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10 Important Factors An E-Commerce Entity Must Know To Deal With The Consumers In 2020

Rakhi Banerjee
8 Jan 2021 4:22 AM GMT
Consumer Protection
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As per ministry of communication, Govt. of India, the number of internet users in India is expected to grow to 730 million by the year 2020. Due to adoption of digital technology, on the one hand E-commerce entity, where transactions occur directly with the consumers (B2C), multiplied rapidly and at the same time internet using consumers have grown fast in the past few years in India. Keeping in view the new set of challenges faced by consumers in the digital age, Consumer Protection Act, 2019 was passed by Govt. of India, which came into force with effect from 20th July, 2020 and Consumer Protection (E-Commerce) Rules, 2020 was notified in the Gazette of India on 23rd July, 2020. The new act has come to replace the three decade old Consumer Protection Act, 1986.

Who are the Consumers under the Consumer Protection Act, 2019?

A consumer is who buys any goods or hires any service by paying price to the seller by offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing. Such goods and services bought or hired should be for his own use or for earning his livelihood and not for any commercial purpose.

Consumer Protection Act, 2019, applies to which goods and services?

The new Act applies to all goods and services including all goods and services, bought or sold over digital or electronic networks including digital products. Rendering of any service free of charge or under a 'contract of personal service' (service rendered by an employee to his employer) is not a 'service' under the Act.

Who is an E-commerce entity under Consumer Protection Act, 2019 & Consumer Protection (E-Commerce) Rules, 2020?

"E-commerce" is the business of buying or selling of goods or services including digital products over ditital or electronic networks.

An "E-commerce entity" means who owns, operates or manages digital or electronic facility or platform for electronic commerce where buying or selling of goods or services including digital products takes place over digital or electronic network. An e-commerce entity should be a company incorporated under: i) the Companies Act, 1956 or the Companies Act, 2013 or ii) a foreign company covered under Companies Act, 2013 or iii) an office, branch or agency outside India owned or controlled by a person resident in India as provided in Foreign Exchange Management Act, 1999.

E-commerce entities where Consumer Protection Act, 2019 & Consumer Protection (E-Commerce) Rules, 2020 applies:-

Marketplace e-commerce entity which provides an information technology platform (includes any website or mobile application) on a digital or electronic network to facilitate transactions between buyers and sellers.

Inventory e-commerce entity which owns the inventory of goods or services and sells such goods or services directly to the consumers and shall include single branch retailers and multi-channel single brand retailers.

E-commerce retails including multi-channel single brand retailers and single brand retailers in single or multiple formats

E-commerce entity established outside India, but systematically offers goods or services to consumers in India.

Do's and Don'ts for an E-commerce entity in the light of Consumer Protection (E-Commerce) Rules, 2020 :-

Every e-commerce entity on its platform should :

(1) clearly display for its users the-- name of the E-commerce entity, address (headquarters and all branches),website; and contact details like email address, fax, landline and mobile numbers of customer care as well as the name of the grievance officer.

(2) establish a grievance redressal mechanism where a grievance officer needs to be appointed, whose name, contact details, and designation should be displayed on its platform.

(3) ensure that the grievance officer acknowledges the receipt of any consumer complaqint within 48 hours and redress the complaint within within one month from the date of receipt of the complaint.

(4) mention on its platform the name and details of the importer (in case it offers imported goods and services for sale), from whom it has purchased such goods or services, or the details of the seller who imports such goods and services and sells it.

(5) record consent of the consumer for the purchase of any goods or services offered on its platform, by explicit and affirmative action of the consumer and not in an automated way or by pre-ticked checkboxes.

(6) made refund to the consumers as per guidelines of Reserve Bank of India or as per applicable laws where refund requests of the consumers are accepted by it.

(7) not manipulate the price of the goods or services offered on its platform to impose unjustified price on consumers,

(8) not discriminate between consumers of the same class or make any classification of consumers.

(9) not impose any cancellation charges on consumers unless similar charges are also borne by the e-commerce entity for such cancellation of the purchase by the consumer.

(10) not adopt any unfair trade practice in any manner.

Do's and Don'ts of a Marketplace E-Commerce Entity & Inventory E-Commerce Entity:

Do's and Don'ts of Marketplace E-Commerce Entity

Do's and Don'ts of Inventory E-Commerce Entity

To ensure that the details of goods and services on their platform is accurate as regards its appearance, nature, quality, purpose or any other feature, by obtaining an undertaking in this regard from seller.

To display information clearly on its platform for its users related to return, refund, exchange, warranty, guarantee, delivery, shipment including cost of return or shipping, mode of payments and its grievance redressal mechanism to enable the consumers to make informed decisions about their purchase of goods and services.

