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Policy Brief: Draft e-Commerce Guidelines for Consumer Protection 2019

Context

On 2 August, the Department of Consumer Affairs under the Ministry of Consumer Affairs, Food & Public Distribution, issued draft guidelines on e-commerce for protection of consumers’ interest. It proposes a slew of consumer safeguards that forbid e-commerce companies from influencing pricing, adopting unfair promotion methods or misrepresenting the quality of goods and services.

These are issued as guiding principles for e-commerce business for preventing fraud, unfair trade practices and protecting the legitimate rights and interests of consumers. These Guidelines apply to the Business-to-Consumer e-Commerce, including goods and services, which also include digital contents products,” said the draft Model Framework for Guidelines on e-Commerce for consumer protection, which has been issued as an advisory to state governments/ Union Territories.

The Department of Consumer Affairs has invited comments/suggestions on the draft guidelines from stakeholders by 16 September.

Earlier this year, in a move to help hundreds of thousands of small businesses and domestic sellers, the government imposed new e-commerce FDI rules from 1 February, banning online retailers from selling products of companies, wherein they own stakes and restricting them from entering into exclusive merchandise deals.

The recent move to regulate the e-commerce companies comes at a time when a comprehensive e-commerce policy is being drafted and is expected to take another several months to get its final form. This can be seen as immediate steps to enhance protection of consumer rights.

Key highlights of the draft guidelines

  1. E-commerce companies will have to display the following details on its website- the sellers supplying the goods and services, including identity of their business, legal name, principal geographic address, name of website, e-mail address, contact details, including clarification of their business identity, the products they sell, and how customers can contact them.
  2. E- commerce entities have been forbidden to-
  • directly or indirectly influence the price of the goods or services and shall maintain a level playing field.
  • adopt any trade practice which for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, or composite supply, adopts any unfair methods or unfair or deceptive practice that may influence transactional decisions of consumers in relation to products and services.
  • falsely represent themselves as consumers or post reviews about goods and services in their name; or misrepresent or exaggerate the quality or the features of goods and services.
  1. E-commerce entities have been mandated to-
  • display terms of contract between e-commerce entity and the seller relating to return, refund, exchange, warranty / guarantee, delivery / shipment, mode of payments, grievance redressal mechanism etc. to enable consumers to make informed decisions.
  • ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such of goods or services.
  • mention safety and health care information of the goods and service advertised for sale.
  • provide information on available payment methods; the security of those payment methods, how to use those methods; how to cancel regular payments under those methods; charge back options and any costs applicable to those payment methods.
  • ensure that personally identifiable information of customers are protected, and that such data collection and storage and use comply with provisions of the Information Technology (Amendment) Act, 2008.
  • accept return of goods if delivered late from the stated delivery schedule or delivery of defective, wrong or spurious products, and/or not of the characteristics/features as advertised.
  • effect all payments towards accepted refund requests of the customers within a period of maximum of 14 days.
  1. If the e-commerce entity is informed by the consumer or comes to know by itself or through another source about any counterfeit product being sold on its platform, and is satisfied after due diligence, it shall notify the seller and if the seller is unable to provide any evidence that the product is genuine, it shall take down the said listing and notify the consumers of the same.
  2. E-commerce companies shall be held guilty of contributory or secondary liability if it makes an assurance vouching for the authenticity of the goods sold on its market place – or if it guarantees that goods are authentic.
  3. Any seller selling or advertising his products or services through an e-commerce platform shall –
  • have prior written contract with the respective e-commerce entity in order to undertake or solicit such sale or offer.
  • provide all information required to be provided either by law or by any other mandatory regime for disclosing contractual information and compliance with that regime will be treated as sufficient.
  • display single-figure total and break up price for the goods or service, that includes all compulsory charges such as delivery, postage, taxes and handling and conveyance charges.
  • comply with mandatory display requirements as per Legal Metrology (amendment) rules 2017 for pre-packaged commodities.
  • provide mandatory safety and health care warnings and shelf life that a consumer would get at any physical point of sale.
  • provide fair and reasonable, delivery terms, or to directly reference the shipping policy.
  • be responsible for any warranty/guarantee obligation of goods and services sold.
  • be upfront about how exchange, returns and refund process works, and who bares the costs of return shipping.
  1. Every e-commerce entity will have to publish the name and contact details of its grievance officer, who would have to address complaints within one month from the date of receipt. The officer will also provide facility to consumers to register their complaints over phone, email or website and provide complaint number for tracking the complaint.

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