People are now quite familiar with Supreme Court’s stance on misleading advertisements and how they have penalised Patanjali for the same, time and again. However, there are many brands out there that follow such unethical ways to promote their brand.
To address these concerns, the Bureau of Indian Standards (BIS) has introduced a draft document titled “Draft Guidelines by the Bureau of Indian Standards: E-Commerce Principles for Self-Governance.” The objective is to establish a fair and ethical e-commerce ecosystem, benefiting consumers, sellers, and service providers alike.
Analysis Of The Draft Rules
The rules establish key principles and promote guidelines for self- governance of E-Commerce operations.
These guidelines divide key principles into three distinct phases: Pre-Transaction, Contract Formation, and Post-Transaction, as well as overarching general principles governing transparency, fairness, and compliance.
1. Pre-Transaction Principles
The pre-transaction phase reinforces seller verification, product listing, and disclosing critical information that the Consumer may require. E-commerce platforms must verify seller identities by collecting essential business details. Strict ‘Know Your Customer’ (KYC) procedures must be implemented to ensure credibility. Additionally, platforms must provide clear product listings, including price, terms of sale, and return policies.
2. Contract Formation Principles
Consumers shall be allowed to view and correct orders before a transaction is completed, with transparency regarding pricing, return policies, and charges. The invoice should also include itemized costs of products, and estimated delivery dates. Various payment options should also be offered, along with any applicable fees. In situations where there are periodic payments, consumers must be notified prior to such payment and give their explicit consent for any changes.
3. Post-Transaction Principles
The entire gamut of consumer protection shall extend to post-sale returns and refunds, including dispute resolution mechanisms and tracking the delivery. It should clearly stipulate timelines for returns and refunds, with a separate provision regarding counterfeit goods. An appropriate redressal system must be implemented, in conjunction with consumer protection laws. On the other hand, real-time delivery updates by SMS, e-mail, or tracking mechanisms strengthen consumer confidence within the e-commerce ecosystem.
The draft rules also note the best practices for ethical business operations such as prohibitions in sales, data privacy compliance, transparent business ethics, anti-counterfeiting, clear advertisements, and proper product representations. Additionally, reviewing by customers must be on the IS 19000:2022 standards to ensure genuineness without tampering.
Interplay With The Exsting Laws
The draft guidelines on e-commerce are therefore aimed at augmenting and enhancing the existing laws and guidelines, such as the Consumer Protection Act, 2019 and other regulations covering e-commerce as well as other digital transactions occurring in India. While the latter provides a broader framework for the rights of the consumer, mechanisms for redressal, protection against unfair trade practices, among others, BIS guidelines specify more concrete actionable measures that challenge the emerging contours of the marketplace in the electronic space.
For instance, the Consumer Protection Act requires that businesses provide safe, acceptable quality, and as described goods and services. On the other hand, the BIS Draft Guidelines require clear descriptions of products, proper labelling, and transparent seller information to aid consumers in their decision-making. The Act and the guidelines safeguard consumers from false advertising, but the guidelines provide additional obligations to e-commerce sites in the monitoring of seller action, ensuring there are clear terms of sale, and ease of dispute processes.
Effect On Advertisers
The guidelines will alter the e-commerce landscape for most advertisers. One positive fallout is that the rules will increasingly urge advertisers to exhibit more accountability and accuracy in their advertisement. With clear product representations in the limelight, advertisements will be truthful while not misleading consumers by any false or misleading claim. With the growth of unwelcome marketing, advertisers will need to be able to identify ads and ensure there is clear and explicit consent in all commercial communications.
On the flip side, advertisers are likely to have higher scrutiny and compliance costs for more detailed disclosures in advertisements as well as a more stringent authenticity check on promotional content claims. The prohibition on unfair trade practice rules may even limit some forms of aggressive advertisement strategies, causing brands to revise their marketing practices for products sold, especially when such practices helped create a false sense of urgency or manipulated the consumer’s sense of urgency for purchasing.
Pros & Cons Of The Draft Rules
The draft rules benefit the consumers to believe the genuineness of the sellers and the authenticity of the products sold through clear verification of sellers, transparent listings, and strong dispute resolution mechanisms. They ensure the consumer is fully informed and protected by detailed invoicing, multiple payment options, and clear return policies. These rules also encourage data privacy compliance and promote anti-counterfeiting measures, addressing prevalent concerns in the e-commerce space. However, the guidelines could also pose challenges, such as increased operational costs for e-commerce platforms due to the need for extensive KYC processes, periodic reviews of product listings, and infrastructure for dispute management. For instance, strict registration and verification requirements may be too cumbersome for smaller sellers to meet, thus hindering innovation or raising the entry barriers. Furthermore, although fairness is promoted, the rules may also result in higher regulatory burdens that slow down the pace at which businesses can adapt to changes in market dynamics. In a nutshell, while the guidelines try to create a more ethical and transparent ecosystem, their implementation might be resisted by smaller or less resourceful players in the market.
Conclusion
In conclusion, the BIS Draft Guidelines for e-commerce is a critical step toward an even more ethical, transparent, and accountable digital marketplace. By implementing principles that value consumer protection, accurate advertising, fair business practices, and increased data privacy, the guidelines try to create a space where both consumers and sellers can thrive. Though implementing these rules might pose difficulties for the smaller players in the market, the overall impact will probably bring more trust and security into e-commerce and ultimately benefit the whole industry. Moving towards a more regulated digital landscape, one still asks: Will these regulations hit the right balance between growth and consumer protection or, inadvertently, stifle innovation in the e-commerce sector?
Author: Mahin Chichkar