116 B, Mittal Towers, Nariman Point, Mumbai, India

This article forms Part II of the three-part series of our discussion on Consumer Protection (E-Commerce) Rules, 2020. Part I provides a general overview of the e-commerce business models and discusses the objectives of the Rules. This part deals with the key highlights of the Rules, 2020 and its limitations. The recently introduced Consumer Protection (E-Commerce) (Amendment) Rules, 2021 will be covered under Part III.

Key Highlights

Applicability

These rules apply to:

  • all kinds of goods and services that are brought or sold over a digital or electronic network, including digital products,
  • all models of e-commerce, including both inventory and marketplace models of e-commerce,
  • all e-commerce retailers, including multi-channel brands and single channel brand. Multi-channel retailing is the act of selling products on more than one retail channel while the single brands are where the products are sold under a solitary brand name. It alludes to a business or franchise where merchandise is offered to singular clients and not to multiple other organizations.
  • all forms of unfair trade practicesacross all models of e-commerce. The following table briefly describes the various e-commerce models.
    Name Description of the e-commerce model
    Business to Customer (B2C) B2C refers to the trading of products or services over the web between online stores and individual clients e.g. Amazon was the first-ever B2C E-Commerce store.
    Customer to customer (C2C) C2C e-commerce is a kind of exchange relation where the two dealers and purchasers are customers. It allows communication between parties through a third party, generally an online sale or auction e.g., eBay, Etsy.
    Business to Business (B2B) B2B is a business model that includes one business offering items or services to different business organizations e.g. IndiaMart, TradeInida.
    Consumer to Business (C2B) C2B involves a kind of trade where a customer or end client gives a product or service to a business organization. It also permits extraction of value from buyers - and also the other way around. eg. OLX, Quikr.
    Business to Business to Customer(B2B2C) B2B2C business model focuses on creating a better customer experience and puts the business organizations directly in touch with the shopper. With the passing of time, the lines between B2B and B2C models are blurring into a converged B2B2C model.
  • The objective of the Consumer Protection (E-commerce) Rules, 2020 is to introduce a uniform code of conduct for of all forms of e-commerce models and entities which are offering goods and services to Indian Customers.

Duties of E-Commerce Entities

  • Every e-commerce entity is required to accurately furnish the following information on their platform:
    The legal name of the e-commerce entity
    Principal geographical address of its headquarters and all its branches
    Name and details of its website
    Contact details such as e-mail address, fax, landline and mobile numbers of customer care, and grievance officer.
  • Along with refraining from indulging in any unfair trade practices, every e-commerce entity is required to establish a grievance redressal mechanism, appoint a consumer grievance redressal officer and display their name, contact details and designation on its portal. Such an officer is also required to acknowledge the receipt of any consumer complaint within forty-eight hours and redress the complaint within one month from the date of receipt of the complaint.
  • When an e-commerce entity offers any goods or services for sale, the name and details of any seller from whom such goods or services have been purchased must be mentioned on their website.
  • No cancellation charges must be imposed on consumers for cancelling after confirming the purchase. The entities shall also not automatically record in any form the consent of consumers except when the consent is expressed through an explicit and affirmative action on its website.
  • Entities should accept refund requests of the consumers, avoid price manipulation in any form to gain profits and avoid arbitrary classification of consumers.

Liabilities of Marketplace e-commerce entities

  • Marketplace e-commerce entities require sellers to ensure that description and other features of goods and services are accurate and in plain and intelligible language on their website and the description must correspond to the appearance and other general features of the goods and services.
  • They are also required to provide the following information on their website, to enable the consumer to make an informed decision. The information must be accurate and accessible.
    • Details of the sellers, their business name, status of their registration, address, customer care number, ratings and reviews, ticket number for each complaint lodged, information relating to return, refund, warranty guarantee, delivery, and shipment.
    • Modes of payment, grievance redressal mechanism, available payment methods, the security of the payment methods, their terms and conditions, a description of differentiated treatment if applicable anywhere.
Source: Inc42

Duties of Sellers in Marketplace e-commerce entities

The duties of sellers in marketplace e-commerce entities are as follows:

  • No seller shall falsely represent themselves as a consumer, and must not refuse to take back goods or refuse to refund except in case of late delivery accompanied by a genuine reason.
  • Any seller in a marketplace e-commerce entity should have a prior written contract with the respective e-commerce entity, appoint a grievance officer, ensure genuine advertisements, provide the entity with its legal name, geographic address of the headquarters and branches, name & details of its websites, customer care contact details, its GSTIN and PAN details.
  • The sellers must provide information regarding all contracts, total price in figures along with the breakup of price, expiry date and other relevant information including the origin of the country of the sale offered by the seller, name and contact details of the grievance officer and importer, details of guarantees and warranties and information related to refund, exchange, delivery, cost of return shipping in an accessible manner.

Duties and Liabilities of Inventory E-Commerce Entities

  • The sellers shallprovide information of all mandatory notices and contractual information, information related to return, refund, exchange, guarantee, warranty, delivery, payment and cancellation methods, total price in figures along with the price breakup, a ticket for each complaint lodged to track the status of the complaint.
  • Inventory e-commerce entities should not falsely represent consumers and post fake reviews and ratings. They should also not refuse to cancel, withdraw, or discontinue services.
  • Inventory e-commerce entities must bear appropriate liability in any case related to the authenticity of goods and services.
  • They must ensure that advertisements for the marketing of the goods are consistent with the actual features and characteristics of the product.

Limitations

May be difficult to implement due to disparity in the nature of business players.
Absensce of a clear defintion of 'price manipulation'.
Entities can no longer levy post-confirmation cancellation charges.
Conveyance charges have not been covered.
Add-on charges have not been covered.
  • Though the provisions are intended as safeguards to ensure a level-playing field, some of these provisions are difficult to implement. Applying identical rules for big and small business players does not convey a very business-friendly approach. For example, it is mandatory for both the marketplace entities and sellers to establish a grievance redressal mechanism, but a small business may not be in a position to comply with this.
  • There is no clear definition regarding what would constitute price manipulation.
  • The rules also prohibit an e-commerce entity from levying a charge for cancellation post-confirmation.
  • The Rules do not examine the issue of conveyance charges which may be exorbitant at times. Some maximum limit ought to be imposed on the sellers charging conveyance charges.
  • The issue of "add-on charges" has also not been tended to. Often, vendors advertise low costs toward the beginning of the buying process; however, later on, a few extra charges, expenses, which are unavoidable, are imposed towards the end. This practice is called "Price Dipping" and is used by several online dealers to acquire customers interest and mislead them by providing a minimal price of the products.