LIABILITIES AND DUTIES OF E-COMMERCE ENTITIES (Part 1)

The Consumer Protection (E-Commerce) Rules, 2020 (Rules) ("the Rules") were issued by the central government in keeping with the provisions of the Consumer Protection Act, 2019 (Act). This article focuses on the liabilities and duties of e-commerce entities, as listed under the Rules. This is helpful for established e-commerce players, start-ups and foreign e-commerce entities not established in India but systematically offering goods or services to consumers in India. In this article, we will look into the Scope and applicability of these Rules, the Key Duties of E-Commerce entities, and Sellers on marketplace entities.

Scope and Applicability

The Rules came into effect on 23rd July 2020 and apply to all goods or services bought or sold over digital or electronic networks, including digital products. It also covers all modes of e-commerce, including marketplace and inventory model. It applies to all e-commerce retail, including multi-channel and single-brand retailers in single or multiple formats. The rules shall also apply to all unfair trade practices across all e-commerce models.

The Rules do not apply to any activity of a natural person carried out in a personal capacity not being part of a professional or commercial activity undertaken regularly or systematically.

These Rules, however, apply to e-commerce entities that are not established in India but systematically offer goods or services to consumers in India.

Key Duties of E-commerce entities

1)???? The Rules require any e-commerce entity to be either

a)???? a company incorporated under the Companies Act, 1956 or the Companies Act, 2013

b)???? a foreign company covered under clause (42) of section 2 of the Companies Act, 2013

c)???? an office, branch or agency outside India owned or controlled by a person resident in India as provided in sub-clause (iii) of clause (v) of the FEMA, 1999

The e-commerce entity shall appoint a nodal person of contact or an alternate senior designated functionary resident in India to ensure compliance with the provisions of the Act or the rules made thereunder.

2)???? Every e-commerce entity shall provide and display the following information prominently on the platform

a)????? the legal name of the e-commerce entity;

b)???? principal geographic address of its headquarters and all branches;

c)????? name and details of its website, and

d)???? contact details like e-mail address, fax, landline and mobile numbers of customer care and grievance officer.

3)???? No e-commerce entity shall adopt any unfair trade practice, whether in the course of business on its platform or otherwise.

4)???? Every e-commerce entity shall establish an adequate grievance redressal mechanism having regard to the number of grievances ordinarily received by such entity from India, shall appoint a grievance officer for consumer grievance redressal, and shall display the name, contact details, and designation of such officer on its platform.

5)???? Every e-commerce entity shall ensure that the grievance officer referred to in sub-rule (4) acknowledges the receipt of any consumer complaint within forty-eight hours and redresses the complaint within one month from receipt of the complaint.

6)???? Where an e-commerce entity offers imported goods or services for sale, it shall mention the name and details of any importer from whom it has purchased such goods or services or who may be a seller on its platform.

7)???? Every e-commerce entity shall endeavour on a best-effort basis to become a partner in the convergence process of the National Consumer Helpline of the Central Government.

8)???? No e-commerce entity shall impose cancellation charges on consumers cancelling after confirming the purchase unless the e-commerce entity also bears similar costs if they cancel the purchase order unilaterally for any reason.

9)???? Every e-commerce entity shall only record a consumer's consent for the purchase of any good or service offered on its platform where such consent is expressed through an explicit and affirmative action, and no such entity shall record such consent automatically, including in the form of pre-ticked checkboxes.

10) Every e-commerce entity shall effect all payments towards accepted refund requests of the consumers as prescribed by the Reserve Bank of India or any other competent authority under any law for the time being in force, within a reasonable period of time, or as prescribed under applicable laws.

11) ?No e-commerce entity shall—

(a) manipulate the price of the goods or services offered on its platform in such a manner as to gain unreasonable profit by imposing on consumers any unjustified price having regard to the prevailing market conditions, the essential nature of the good or service, any extraordinary circumstances under which the good or service is offered, and any other relevant consideration in determining whether the price charged is justified;

?(b) discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Act

Duties of sellers on the marketplace

(1) No seller offering goods or services through a marketplace e-commerce entity shall adopt any unfair trade practice, whether in the course of the offer on the e-commerce entity's platform or otherwise.

(2) No such seller shall falsely represent itself as a consumer and post reviews about goods or services or misrepresent the quality or the features of any goods or services.

(3) No seller offering goods or services through a marketplace e-commerce entity shall refuse to take back goods, withdraw or discontinue services purchased or agreed to be purchased, or refuse to refund consideration if paid if such goods or services are defective, deficient or spurious, or if the goods or services are not of the characteristics or features as advertised or as agreed to, or if such goods or services are delivered late from the stated delivery schedule: Provided that in the case of late delivery, this sub-rule shall not be applied if such late delivery was due to force majeure.

(4) Any seller offering goods or services through a marketplace e-commerce entity shall:

(a) have a prior written contract with the respective e-commerce entity in order to undertake or solicit such sale or offer;

(b) appoint a grievance officer for consumer grievance redressal and ensure that the grievance officer acknowledges the receipt of any consumer complaint within forty-eight hours and redresses the complaint within one month from the date of receipt of the complaint;

?(c) ensure that the advertisements for marketing goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services.

?(d) provide to the e-commerce entity its legal name, principal geographic address of its headquarters and all branches, the name and details of its website, e-mail address, customer care contact details such as fax, landline, and mobile numbers and, where applicable, its GSTIN and PAN details.

(5) Any seller offering goods or services through a marketplace e-commerce entity shall provide the following information to the e-commerce entity to be displayed on its platform or website:

(a) all contractual information required to be disclosed by law;

(b) total price in the single figure of any good or service, along with the breakup price for the good or service, showing all the compulsory and voluntary charges such as delivery charges, postage and handling charges, conveyance charges and the applicable tax, as applicable;

(c) all mandatory notices and information provided by applicable laws, and the expiry date of the goods being offered for sale, where applicable;

(d) all relevant details about the goods and services offered for sale by the seller, including country of origin, which are necessary for enabling the consumer to make an informed decision at the prepurchase stage;

(e) the name and contact numbers and designation of the grievance officer for consumer grievance redressal or for reporting any other matter;

?(f) name and details of the importer, and guarantees related to the authenticity or genuineness of the imported products;

(g) accurate information related to terms of exchange, returns, and refund, including information related to costs of return shipping in a clear and accessible manner;

(h) relevant details related to the delivery and shipment of such goods or services; and

(i) any relevant guarantees or warranties applicable to such goods or services.

Conclusion

The Consumer Protection (E-Commerce) Rules, 2020 demonstrate the government's dedication to safeguarding consumer rights across all e-commerce models, including marketplace and inventory. They cater to the creation of a consumer-centric ecosystem in India. Part II of this article will look into the specific duties and liabilities of marketplace and inventory e-commerce entities and the evolving regulatory environment for e-commerce in India. These rules will foster long-term relationships between e-commerce entities and Indian consumers.

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