E-Commerce Portal Liable If Seller Does Not Mention "Country Of Origin" Of Product : Consumer Forum

In what is possibly a first of its kind judgment, a Consumer Forum has held an e-commerce platform liable for the vendor not displaying the "country of origin" of the product.

The District Consumer Disputes Redressal Commission of Hyderabad noted that under the Consumer Protection (E-Commerce Rules) 2020, the seller is obliged to provide information regarding country of origin of the product and the e-commerce market place must ensure that necessary information is displayed so that the customer can make an informed choice.

If there is any violation of the E-Commerce Rules, the e-commerce market place cannot invoke the "safe harbour" immunity available for intermediaries under Section 79 of the Information Technology Act.

Therefore, the consumer forum held Paytm(the e-commerce market place) and Uni One India Pvt Ltd (the vendor) liable for deficiency of service and pay compensation of Rs.15,000 to Advocate Baglekar Akash Kumar, the complainant in the case. 

Complainant's case

The complaint related to an Usha sewing machine purchased by the Akash Kumar in August 2020 through Paytm for Rs.13,440. When the package was delivered, the complainant found out that the machine was made in Thailand. The manufacture did not display the country of origin in the site as mandated under Rule 6(5)(d) of the Consumer Protection (E-Commerce) Rules, 2020. Since no information was given, the complainant assumed that the product was made in India. The complainant submitted that he would not have purchased the sewing machine had the country of origin been mentioned on the online portal.

Opposing the complaint, Paytm contended that it is an online market place which provides a platform for different sellers to sell their products and acts only as an intermediary to facilitate sale transactions between the sellers and buyers and has no direct involvement with the sale of the product. 

The manufacturer contended that mere omission of the information pertaining to country of origin does not amount to unfair trade practice when all other relevant information has been provided. It also submitted that there was no need for the complainant to base his decision on an assumption as he had the option to seek clarification from the manufacturer. It further submitted that no harm, injury, mental agony, or trauma was caused to the complainant due to the unintentional omission.

Concealing country of origin amounts to deceptive practice : Forum's observation

The consumer forum observed that,  "Inducing the consumer to purchase a particular product without specifically mentioning the origin of the country can be construed as not providing the consumers with the information which is to be provided under E-Commerce Rules 2020".

"The case falls within the ambit of relevant rules, which specifies that the seller shall provide the information to the E-Commerce entity to be displayed on its platform or website, i.e., all relevant details about the goods and services offered for sale by the seller including the country of origin which is necessary for enabling the consumer to make an informed decision at the pre-purchase stage. Not providing the mandatory information is nothing but deceptive practice which distort the consumer choice."

E-commerce entity liable for negligent conduct of the seller

The Consumer forum rejected the arguments of Paytm by noting that there is a " paradigm shift in the liability of online traders, who until now majorly functioned in the nature of middlemen". With the E-commerce Rules coming into force, the online traders will become directly and vicariously responsible for the damage caused by the vendor to the customer. This implies that even, in cases of negligent conduct by the seller, the onus of liability shall fall upon the E-commerce entity, if any losses are incurred by the end consumers, the forum noted.

"E-commerce Rules categorically spell out the vicarious liability of the E-commerce entities including online platforms. By presenting themselves as mere intermediaries and claiming liability exemption under Section 79 of the IT Act is not applicable in the instant case as all E-commerce entities will have to mention the country of origin on all products, more so, when imported from other countries that are offered for sale.

Not mentioning the country of origin a contravention of E-commerce rules

The order further stated "

"With increasing popularity of E-commerce websites, E-commerce business in India has ushered a significant change in shopping habits of consumers. When consumers decide to buy a product, they primarily rely on the information provided by companies in their product advertisement. However, this race to be on top has led to an increase in malpractices of false claims and concealing and misleading information. In the instant case, the act of not mentioning the country of origin on the product is nothing but the contravention of the relevant E-commerce rules".

The Commission comprising Mrs.Uma Venkata Subba Lakshmi (President), Mrs.C Lakhsmi Prasanna (Member) and Mrs.Madhavi Sasanakota (Member) thus directed the Opposite Parties 1 and 2 are directed to comply with the Consumer Protection (E-Commerce) Rules, 2020 in letter and spirit and issue corrective product information that came to question in the instant complaint. The Commission also directed the opposite parties to pay compensation of Rs. 15,000 for deficiency of service and adoption of unfair trade practice.