Protect traders, exempt smaller platforms, create a mechanism to identify defaulters, provide explicit clarifications on certain rules, restrain platforms from competing with business users, and prevent misuse of data collected by platforms are some of the many suggestions that Swadeshi Jagran Manch has made to the Department of Commerce on the proposed amendments to e-commerce rules.
The government on June 21 proposed amendments that give the existing Consumer Protection (E-Commerce) Rules, 2020 more teeth. The proposed changes include new rules to address abuse of FDI regulations, the establishment of a grievance redressal mechanism, new display and labelling criteria for foreign goods, the prohibition of flash sales, restrictions on promotions, fall-back liability, among other things.
Why this matters? SJM has been a prominent voice in criticising the current e-commerce and FDI regulations. It has repeatedly argued that platforms like Amazon and Flipkart are abusing FDI regulations and engaging in anti-competitive practices that are hurting offline retailers as well as smaller sellers on the platform. Its comments on the proposed amendments not only shed light on what the organisation thinks of the rules but will also shape how the final version turns out.
What are the submissions made by SJM?
Traders and service providers must be protected as well: SJM submitted that the definition for “consumer” in Consumer Protection Act, 2019 does not include a person who buys a good or avails a service for the purpose of resale or for commercial purposes. As such, the rules made under this Act will not be applicable to traders and service providers “even if they are exploited due to dominant position of the E-Commerce giants,” SJM said.
“Small traders (on Amazon, Flipkart-Walmart), drivers on Uber, Ola etc. and small restaurants involved in Zomato etc., hairdressers, carpenters, electricians etc. on Urban Clap etc. and many other workers are subject to severe hardships by these E-Commerce giants, having no protection, at all, against exploitation” – SJM
Stating that many traders and service providers are not getting any protection under the law, SJM requested the Commerce Ministry and DPIIT to clarify and make suitable provisions in the rules to protect traders and service providers who transact through e-commerce platforms for commercial purposes.
Require all e-commerce entities supplying to consumers in India to register themselves: Currently, the rules require an e-commerce entity that “intends to operate in India” to register itself with the DPIIT. SJM has requested that this be changed to require any e-commerce entity that “supplies goods or services to a consumer in India” to register itself. This will be helpful in regulating even those entities “which do not establish offices in India but still have lots of revenue being generated from consumers located in India,” SJM stated.
Prescribe threshold to exempt smaller entities from registration: While calling the compulsory registration with DPIIT a “welcome step,” SJM suggested that a threshold be prescribed “to avoid any hardship to E-Commerce entities with very small consumer base in India” and “save small E-Commerce players from avoidable compliances.” SJM suggested that the definition of MSME may be adopted to define small e-commerce players.
Create a mechanism to identify defaulters: “DPIIT must also create a monitoring mechanism to identify the defaulter E-Commerce entities and must also have an adjudication mechanism for penalising such defaulters,” SJM stated.
Introduce the “officer who is in default” concept: While the proposed rules require e-commerce platforms to appoint employees to the roles of chief compliance officer, nodal contact person, and resident grievance officer, SJM has requested that the concept of “officer who is in default,” as laid out in the Companies Act 2013, also be introduced to the e-commerce rules. This is “so that the persons in accordance with whose advice, directions or instructions the E-Commerce entities act can be brought to books in case of any contravention under the Act and the E-Commerce Rules,” SJM stated.
Remove the “intent to maximize revenue” clause from the rule on cross-selling: The rules state that cross-selling is when an e-commerce platform tries to sell a good that is complementary to the purchase made by a consumer “with an intent to maximize the revenue.” The rules further state that e-commerce entities engaged in cross-selling of goods or services must clearly disclose to users the name of the entity providing data for cross-selling and data of such entity used for cross-selling. SJM is asking for the removal of the “intent to maximise revenue” qualifier as it is “communicating a confusing message” that disclosers “are to be given only when the intent is to maximise the revenue and not otherwise.”
Provide more clarity on search result manipulation: The rules state that e-commerce platforms must not “mislead users by manipulating search results.” SJM has requested to add more clarity to this rule by stating that e-commerce platforms must refrain from giving more favourable ranking to their own products or to products of the companies that belong to the same undertaking as the platform. E-commerce companies must also be required to “apply fair and non-discriminatory conditions to such ranking,” SJM stated.
Provide performance measuring tools to advertisers: SJM has requested that advertisers and publishers must be provided free of charge access to performance measuring tools so that they can “carry out their own independent verification of the ad inventory.”
Provide more clarity on flash sales: “The intent of these amendments seems to discourage flash sales, ultimately affecting the consumers by limiting their choices and other ways,” SJM stated while asking the government to provide more clarifications to the phrase “manipulate the price.” However, it is not sure what SJM is referring to here because the two clauses that mention flash sale in the rules do not contain the phrase “manipulate the price.”
Provide access to third-party search engines: SJM has suggested that e-commerce platforms be required to provide third-party online search engines “with access, on fair, reasonable and non-discriminatory terms to ranking, query, click and view data in relation to free and paid search generated by end-users” provided that any personal data is subject to anonymisation.
Restrain platforms from competing with business users: SJM has suggested that e-commerce entities should not be allowed to use any data generated from their business users to compete with these business users unless such data is publically available.
Provide business users with more data: SJM has also requested that business users be provided with “continuous and real-time access and use of aggregated or non-aggregated data” free of charge given that such data is generated from these business users and their users.
Share personal data only with consent: When it comes to the personal data of end users, platforms must only share this with the business users if the end-user has effectuated it and consented to such sharing, SJM stated.
Define “abuse of dominant position”: The rules state that no e-commerce entity that holds a dominant position should abuse its dominant position. SJM has argued that abuse of dominant position should be described “as provided in subsection (2) of Section 4 of the Competition Act, 2002.” However, the rules actually state this, and SJM’s submission appears to be redundant.
Address and contact details of the seller should be displayed in the invoice: The rules state that e-commerce platforms must display in their invoice the name of the seller in the same font size as that of the e-commerce entity’s name. SJM has submitted that the address and contact details of the seller should also be included in this in order to “have proper redressal of consumer complaints.”
Information collected by the platform should not be used for its own advantage: The rules currently state that an e-commerce entity should not use “any information collected through its platform for unfair advantage of its related parties and associated enterprises.” SJM has submitted that this should be modified to say that an e-commerce entity should not use “any information collected through its platform for its unfair advantage or for unfair disadvantage to the sellers.” This submission was made in the context that e-commerce platforms are collecting data on fast-moving products and manufacturing the same through their related parties or associates, SJM stated.
Display information on total business executed and advertisements costs: SJM has requested that “in the larger interest of the consumers,” e-commerce platforms must be required to disclose the following information on their website on a quarterly basis:
- Total business executed on their platform
- Advertisement cost incurred
- Number of complaints received and redressed
Provide for capacity building: SJM suggested that a suitable rule be included “to provide for capacity building for inspection and enforcement of E-Commerce transactions, unfair trade practices, mis-selling, manipulation of prices, search algorithm and other technical aspects.”
Establish e-courts for grievance redressals: SJM has suggested that e-courts be established for consumers’ grievances redressal.
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