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Explicitly cover hotel and food aggregators under e-commerce rules and hold them accountable: FHRAI

The association contended that mishandled food packaging and delays in delivery should not be attributed to sellers.

The Federation of the Hotel and Restaurant Associations of India (FHRAI) submitted that the e-commerce rules should explicitly cover online travel aggregators like MakeMyTrip, food aggregators like Zomato, dining reservation services like DineOut, and ticketing platforms like BookMyShow. The association also suggested additional duties and liabilities that must be placed on these platforms.

Background: The government on June 21 proposed amendments that give the existing Consumer Protection (E-Commerce) Rules, 2020 more teeth. The 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.

Read: Summary of the proposed amendments to E-Commerce Rules, 2020

Why it matters? The FHRAI represents over 50,000 hotels and 5,00,000 restaurants from across the country. While various stakeholders have submitted feedback on the proposed rules concerning platforms like Amazon and Flipkart, FHRAI has submitted feedback concerning other platforms (travel, ticketing, food delivery) and sellers (hotels and restaurants) that are equally affected by the proposed rules.

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What FHRAI submitted?

Rules should explicitly cover the hospitality and travel industry:  Although the definition of an e-commerce entity is broad enough to cover online travel aggregators, food aggregators, dining reservation services, and ticketing platforms, FHRAI has submitted that it be “made explicitly clear in the definition itself so that nothing is left for any dispute in the future.”

Suggestions for additional duties and liabilities for e-commerce entities: In addition to the already prescribed duties and liabilities, FHRAI submitted the following suggestions:

  • Overbooking: Online travel agencies engage in overbooking, resulting in consumers facing problems. FHRAI submitted that e-commerce entities should not be allowed to overbook.
  • False unavailability: Online travel agencies and food aggregators should be held accountable if they show unavailability of service even when there is availability, FHRAI submitted.
  • Ranking perception: Ranking of hotels and restaurants is done by the platform according to their own criteria and any incorrect perception arising from these rankings should not be blamed on the hotels and restaurants, FHRAI said. The association submitted that platforms should be responsible for the ranking and should be careful to not mislead customers.
  • Expectations from reviews: Customers should not base their expectations on reviews left by other customers on aggregator platforms and hold the hotel or restaurant responsible if their expectations are not met because these reviews are controlled by the platforms, FHRAI said. It submitted that platforms should ensure there are no fake reviews that mislead customers.
  • Unilateral marketing offers: FHRAI said that aggregators make several independent marketing offers like discounts, cashback, and promotions but do not make it clear that the hotel or restaurant is not responsible for this offer, leading to confusion among customers. FHRAI submitted that offers must be made in consonance with the agreement entered into between the platforms and seller, and the platform should be responsible for any offer made on its own.
  • Illegal accommodations: Some platforms list illegal and unauthorised accommodations on their portals which poses a threat to consumer safety, FHRAI said. The association submitted that there should be guidelines to prevent this from happening, thus ensuring that only legitimate businesses with the appropriate local and central licenses are allowed on platforms.
  • Hidden charges: FHRAI said that aggregators indulge in raising charges like convenience fee, service charge, charity donation, transaction fee, and other charges which are not raised by the restaurant or hotel, but customers are made to believe so. FHRAI submitted that platforms should make these charges optional and have an opt-in option by default rather than the current opt-out option.
  • Wrongful GST collection: The GST charges for hotel rooms is based on slabs but aggregators change prices as per their convenience resulting in wrong GST charges being collected sometimes, FHRAI said. The association submitted that it should be the responsibility of platforms to collect the correct GST and not the hotels.

Suggestions for changes in duties of sellers: FHRAI submitted the following suggested changes to the prescribed duties of sellers:

  • Food packaging issues: FHRAI claimed that despite best efforts by restaurants, food packaging can be tampered with or mishandled by delivery personnel and in such cases, sellers should not be held responsible for this. However, it said that sellers should ensure that packages are sealed before handing them over to delivery personnel so that mishandling thereafter can be checked.
  • Complaints of subjective nature: “On many occasions, complaints about the services being offered by the hospitality sector are of subjective nature such as a complaint about deficiency in ambience, taste, quality, quantity, price, value for money and any such subjective and unmeasurable parameter that is part of the hospitality business,” FHRAI stated. Such complaints must not be considered as defects in goods or services, FHRAI submitted.
  • Delays in delivery: FHRAI submitted that any delays in food deliveries are more often than not due to deficiency in riders, which is the responsibility of aggregators and such delays should not be attributed to sellers.

Rule concerning customer data collection not required: One of the proposed rules states that information pertaining to a customer must not be shared with any other person without the explicit consent of the customer. FHRAI submitted that this rule is not required because the Personal Data Protection Bill, 2019 will cover data-related concerns once it goes into effect and there should not be any conflict between the two legislations.

Sellers should not be liable for the platform’s deficiency: FHRAI submitted that a new rule should be added to ensure that sellers on e-commerce platforms are not held liable or responsible if the deficiency is on the part of the e-commerce entity.

Fall-back liability is in the interest of the consumer: One of the proposed rules states that if a seller on a platform fails to deliver a good or provide a service ordered by a consumer, the platform is liable. FHRAI welcomed this rule and said that “it is hugely in the interest of the consumer who would be ensured that he is not required to search for the entity who is to be sued for deficiency in service. The consumer will have his remedies against the entity on whose platform he had transacted.”

Also Read (feedbacks submitted by other stakeholders)

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