Five grey areas where government attention is needed when it comes to consumer protection in Indian E-commerce

We have witnessed that people are becoming more aware of consumer protection rights all over the world in recent decades. Likewise, Indian legislative authorities have begun to take heed of it. The government entirely updated the consumer protection act, 1986, the fundamental protection law in India, with the COPRA (consumer protection act, 2019.

Specifically, the COPRA has been a crucial step towards the protection and modernization of the consumer’s rights in the digital economy.

Lately, on the 23rd of July, 2020, the government has also released the consumer protection (E-commerce) rules, 2020 under the COPRA. Although there have been debates around the rules concerning e-commerce for quite some time now, the sector has not been regulated yet.

Like the many developed countries such as the EU and the UK, the government has thought to safeguard consumers in the digital economy via e-commerce rules.

Remember, the e-commerce rules do not involve any data protection matters as the government intends to cover it under the e-commerce policy, a draft of which was first revealed for public comments in February 2019. When you think of starting a private limited company in India as an eCommerce business, you are obliged to revamp the apps and websites to remain compliant with e-commerce rules.

How the e-commerce rules aspire to safeguard consumers?

The e-commerce rules are intended to cover all the goods and services purchased or sold over the digital or electronic network (including digital products) to Indian consumers.

This would potentially cover nearly all the apps and websites that provide any good or service (including digital products) for sale to Indian consumers and not merely marketplaces such as Flipkart or Amazon.

Keep in mind that E-commerce rules will be applicable to offshore apps and websites that systematically provide goods and services to Indian consumers and would hence cover marketplace such as Alibaba or websites such as ASOS.

The e-commerce rules aspire to protect consumers through i) increasing revelations made by e-commerce entities to consumers, ii) better accountability of e-commerce entities for compliance (including having a place for business in India and establishing redressal mechanism for complaints inter alia) and iii) enforcing a proscription on adopting unfair trade means or practices and price discrimination or manipulation.

Non-compliance with these rules would lead to penalty and implementation of e-commerce rules is the new regulator’s responsibility for consumer protection, CCPA (central consumer protection authority).

Consumers can raise disputes or conflicts before the consumer courts or tribunals for unfair trade practices, even in the e-commerce space. Still, it is not explicit if they can submit complaints to the regulator directly for non-compliance with e-commerce rules and how the regulator would monitor, inspect or implement e-commerce rules.

Are there any grey areas in the rules?

Country of origin.

One of the most contested issues (that features in discussion around some proposals to e-commerce policy) is the country of origin, which has been brought into place in e-commerce rules. According to regulations, a seller providing goods/services via a marketplace e-commerce entity when you register your business with Flipkart to become a seller need to mention the country-of-origin information to the e-commerce entity for them to show the same on its websites or platforms. There is ambiguity on what is meant by country of origin. For example, is the country of origin for an apple iPhone, US or China? And it is not compulsory on inventory-based e-commerce entities or any other e-commerce entity that is not a marketplace.

Proscription of price manipulation.

E-commerce entities are proscribed from manipulating the price of goods/services provided on their platform in a manner as to gain unreasonable profit by enforcing on consumers any unjustified price about contextual market conditions and crucial nature of the good/service inter alia. Though, there is no such specificity on what is meant by unreasonable profit or unjustified price. Hence, the ambiguity is there in the interpretation.

Revealing the contractual information.

Any seller providing goods/services via marketplace e-commerce entity is obliged to reveal all contractual information needed to be disclosed by law to an e-commerce entity that should then furnish this on its websites or platforms. This applies to inventory e-commerce entities as well. It is not explicit here that what does it mean by contractual information?

Timeline for compliance.

The rules mentioned above will be effective from the 23rd of July, 2020, and no grace period has been provided for compliance, especially for offshore e-commerce companies that offer goods/services to Indian consumers. Generally, a grace period should be awarded to businesses to set their affairs in line with the law.

Penalty.

Although the e-commerce rules refer to COPRA for penalties, there is ambiguity on which penalties should apply.

In conclusion.

As mentioned above, to abide by e-commerce rules, businesses must update their apps and websites fundamentally and invest in legal compliance.