To display all information clearly related to seller-their business, address, customer care no. rating or feedback etc for enabling consumer to make informed decision for purchase of goods and services.

To display clearly total price of any good or service in single figure along with the breakup showing all charges, such as delivery charges, postage and handling charges, conveyance charges and the applicable tax.

To provide a ticket number for each complaint to the consumers for the purpose of tracking complaint status by consumers.

To provide a ticket number for each complaint to the consumers for the purpose of tracking complaint status by consumers.

To provide all information related to refund, exchange, warranty, guarantee, delivery, shipment, modes of payment and grievance redressal mechanism to enable the consumer to make informed decision.

To ensure that the advertisements for marketing of goods or services are consistent with the actual goods or services.

To provide information on its platform on available payment methods including security and charges of such payment method. Procedure to cancellation of such payments under those methods, charge-back options, if any, and the contact details of the payment service provider.

To provide information on its platform on available payment methods including security and charges of such payment method. Procedure to cancellation of such payments under those methods, charge-back options, if any, and the contact details of the payment service provider.

To provide all information as are provided to it by seller and to disclose its relationship with sellers in its terms and conditions of business.

To display and disclose all mandatory notices and contractual information required by applicable laws.

To explain the parameters for determining ranking of goods or sellers on its platform through publicly available descriptions drafted in plain language.

To bear the liability in any action related to the authenticity of goods or services sold by it, where it guarantees that such goods or services are authentic.

Not to represent itself falsely as a consumer and post reviews about goods and services or misrepresent the quality or the features of any goods or services.

Not to represent itself falsely as a consumer and post reviews about goods and services or misrepresent the quality or the features of any goods or services.

Not to conspire or abet or aid in the commission of any unlawful act using any third party information hosted by it and also remove or disable access to material in its computer resource used to commit any unlawful act on that resource, without vitiating the evidence in any manner.

Not to refuse to take back goods, or withdraw or discontinue services or refuse to refund consideration if such goods or services are defective, deficient, spurious, or not as advertised or agreed to or delivered late (unless due to force majeure).

Duties of sellers on a marketplace e–commerce entity:-

i) To execute a prior written contract with the respective e-commerce entity for offering and selling of goods or services.

ii) To appoint a grievance officer who redresses the complaint within one month from the date of receipt of the complaint.

iii) To ensure that the goods or services are consistent with the advertisements made in this regard.

iv) To provide to the respective e-commerce entity, for displaying on the respective platform, its legal name, address, name and details of its website, e-mail address, customer care contact details, its GSTIN and PAN details and all contractual information as per law.

v) To provide for displaying on the respective platform, the total price in single fiture of any good or service, along with the breakup price, showing all the compulsory and voluntary charges such as delivery charges, postage and handling charges, conveyance charges and the applicable tax, as per law.

vi) To provide for displaying on the E-commerce platform, all mandatory notices and information provided by applicable laws and the expiry date of the good being offered for sale.

vii) To provide for displaying on the platform, all relevant details about the goods and services offered for sale by the seller including country of origin, the name and contract numbers, and designation of the grievance officer, name and details of importer, and guarantees related to the authenticity or genuineness of the imported products.

viii)To provide to the respective e-commerce entity all accurate information related to terms of exchange, returns and refund including information related to costs of return shipping in a clear and accessible manner, relevant details related to delivery and shipment of such goods or services; and any relevant guarantees or warranties applicable to such goods or services.

ix) Not to adopt any unfair trade practice.

x) Not to falsely represent itself as a consumer and post reviews about goods or services.

xi) Not to refuse to take back defective, deficient spurious goods, or withdraw or discontinue services or refuse to refund payment.

Grounds on which a consumer complaint lies:

A complaint against the trader or service provider can be filed by a consumer for getting any relief before District Commission or State Commission, as the case may be, complaining for:

i) supply of defective or faulty goods,

ii) deficiency of services for charging excess price or offering goods or services which are hazardous and injurious to life and safety of the public or any act of negligence or omission or commission including deliberate withholding of relevant information which causes loss or injury to the consumer.

iii) executing an unfair contract between a manufacturer or trader or service provider on one hand, and a consumer on the other requiring excessive security deposits from a consumer or imposing any disproportionate penalty or unreasonable charge, obligation or condition on the consumer. Refusing to accept early repayment of debts or unilaterally termination of contract or assigning the contract to the detriment of a consumer, without his consent also attribute to an unfair contract.

iv) adopting unfair trade practice or deceptive practice including making false statement about the goods or services. Unfair and deceptive trade practice also includes not issuing bill or cash memo or receipt for the goods sold or services provided. Refusing to take back defective goods or withdraw deficient services and refusing to refund the payment within stipulated time are some of the offence under unfair trade practice.

