Govt’s proposed amendment in E-Commerce Rules: Overview
The Ministry of Consumer Affairs, Food and Public Distribution has proposed an amendment the Consumer Protection (E-Commerce) Rules, 2020. As such, the Department of Consumer Affairs is seeking comments from the public on the proposed amendments. The comments/ suggestions can be sent to [email protected], by 6th July, 2021. Here are the important additions and deletions that the amendment proposes.
The definition of an e-commerce entity includes any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. The proposed definition also includes ‘any entity’ engaged by such person for the purpose of fulfilment of orders placed by a user on its platform’ and any ‘related party’ as defined under Section 2 (76) of the Companies Act, 2013.
The amendment to the E-Commerce Rules proposes to define cross-selling as adjacent or complimentary sale of goods and services to a purchase made by a consumer, with an intent to maximize the revenue of the e-commerce entity.
Any e-commerce entity which is engaged in cross-selling of goods or services shall provide adequate disclosure to its users. The disclosure, including name of the entity providing data for cross-selling, and data of such entity used for cross-selling, shall be displayed prominently in a clear and accessible manner on the platform.
Introducing Fall back liability
The amendment proposes a fall back liability of a marketplace e-commerce entity. The liability arises when a seller registered with the marketplace entity fails to deliver the goods or services due to negligent conduct, omission or commission or any act done while fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity which causes loss to the consumer.
A flash sale would mean a sale organized by an e-commerce entity at significantly reduced prices, high discounts or any other such promotions or attractive offers for a predetermined period of time on selective goods and services or otherwise with an intent to draw large number of consumers.
The amendment to the E-Commerce Rules proposes to introduce ‘mis-selling’ which means deliberate ‘misrepresentation’ of information by an e-commerce entity about such goods or services as suitable for the user who is purchasing it. Misrepresentation in turn, means:
- positive assertion in a manner not warranted by the information of any entity making it, of that which is not true.
- any display of wrong information, with an intent to deceive or gain an advantage to the e-commerce entity committing it, or any seller claiming under it; by misleading consumer to the prejudice of e-commerce entity, or to the prejudice of anyone claiming under it.
- causing a consumer to purchase such goods or services to make a mistake as to the substance of the thing which is the subject of the purchase
No e-commerce entity shall engage in mis-selling.
Registration of e-commerce entities
The amendment also proposes registration of e-commerce entities which intend to operate in India, with the Department for Promotion of Industry and Internal Trade (DPIIT). The entity would have to display such registration number to its users in a clear and accessible manner on its platform.
Explicit Inclusion of Partnerships in E-Commerce
While laying down duties of e-commerce entities, the present rules only recognized a ‘company’ as an e-commerce entity. However, the proposed rules now explicitly include a partnership incorporated under the Indian Partnership Act, or a Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008.
Overhauling the Grievance Redressal Process
Like the new intermediary rules, the proposed amendment to the e-commerce rules also aim for adequate grievance redressal mechanism. While the present rules also lay down the requirement of a grievance officer, the proposed rules require the entities to appoint a Chief Compliance Officer who shall be an employee of the e-commerce entity and shall be a resident and citizen of India. He shall ensure the entity’s compliance with the Consumer Protection Act, and the associated rules. Further, such an officer will be responsible in any proceedings relating to any relevant third-party information, data or communication link hosted by that e-commerce entity ‘where he fails to ensure that such entity observes due diligence’ while discharging its duties under the Act and associated rules.
Apart from a Chief Compliance Officer, an e-commerce entity will also have to appoint a nodal contact person for 24X7 coordination with law enforcement agencies, and ensure compliance with their orders.
The e-commerce entity will have to publish about its Grievance Redressal Process on its website, mobile based application or both, the name of the Grievance officer and his contact details. The entity will also have to publish details of the mechanism by which a user may make a complaint against violation of the provisions of the rules or any issue with its platform.
The Grievance Officer shall receive and acknowledge ay order, notice, or direction issued by the Appropriate Government, any competent authority or court.
Elaborating the ‘Country of Origin’ and ‘Suggesting Domestic Alternatives’
The present rules only require an e-commerce entity to mention the name and details of any importer from whom it has purchased such goods. It has to do the same in case a seller is selling imported goods.
However, the proposed rules require an e-commerce entity to follow additional guidelines if it offers imported goods or services for sale. Apart from mentioning details as per the present rules, it shall also identify goods based on their country of origin, provide a filter mechanism on their e-commerce website and display a notification regarding the country of origin at multiple stages of a purchase- at the pre-purchase stage and at the time of goods being viewed for purchase.
Most importantly, an-ecommerce entity shall suggest alternatives ‘to ensure a fair opportunity for domestic goods’. It shall also provide ranking for goods and ensure that the ranking parameters don’t discriminate against domestic goods and sellers.
No Flash Sales
The proposed rules say that no e-commerce entity shall organize a flash sale of goods or services offered on its platform.
Logistics Service Providers
The proposed rules say that no logistics service provider of a marketplace e-commerce entity shall provide differentiated treatment between sellers of the same category, unless it provides a disclaimer/ description of any differentiated treatment which it gives or might give between sellers of the same category.
You can read the Proposed Amendment here.
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