clearly displayed on the e-commerce portal for the benefit of consumers.
Obligation of sellers
A seller intending to sell any of his products on an e-Commerce website is required to have a prior written contract with the e-Commerce entity to solicit such sale, and crucial information pertaining to such contract must be disclosed as per the law. Also, the business entity is required to be registered as a legal entity in India or abroad. The seller is required to display the breakup of the price of the goods inclusive of all the compulsory charges like delivery, postage, taxes and conveyance charges. Furthermore, the seller must comply with the mandatory display requirements as per Legal Metrology (Amendment) Rules, 2017 for goods that are pre-packed. The seller is also mandated under the guidelines to provide reasonable delivery time or shipping policy. The seller must also take full responsibility for any warranty or guarantee granted by it.
Guidelines Relating to Defective and/or Deficient Products/Services and take down policies
The Guidelines specifically mention under Section 4 that any e-commerce entity could be held for contributory or secondary liability if it assures authenticity of any goods sold on the marketplace. Also, the e-Commerce entity must accept return of products on grounds of reaching a consumer beyond the expected delivery time or if the product is damaged, defective, wrong or different from what is shown on the website. The entity is also bound to effect payment for refund cases within a maximum period of 14 days. Further, if the e-commerce entity is notified by a consumer or comes to know by itself that any counterfeit product is being sold on its platform and after notifying the seller, if the seller is unable to provide relevant evidence to deny that, the ecommerce entity is required to take down such listing and notify the consumer of the same.
Obligations of E-Commerce businesses following Inventory Models
Inventory based model of e-Commerce means an e-Commerce activity where inventory of goods and services is owned by e-Commerce entity and is sold to the consumers directly as defined in Section 2 (g) of the Guidelines. The e-Commerce entities are strictly forbidden to falsely represent themselves as consumers or write reviews on their websites regarding the quality of any goods or services in their name. They are also prohibited from practicing any unfair trade practices or deceptive measures for promoting the sale of any goods or services
Obligations of E-Commerce businesses following Marketplace models
Market place model of e-Commerce has been defined in the Guidelines under Section 2 (i). It means providing of an information technology platform by an e-Commerce entity on a digital & electronic network to act as a facilitator between buyer and seller. Marketplace ecommerce entities are required to perform background checks of sellers before permitting them to sell on the platform.
Under the Guidelines, Contractual transparency between the sellers and the e-Commerce marketplace has to be maintained. Key aspects of contracts like refund, return, warranties and guarantees, delivery and shipment, etc. along with complete details of the seller are to be displayed on the marketplace. If the e-Commerce marketplace claims authenticity of any product sold by a third-party seller on its website, the marketplace could be held liable in case of dispute. Also, the marketplace is not allowed to influence the price of any product sold on its website, directly or indirectly. Also, ecommerce marketplaces are required to promptly take down counterfeit products on receiving reports.
The privacy of the customers has been given utmost importance under the Guidelines. The e-Commerce entities have to protect the data of the customers that identify them personally. The collection, usage or storage of any kind of personal data of a consumer must be done only in accordance with the provisions of the Information Technology Act.
Safe Payment Methods
As per the Guidelines, any kind of payment facilitated by the e-Commerce website must be in accordance with the RBI Guidelines. It is the responsibility of the e-Commerce entity to provide clear information pertaining to the payment methods available to the consumer, whether they are safe or come with any additional costs and how to use them or charge-back options under them.
Consumer Grievance and Redressal
The Guidelines provide a definite procedure for redressing customer complaints by e-Commerce entities. Every e-commerce website is required to take measures to ensure speedy redressal of customer grievances. Every ecommerce entity has to publish the name of the Grievance Officer with contact details and the mechanism by which users can notify their complaints about the products. The time period given to the Grievance officer to hear and redress the complaint is one month from the date of the receipt of the complaint. Consumers should be able to register their complaints over phone, email or website and they should be given a complaint number for tracking the complaint.
As per the Guidelines, customers should be provided with a transparent and effective consumer protection mechanism just like in any other kind of commerce. Also, the Guidelines provide that the consumer protection mechanism/system could be merged with National Consumer Helpline for grievance redressal.
Author: Anusmita Mazumder
This Intellectual Property News update is brought to you by the eCommerce Law and Consulting/Strategy Divisions of BananaIP Counsels, a Top IP Services Firm in India.
Over the last decade, BananaIP’s team of highly qualified and experienced IP/Patent attorneys have helped several e-Commerce, aggregators, marketplaces and content distributors, in India and across the world protect and utilize IP/Patents for business benefit.
If you require any IP assistance, then you may contact us at [email protected].