In order to enforce compliance under the Consumer Protection (e-Commerce) Rules 2021, the Ministry of Consumer Affairs, Food and Public Distribution has made it compulsory for e-commerce platforms to appoint a nodal officer. This newly amended rule is in accordance with last year’s e-commerce rules of 2020.
The Consumer Protection Act
Previously, the Consumer Protection Act, 2019, replaced the Consumer Protection Act of 1986. In accordance with the provisions of Act, on 23 July 2020, for prevention of unfair e-commerce trade practices and the promotion of consumer goods, the Ministry of Public Distribution, Food and Consumer Affairs notified the Consumer Protection Rules, 2020 (“Rules”) for consumer welfare.
These rules apply to all products and services available through a digital or electronic network. For example- e-commerce marketplace entities and e-commerce inventory entities. It also applies to all e-commerce retailers such as single-channel retailers and single-brand retailers, all forms of business practices in single or multiple formats.
The additional clause is basically an addition to the 2020 rules. It states that any e-commerce entity is a company registered and verified under the Companies Act, 1956 (1 of 1956) or Companies Act, 2013 (18 of 2013)
any foreign company which is covered under the Companies Act of 2013 or any office, branch, agency outside India covered by the Foreign Management Act, 1999,
shall appoint a Nodal Officer, or alternatively an Indian resident senior designated official with a particular functionary, a representative of the organization with a set of particular responsibilities who shall comply to the provisions of the Act and the rules made thereafter.
In addition to appointing a nodal officer, the regulations also have other rules which an e-commerce platform is required to follow:
- ‘Pays of origin’ display of products
- Explain how e-commerce platform listings are working
- Data about sellers selling counterfeit products
- Consent of the Client to buy any goods or services Record
- Consumer Helpline National Partner
- Remediation officer appointment of grievance
- No “price manipulation”
- The description of the product should be exact
- Platforms should ensure that goods/services are authentic
Recent issue with Amazon
Some of these rules mentioned above have not been well implemented in the e-commerce sector. Recently, the Ministry of Consumer Affairs had rejected an appeal lodged by Amazon against a notice issued earlier this year, asking as to why Amazon does not show the country of origin of a product listed on its platform.
Amazon had argued that whilst the rules place the burden of declarations on manufacturers or sellers on e- commerce sites “without making all the declarations required by these rules, Amazon has been diligent in carrying out its duty as the intermediary, as the product is uploaded to their website.”
While the Ministry is working towards making the rules more efficient, the 2021 amendment shall place a check on compliances of any business operation thoroughly by the Nodal officer.
The aim of the Rules is to make information and disclosure on e-commerce platforms accessible to consumers with transparency and accountability. Rules shall also aim to inspect and disclose certain sellers’ practices of preferential treatment, which will limit the possibility of large sellers’ unfair trading practices. The regulations are a step to address consumer complaints and prescribe certain best practices for the benefit of consumers as e-commerce activity is increasing in current times.