Overview

Draft Consumer Protection (E-Commerce) Rules, 2019: Effect and Analysis

Introduction

With a view to give effect to the Consumer Protection Act, 2019 (notified in the official gazette on 09.08.2019), the Department of Consumer Affairs, Ministry of Consumer Affairs, Food & Public Distribution, Government of India, published the draft Consumer Protection (E-Commerce) Rules, 2019 (‘draft Rules’) on 11.11.2019, for the information of the general public and for inviting comments and/or recommendations from all industry associations and stakeholders.

It is pertinent to state here that these draft Rules have assumed relevance and importance only on account of the fact that all consumer goods/services transactions conducted and concluded via electronic means/e-commerce platforms are duly covered within the purview of the Consumer Protection Act, 2019 (‘Act’).

The basic rationale behind introducing these Rules is to ensure a level playing field for all sellers and to uphold and protect the interest of the ultimate consumer by regulating the e-commerce entities operating in India.

Analysis

Rule 3 of the draft Rules categorically lays down certain conditions for undertaking e-commerce transactions, which need to be complied with by all e-commerce entities carrying out business in India within ninety (90) days from the date of publication of the final version of these draft Rules in the official gazette. All such e-commerce entities shall:

• be registered under Indian laws and must certify compliance with the Rules;
• not be promoted or managed by (which includes all key members of the management team) anyone convicted of a criminal offense carrying a punishment in the last 5 years by any Court of competent jurisdiction. This applies globally and is not restricted to India;
• comply with the provisions of IT (Intermediaries Guidelines) Rules, 2011;
• confirm to Reserve Bank of India (RBI) guidelines for payment facilities;
• furnish details about sellers, including the identity of their business, legal name, principal geographic address, name of the website, the products they sell, and how they can be contacted by customers.

Rule 4 of the draft Rules comprehensively fixes the liabilities and obligations on the e-commerce entities. The said Rule 4 provides that an e-commerce entity cannot directly or indirectly influence the price of the goods or services. This obligation has been introduced to ensure that a level playing field is maintained between the various players in the open market. The e-commerce entities are further prohibited from adopting any trade practice for promoting the sale of goods or provision of services which may influence the purchase decisions of the consumers. In addition to the aforesaid, the e-commerce entities are supposed to display their contracts with the sellers and provide clear information regarding return, refund, exchange, warranty/guarantee, delivery of the goods, so that the consumer is in a position to make an informed decision. Moreover, the draft Rules have also covered and brought under scrutiny the false advertising activities resorted to by the e-commerce entities.  Accordingly the draft Rules mandate and require the entities to ensure that the advertisements for the marketing of goods or services made available through e-commerce are consistent with the actual characteristics, access, usage conditions of such  goods or services and any health and safety information of the goods and services.

In addition to the above, Rule 5 of the draft Rules specifies the liabilities of the sellers that utilize the digital marketplace made available by such e-commerce platforms/entities. The aim of fixing liabilities on such sellers is to ensure that the rights of the consumers are safeguarded by incorporating an element of fairness and responsible dealing in transactions governing services offered by the e-commerce entities. This Rule mandates that all such sellers need to display single-figure total and break up price for the goods or services, that includes all compulsory charges such as delivery, postage, taxes and handling and conveyance charges. Further they are required to comply with labelling and display requirements as per the Legal Metrology (Amendment) Rules 2017 for any pre-packaged commodities that they are selling.

Lastly, Rule 6 of the draft Rules mandates that every e-commerce entity shall set up and provide for a mechanism and system for ensuring prompt and effective redressal of consumer grievances and resolution of consumer disputes.

Conclusion

The introduction of these draft Rules seems to be a promising step aimed towards protecting the interest and rights of consumers by subjecting such e-commerce entities to clearly defined rules and regulations. These draft Rules need to be implemented by the Government in their true letter and spirit to ensure that all market players have a level playing field characterised by healthy competition by subjecting all e-commerce entities to responsibilities and obligations similar to that of the brick and motor stores.