Consumer Protection Act, 2019 provides that disclosure of any personal information by the seller or service provider to other person, given in confidence by the consumer (unless such disclosure is made in accordance with the provisions of any law for the time being in force) is an offence under unfair trade practice.

v) any defective product manufactured or sold or for deficiency in services relating thereto, a claim for product liability action lies against the product manufacturer, product seller or produce service provider who are liable to compensate for any harm caused to a consumer including damage to any property, personal injury, illness or death. Personal injury and harm also includes mental agony or emotional distress or any loss of consortium or other loss.

What is Central Consumer Protection Authority (CCPA):

The Consumer Protection Act, 2019 has a provision to establish a Central Consumer Protection Authority (CCPA) to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements. A complaint in this regard may be forwarded to CCPA who shall have an Investigation Wing, and after investigation it can pass direction for recalling of goods or withdrawal of services which are dangerous, hazardous or unsafe. It can also pass direction for reimbursement of the prices of goods or services and discontinuation of unfair practices. In case of misleading advertisement CCPA may issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue or to modify such advertisement. It may also impose a penalty up to Rs 10 lakh on the said endorser in the first instance and Rs 50 lakh for every subsequent contravention.

Penalty and Punishment for offences under Consumer Protection Act, 2019 and for contravention of Consumer Protection (E-Commerce) Rules, 2020:

i) For non compliance of directions of Central Consumer Protection Authority (CCPA) by any person shall be punished with imprisonment for a term which may extend to six months or with fine which may extent to twenty lakh rupees, or with both. It is a compoundable offence under the act.

ii) Any manufacturer or service provider who causes false or misleading advertisement shall be punished with imprisonment for a term which may extend to two years and with fine which may extend to ten lakh rupees and for every subsequent offence, be five years and with fine which may extend to fifty lakh rupees. It punished with imprisonment for a term which may extend to is a compoundable offence under the act.

iii) For manufacturing products containing adulterant for the purpose of selling, storing or distributing or importing, depending on the magnitude of injury caused to the consumer, the act lays down maximum punishment for such offence is imprisonment for life and with fine which shall not be less than ten lakh rupees.

iv) For manufacturing for sale or for storing or selling or distributing of importing spurious goods by any person, depending on the magnitude of injury to the causes to the consumer, the act lays down maximum punishment for such offence is imprisonment for a term which shall not be less than seven years, but may extend to imprisonment for life and with fine which shall not be less than ten lakh rupees.

Author's Analysis

E-commerce business has been flourishing in India rapidly. Consumer confidence is the most important factor for growth of a business where transactions are from business-to-consumer. When consumers have a low confidence, businesses can't grow or earn revenue due to less spending by the consumers, which ultimately leads to downfall of overall economic activity. Consumers spend more when they get confidence in the business transaction in the market which leads to growth of business and economic prosperity.

Consumer Protection Act, 2019 and Consumer Protection (E-Commerce) Rules, 2020 are in conformity with the principles for 'good business practices' as enumerated in United Nations Guidelines for Consumer Protection-2016. Accordingly the provisions of the Act and the Rules for E-commerce business as summarised in this article are based on the principles of fair and equitable treatment, commercial behaviour, disclosure and transparency, protection of privacy of consumers and effective complaints-handling mechanisms of business entities.

It is quite evident from the past enactments of several laws in Indian legal system that poor implementation of any Act and relevant Rules make even the greatest law ineffective. The effective implementation of the Consumer Protection Act and E-Commerce Rules will not be possible until or unless government take initiative for providing basic minimum infrastructure and resources for administration of justice by Consumer Commissions at different level.

Due to new set of pecuniary jurisdiction as provided in the Act practical difficulty may be faced by the consumers in implementing the beneficial legislation in their favour. As per new Act, District Commission will entertain a complaint where value of the goods or services paid as consideration does not exceed Rs.1 Crore. It is obvious that maximum cases would fall under the pecuniary jurisdiction of District Commissions under various State Governments and District Commissions will be burdened with maximum cases to be filed before it. In the present scenario, District Commissions have neither infrastructure nor man power to deal with so many cases which was earlier divided between District Forum, State Commissions and National Commission as per their respective pecuniary jurisdiction. Consequently consumers may not get relief easily due to delay and lack of infrastructure to deal with so many cases which need to be addressed on an urgent basis to strengthen the effective implementation of Consumer Protection Act, 2019 and Consumer Protection (E-Commerce) Rules, 2020.

Views are personal.

(Author is a practicing Lawyer at Delhi)


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