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#NAMApolicy: The definition of an ecommerce platform, liability, consumer protection and more

By Nikhil Cariappa

This report is the second in our series covering the discussion on e-commerce and consumer rights. Read the first here. “A lot of our law has evolved from the common law jurisprudence, which refers to principles of law evolved by courts in the UK, over a period of time. The Donoghue vs. Stevenson case was a turning point in consumer law, said Alok Prasanna Kumar, Vidhi Centre for Legal Policy.

What follows is a paraphrased transcript of the discussion, edited for brevity and clarity.

A medium in transition

On the question of how you define relationships between buyer and seller and the platform. Who bears the responsibility towards the consumer?

  • The key question is: Who is your neighbour now? This has changed, given the changing business models. It’s not just about manufacturer to distributor to retailer to the consumer. The range of middlemen has disappeared. You now have platforms which perform all these functions and has much more power than the parties on either end. Very few companies can withstand being blackballed by a major e-commerce company, it has to do with the fact that platforms give you a network advantage. A driver or rider who gets blacklisted by both Ola and Uber, that’s the end of the story. (Alok Prasanna Kumar, Vidhi Centre for Legal Policy)
  • On the other hand, if a driver wants to complain, the company can say that their only obligation was to keep you [the driver] on the platform. Who the consumer is, who the provider of a service is has changed dramatically. It raises the question: does that not call for us to rethink our consumer laws? (Alok Prasanna Kumar, Vidhi Centre for Legal Policy)
  • As a consumer you buy something from a platform, because you trust the platform. Even though the platform is not legally accountable because they have safe harbour. None of these platforms would have scaled to this level, if they were responsible for everything sold on it. For example, WhatsApp will never be able to take liability for every message sent on WhatsApp. (Nikhil Pahwa, MediaNama)
  • The safe harbour rules came from the US, when e-Commerce companies approached the US Congress and asserted that they were a nascent industry. The US Congress introduced the Digital Millennium Copyright Act (DMCA) which provided a certain level of safe harbour. While a platform like YouTube cannot monitor all of the content uploaded on it instantly, the German Network Enforcement Act gives us a different paradigm to think about this. The Act does not create any new offences; it says that as a certain kind of intermediary, specifically social media companies have the obligation to take down certain content, when it is pointed out that it is unlawful, and act within 24 hours. This arose from the fact that Germany has free speech restrictions when it comes to Holocaust denial, Nazi memorabilia, hate speech etc. (Alok Prasanna Kumar, Vidhi Centre for Legal Policy)

The takeaway is that maybe there are certain intermediaries which don’t need safe harbour rules, or need protection from intermediary liability. The nature of the economy, business and market has changed so much that certain entities should not be allowed to make a claim that there is too much content and hence there is nothing we can do. (Alok Prasanna Kumar, Vidhi Centre for Legal Policy)

  • We can apply this paradigm to e-Commerce. This is not a nascent industry anymore with millions of users and billions in revenue, not to say that every small e-Commerce company should have the same liability. But there is no reason we cannot have a minimum threshold where, if you have a certain number of users, you bear certain amount of responsibility. I’d rather link to number of users than to turnover, and assign responsibility in terms of consumer protection. (Alok Prasanna Kumar, Vidhi Centre for Legal Policy)

The Consumer Protection Bill

  • On the definition of a consumer? The Ministry of electronics and information technology (MeitY) defines it is – any business activity carried out through electronic means, which is too broad; there is no way to make head and tail to it. (Shodhan Babu, Panag & Babu Law)
  • If India’s consumer protection bill is adequate: Under the current consumer law framework, consumers can go to court/forums at district, state and national levels if there is a dispute and seek damages. The law is structured such that the onus is entirely on the consumer to show that he/she has suffered, because of a deficient product. The imbalance of power is very striking; the consumer simply cannot access the information these companies have to make out their cases.  (Shodhan Babu, Panag & Babu Law)
  • The 2015 and the 2018 Bill provide for a central consumer protection authority (CCPA). From the point of view of consumers, the CCPA has been given wide range of investigative powers – it has been given powers akin to the competition commission, and the drug controller, they can recall products. They can appear before any existing fora, and intervene in any matter that may affect consumer rights. (Shodhan Babu, Panag & Babu Law)

Filing complaints

On the question of fraud and how consumers are at the mercy of platforms for redressal.

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  • A common complaint an e-Commerce company will face is consumers receiving an empty box instead of the mobile phone. A regulatory body such as the CCPA will have due diligence provision which requires the marketplace to verify the dealers listed on the platform, are required to have documentation for each product before they dispatch the product. That way you cover fraud on consumer side and dealer side. (Shodhan Babu, Panag & Babu Law)
  • There aren’t enough mass tort actions in India; which is a set of procedural innovations. You can sue on behalf of X, Y or Z but you need to have procedural rules to say what happens when you sue on behalf of someone: how you show damage, evidence rules, payout calculations. In the US, there is a detailed legal procedure, which we don’t have in our Consumer Protection Act. Where you should have have concerted mass action to enforce liability on large companies, you have consumers fighting between the hierarchy of consumer fora. The enforcement wont happen if people cannot act in a concerted manner. (Alok Prasanna Kumar, Vidhi Centre for Legal Policy)
  • Fraud has an element of criminality, the consumer goes to the police station and the state takes over prosecution. The police will file a charge sheet if they are able to investigate successfully, and then the process (of redressal) is initiated. There is enough case law on fraud resolution by e-Commerce companies; the issue is delay and onus on the consumer. It can take years to resolve a simple complaint in the district forum in Bangalore; nobody has the stamina for that. (Shodhan Babu, Panag & Babu Law)
  • Consumer cases largely seem to be related to Insurance, Banking, Real estate products where the value is sufficiently high that you go to court. But for smaller products, it will take me one year at each level and there are three levels – district, state and national forum. (Alok Prasanna Kumar, Vidhi Centre for Legal Policy)

Section 79 (IT Act)

On the risks involved in dealing with this law since it does not affect only e-commerce but also relates to harmful and illegal speech, where the political ramifications are clear.

  • E-Commerce companies have free speech risks, say the case of the mat with the Indian flag, or the Nazi Memorabilia in France which Yahoo had to take down. It could be just a book sold on Amazon. I don’t think we can separate the two; there is good reason to treat the whole field as one. Even social media companies offer ads for sale – like promoted tweets. That is also an e-Commerce product. (Alok Prasanna Kumar, Vidhi Centre for Legal Policy)
  • Currently you have a blanket approach where intermediaries are not liable at all, regardless of circumstances. On the other hand, if you go by a case-to-case basis – which is how most regulation works – you can separate free speech issues from compliance issues to protect the consumers rights. Today we  have Amazon ‘fulfilled services’, dealer ratings and so on. The reasons they do this may be due to their relation with the consumer and regulatory incentives, or regulation which disincentivizes them from not having it. But in India, the free speech issues have more to do with how the police see it, and not the law being sound. (Shodhan Babu, Panag & Babu Law)

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