Consumer Protection (E-Commerce) Rules, 2020: Reining in an unruly horse

With the passing of the Consumer Protection Act, 2019, the Legislature took a conscious decision to repeal its predecessor, the Consumer Protection Act, 1986 and enacted a new statute altogether.

However, this does not answer the question as to why they simply did not incorporate the amendments in the previous statute ? For this, we need to understand that we have a new market, new dynamics and new challenges, calling for a new law.

Overview

The harmony between market dynamics and consumer interests has always been a thin rope to tread on for the governments across jurisdictions. Markets have, understandably, been inclined toward profit margins with scant regard to consumer interests. With new avenues of conducting business opening up, for ex: e-commerce platforms, the gap is only widening. To protect the interests of consumers, governments across the world have stepped in and have enacted legislation. India has been no exception to the challenges and has ensured fair competition in the market through the Competition Act, 2002. However, what touches the individuals in their daily needs as consumer is Consumer Protection Act.

With market dynamics changing every single day, and with e-commerce platforms becoming a new trend, it was imperative to completely revamp the consumer protection law keeping in mind the challenges and providing effective recourse against the same. It was with this intention that the Consumer Protection Act, 2019 came into effect.

The tenor of the Act itself demonstrates that it is even more consumer-centric now. This is evident from the most basic facet of territorial jurisdiction of the consumer fora. Till the Act of 1986, a complaint could be instituted only in the jurisdiction where the opposite party was situated or where the cause of action arose. But now, in addition to this, a complaint can also be instituted where the complainant resides or personally works for gain. This is huge relief indeed but, at the same time, is also prone to misuse at the hands of unscrupulous litigants.

While the Legislature was conscious of the woes of customers, the travails of the consumer fora also did not go unnoticed. In the Act of 1986, the pecuniary jurisdiction of the then district forum was upto Rs 20 lakh, and that of State Commission was Rs 1 crore. Disputes involving amounts above that came under the jurisdiction of the National Commission. With the pecuniary jurisdictions being low, the workload was increasing upstream. The pecuniary jurisdiction of the District Commission has now been increased to Rs 1 crore, that of State Commission is upto Rs 10 crore, and, above that, it is within the realm of the National Commission.

There are many other important additions which are going to render the Act quite effective against the challenges of consumer rights. For example: the establishment of the Central Consumer Protection Authority, incorporating more stringent provisions for default in complying with the orders, enforcement of every order of the fora as if it were the decree of a court, adding the provision of second appeal to the National Commission, etc.

E-commerce Rules

This article is aimed at one of the most important features of the Act, which is the targeted and dedicated approach toward e-commerce platforms. It is to be noted that although e-commerce transactions were not alien to the Act of 1986, the new Act has made a conscious effort to streamline the basic structure of e-commerce platforms so as to align them with the interest of the consumers.

While e-commerce has opened new avenues and has made transactions faster and more convenient, they have also been prone to unfair trade practices. Although e-commerce platforms tried to resolve the grievance of the customers, there was a need to streamline the functioning of the same. With this perspective, the Central government notified the Consumer Protection (E-commerce) Rules, 2020.

The intention of the Legislature to specifically deal with e-commerce and online transactions was evident from the very enlargement of the definition of consumer under Section 2(7) of the Act by including both online and offline transactions within the scope of ‘buying goods’ and ‘hiring services’. Further, the Act categorically defines relevant e-commerce, electronic service provider and misleading advertisement while specifically addressing the most commonly faced issues such as refusing to take back defective goods or refusing to refund the amount.

The Rules are pretty exhaustive in their sweep and, at the outset, declares its application to:

(i) All goods and services bought or sold over digital or electronic network including digital products;

(ii) All models of e-commerce, including marketplace and inventory models of e-commerce;

(iii) All e-commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats; and

(iv) All forms of unfair trade practices across all models of e-commerce.

A bare perusal of the same demonstrates that the intention of the Legislature is, clearly, to encompass every aspect of e-commerce and keep consumer interests on the highest pedestal while streamlining the functioning of e-commerce platforms. This is also demonstrated from the fact that the Rules clearly define the relevant players of the e-commerce space, such as e-commerce entity, inventory e-commerce entity, marketplace e-commerce entity and seller.

Duties of E-commerce entities

It is now the duty of every e-commerce entity to appoint a nodal person of contact or an alternate senior designated functionary to ensure compliance with the provisions of the Act and Rules.

One of the primary issues faced by customers is that all service providers, including e-commerce platforms, only provide the contact details of their customer care helplines that furnish tailor-made responses, and are seldom able to provide a fruitful solution. Under the Rules, e-commerce entities are bound to clearly display the contact details of their grievance officer along with other particulars like e-mail, fax, landline and mobile numbers of customer care.

Along with the same, e-commerce entities are also bound to establish an adequate grievance redressal mechanism having regard to the number of grievances ordinarily received from India.

One of the arbitrary actions that e-commerce platforms resort to is the cancellation charges which are levied on the customer if the order is cancelled. After the notification of the Rules, the e-commerce entities are not allowed to levy the same on the customer unless the e-commerce entity also undertakes to bear similar charges if it unilaterally cancels the order placed by the customer for any reason whatsoever.

The concept of express consent has found a place in the Rules. The consent of the customer shall be recorded only if that consent is explicit and affirmative. E-commerce platforms are not allowed to record automatic consent of the customer.

The Legislature has taken ample care to make sure that the goods displayed on their platforms correspond to their actual form and specifications. For that purpose, the marketplace e-commerce entities are now bound to secure an undertaking from the seller that description, images etc. of the goods on the platform are accurate and correspond directly to the actual goods or services.

While e-commerce platforms act as a facilitator and a bridge between the seller and the customer, they have always been shy of connecting the seller and customer directly. Customers were forced to scour the data of the seller from the internet. However, things are to take a different turn after the notification of the Rules. The e-commerce entity is now bound, upon a request being made in this regard, to provide the customer with information such as name and details of its website, email address and other information required for communication with the seller for dispute resolution.

Duties of sellers and inventory e-commerce entities

The duties and liabilities of e-commerce entities are discussed in the light of defaults committed by the sellers and, as such, the duties of sellers have been categorically been mapped out in the Rules.

Customers are often met with an emphatic denial by the seller to either return the goods or refund the price. Instead, the customer is forced to take a replacement of the same product. It has been specifically laid down that the seller is, now, not entitled to refuse to take back the goods or discontinue services or refuse to refund the consideration if the goods or services turn out to be defective, or if they do not match the specification displayed on the platform, or if the delivery is made later than promised.

The seller is also bound to appoint a consumer grievance officer in order to redress complaints in a clear and effective manner.

Inventory e-commerce entities are also covered within the sweep of the Rules, and the obligations of the seller are also applicable to them.

Conclusion

No player of the e-commerce space is immune from the application of the Rules. Along with specifying their duties and liabilities, the Rules also ensure the compliance thereof by providing that any contravention of the provision of Rules would attract the provision of the Act.

A perusal of the Rules makes it abundantly clear that the Legislature has, indeed, walked that extra mile to cover every aspect of e-commerce transactions and has tried to ensure that the consumer gets accurate information to make an informed decision. The latest incarnation of the Consumer Protection Act is, indeed, robust and is at par with the international standards of consumer laws.

The author is a Co-Founding Partner at PSL Advocates & Solicitors