On August 2, the Department of Consumer Affairs, under the Ministry of Consumer Affairs, Food and Public Distribution, released the draft of E-Commerce Guidelines for Consumer Protection 2019 (available below) for consultation. The draft guidelines are open for consultation from stakeholders for 45 days, that is, until September 16, 2019. Views, comments and/or suggestion can be sent to dscpu-ca@nic.in.

Thus far, this is the second draft to emerge on regulating e-commerce. The Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry had released the draft for National E-Commerce Policy in February 2019. That draft hasn’t been ratified into a law yet.

Points raised in the policy are both explicitly cited and paraphrased. Here’s a piece by piece lowdown on all the issues it raises:

Aim

Guiding principles for e-commerce businesses to:

  • Prevent fraud and unfair trade practice
  • Protect the legitimate rights and interests of consumers

Apply to: B2C E-Commerce, included goods and services, including “digital contents products”

Definitions

E-commerce Entity: “a company incorporated under the Companies Act, 1956 or the Companies Act, 2013 or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in Section 2 (v) (iii) of FEMA 1999, owned or controlled by a person resident outside India and includes an electronic service provider or a partnership or proprietary firm, whether inventory or market place model or both and conducting the e-Commerce business; provided that ‘e-Commerce Entity’ does not include any entity or business notified otherwise by the Government for the said purpose from time to time”

Inventory based model of e-commerce: “an e-Commerce activity where inventory of goods and services is owned by e-Commerce entity and is sold to the consumers directly”

Market place model of e-commerce: “providing of an information technology platform by an e-Commerce entity on a digital & electronic network to act as a facilitator between buyer and seller”

Electronic Record: “data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche; (as per Information Technology Act)”

Information: “data, message, text, images, sound, voice, codes, computer programmes, software and databases or micro film or computer generated micro fiche; (as per Information Technology Act)”

Electronic Service Provider: “a person who provides technologies or processes to enable a product seller to engage in advertising or selling of goods or services to a consumer and includes any online market place or online auction sites”

Conditions for carrying out e-commerce business in India

Following conditions must be complied with within 90 days of publication of the final guidelines in the Gazette by the e-commerce business:

  1. Register as a legal entity under Indian law
  2. Submit self-declaration to Department of Consumer Affairs stating that it is in compliance with the guidelines
  3. Promoter/key management personnel shouldn’t have been convicted of any criminal offence punishable with imprisonment in the last 5 years by any Court
  4. Comply with Information Technology (Intermediaries Guidelines) Rules, 2011
  5. Payments for sale facilitated by the e-Commerce entity must conform with the guidelines of the RBI
  6. Display details about the sellers supplying the goods and services, including identity of their business, legal name, principal geographic address, name of website, e-mail address, contact details, including clarification of their business identity, the products they sell, and how they can be contacted by customers shall be displayed on the website

Liabilities of E-Commerce Entities

An e-commerce entity shall NOT

  1. directly or indirectly influence the price of the goods or services and shall maintain a level playing field
  2. adopt any unfair methods or unfair or deceptive trade practices that may influence transactional decisions of consumers in relation to products and services
  3. leave fake reviews as consumers, or misrepresent/exaggerate the quality or the features of goods and services.

An e-commerce entity SHALL

  1. enable consumers to make informed decisions by displaying terms of contract between e-commerce entity and the seller related to return, refund, exchange, warranty/guarantee, delivery/shipment, mode of payments, grievance redressal mechanism etc.
  2. ensure that advertisements for marketing of goods and services are true and accurate
  3. mention safety and healthcare information of the goods and services advertised for sale
  4. provide information on available payment methods: their security, how to use them, how to cancel regular payments under those methods, charge back options, and any applicable payment costs
  5. ensure that personally identifiable information of customers is protected, and that such data collection, storage and use comply with provisions of the Information Technology (Amendment) Act, 2008
  6. accept return of goods if: delivered late, or defective, wrong or spurious product is delivered, and/or the characteristics/features are not as advertised
  7. process payments towards accepted refund requests of the customers within maximum 14 days
  8. on becoming aware of, by itself, through a consumer, or any other source, any counterfeit product being sold on its platform, and is satisfied of it counterfeit nature after due diligence, it shall notify the seller, and if the seller is unable to provide any evidence that the product is genuine, it shall take down the listing and notify the consumers of the same
  9. be held guilty of contributory or secondary liability if it makes an assurance vouching for the authenticity of the goods sold on its marketplace, or if it guarantees that goods are authentic.

Liabilities of Sellers

Any seller selling/advertising his/her products/services through an e-commerce platform SHALL:

  1. have prior written contract with the respective e-commerce entity in order to undertake or solicit such sale or offer
  2. provide all information required to be provided either by law or by any other mandatory regime for disclosing contractual information and compliance with that regime will be treated as sufficient
  3. display single-figure total and break up price for the goods or service, that includes all compulsory charges such as delivery, postage, taxes and handling and conveyance charges
  4. comply with mandatory display requirements as per the Legal Metrology (Amendment) Rules 2017 for pre-packaged commodities
  5. provide mandatory safety and healthcare warnings and shelf life that a consumer would get at any physical point of sale
  6. provide fair and reasonable, delivery terms, or to directly reference the shipping policy
  7. be responsible for any warranty/guarantee obligation of goods and services sold
  8. be upfront about how exchange, returns and refund process works, and who bears the costs of return shipping.

Consumer Grievance Redress Procedure

Every e-commerce entity SHALL:

  1. publish on its website the name of the Grievance Officer, his/her contact details, and details of the mechanism by which users can notify their complaints about products and services availed through their website
  2. the Grievance Officer shall redress the complaints within one month from the date of receipt of complaint
  3. provide facility to consumers to register their complaints over phone, email or website and shall provide complaint number for tracking the complaint
  4. provide consumers with transparent and effective consumer protection that is not less than the level of protection offered in other forms of commerce
  5. provide mechanism/system to converge with NCH in grievance redress process.