Legal, All about the Act

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This Blog is written by Ruhani Garg from Institute Of Law, Nirma University, Gujarat. Edited by Saradarasagnya Oleti.

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INTRODUCTION

Transactions that are conducted online or through Internet is known as e commerce or Electronic Commerce. E-Commerce means buying and selling of goods and services by the digital or electronic network. The sector of e-commerce in India has been facing a significant growth fuelled by expansion in number of online users, the rising popularity of social media platforms and developing entrance of smartphones. India is adding one internet user every three second, according to Morgan Stanley report-2019 and e-commerce sector in India is estimated to reach USD 230 billion by 2028 which is accounting for 10% of total Indian’s retail.

The Department of Consumer Affairs, Food and Public Distribution issued the E-Commerce guidelines in order to protect the interest of consumers. The E-Commerce Regulation Bill, 2019, protects the rights of consumer against marketing of products and services through e-commerce and for the matters which are connected to e-commerce. These Norms and regulations are the guiding principles for e-commerce business to protect the legal rights of consumers and prevent activities like fraud and unfair trade practices. These guidelines are applicable to B2C (Business to Customer) e-commerce organisations like Amazon, Flipkart, Paytm Mall. These guidelines are also applicable to e-commerce organisations (B2C) which are involved in digital content products. The main regions that have been covered in the norms include preventing price influencing, addressing counterfeit, improving integrity of reviews as well as expanding transparency of terms and conditions that e-commerce organisations have with sellers and about divulgence of seller’s information.

E-commerce entity – The E-Commerce Regulation Bill, 2019 defined e-commerce organisation as a company incorporated under the Companies Act, 2013 or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in Section 2(v)(iii) of FEMA 1999, owned or controlled by a person who is residing outside India and includes an electronic service provider or a partnership or proprietary firm, whether inventory or market place model or both and conducting the e-Commerce business.. The guidelines benefitted the consumers as the norms include conditions such as ensuring that the marketing and advertisement of goods and services should be consistent with the actual characteristics and it is compulsory to mention safety and health care information of the goods and services that are advertised for sale.

SIGNIFICANCE

The salient features of the guidelines issued under E-commerce Regulation Bill, 2019 are as follows:

A. Conditions for carrying out an e-commerce business

Any e-commerce business in India has to follow new guidelines for being eligible to operate in the country. As per the laws of India, e-commerce business needs to be registered as legal entity and required to comply with the conditions mentioned in guidelines within 90 days. All the e-commerce organizations operating in India have to follow the provisions of the Information Technology (Intermediaries Guidelines) Rules, 2011. As per the guidelines any promoter or key management personnel should not have been convicted of any criminal offence punishable with imprisonment in last 5 years by any Court of competent jurisdiction and have to comply with the guidelines. Also, all the payments and transactions facilitated by e-commerce entities should be done while following the guidelines by Reserve Bank of India (RBI).

All the entities are also required to submit a self-declaration that confirms their compliance of the guidelines. Also, all the details about sellers supplying the goods and services shall be displayed by e-commerce entities on their website, especially the type of business furnished by seller including identity of their business, legal name, principal geographic address, name of website, contact details, name of the product they sell.

B. Duties and Liabilities of E-commerce entities

• It is compulsion for e-commerce entities to accept returns of the products delivered in case they are defective or spurious or if they do not have the characteristics and features advertised or if the return is being made due to delay in delivery. Further, the payments towards refund shall be made within 14 days from the date of acceptance of such a refund request.

• It is obligation of the e-commerce entity to display all the terms and conditions to increase transparency of the contract between sellers and e-commerce organisations about refund, exchange, warranty/guarantee, delivery and shipment, mode of payments and redressing grievances. and other information that may be required by customer to make informed decisions. Also, the safety and health care information related to goods and services is required to be duly advertised for the sale.

• According to the guidelines, an e-commerce entity has to safeguard and protect the personal data of consumers and comply with the provisions of Information Technology Act, 2008. The organisations have to ensure that adequate information is provided regarding the methods of payment to consumer and security of such information which is provided by the customer. The information regarding cancellations, refund, charge back options and any additional costs shall also be made available on the website by the entity.

• E- commerce entities cannot indulge in trade practices for promoting the sale of goods and services or use or deceptive methods that may influence the customer’s transactional decisions. There entities are not allowed to influence the price of the goods and services they offer. Also, the norms aim to restrict sellers from falsely representing themselves as consumers and posting false reviews as well as misrepresenting the quality and features of goods and services on their websites. These entities shall also ensure that the information displayed in the advertisement of the product should be consistent with actual goods and services and its features.

• If an e-commerce entity receives any information about the counterfeit product being sold on its platform, shall satisfy itself of the legitimacy of the information. If seller of the product fails to prove genuineness of the product then it can delist the goods and services from its platform and notify its customer accordingly. The e-commerce entity should ensure that all the products being sold on its platform shall be authentic and it shall be contributory or secondary liable if such assurance and guarantee is found untrue or false.

C. Liabilities of seller

Any seller who is selling or advertising their goods and services on e-commerce platforms have several liabilities according to the guidelines under E-commerce Regulation Bill, 2019. The seller should have the prior contract with the e-commerce entity before the sale and advertisement of goods and services. There should be transparency of the contract and seller has to provide all the information about contract with e-commerce entity as per the law and other provisions.

The seller has to provide both single figure price and break-up price for goods and services and has to ensure that the display of charges include display of all compulsory charges such as postage, delivery, conveyance, taxes and handling charges. It is the duty of seller as per the guidelines that health and safety care warnings are being provided for goods and services on e-commerce platform. Also, the seller should mandatorily require to provide the policies related to delivery and shipping for the customer.

Seller has to comply with the provisions of Legal Metrology (Amendment) Rule, 2017 for pre-packaged commodities. Seller will be responsible for warranty and guarantee obligations of the goods and services sold. Seller should ensure that there is clarity of the process of exchange, refund, returns of the goods and costs occurred between him and e-commerce entity.

D. Procedure of consumer grievance redressal

According to E-commerce Regulation Bill, 2019, it is mandatory for e-commerce entity to publish on its website the name and contact details of grievance officer. The Bill has sought transparency on the procedures followed to address complaints. An e-commerce entity has to ensure that consumers are provided with the adequate facilities to get their complaints registered. Each complaint will have the unique complaint number and it will be provided to the consumer to keep track of the status of their complaint. It is mandatory for the Grievance officer to redress the complaint within period of one month from the date of receipt of such complaint.

E-commerce entities are also required to provide a mechanism or system to consumer wherein any redress grievance redress mechanism shall be permitted to be converged with National Consumer Helpline.

CONCLUSION

When a consumer approaches the market for any goods or services, he expects value for money i.e. not being cheated by manufacturers or sellers. The E-Commerce Regulation Bill, 2019, protects the rights of consumer against marketing of products and services through e-commerce and for the matters which are connected to e-commerce. These Norms and regulations are the guiding principles for e-commerce business to protect the legal rights of consumers and prevent activities like fraud and unfair trade practices.

These guidelines provide transparent and effective consumer protection that are same as the level of protection offered in other forms of commerce. Before the introduction of the Bill intermediaries are directed by provisions of Information Technology Act, 2011. These fail to provide a time limit for redressal of a complaint and tracking of the status of each complaint. Current guidelines are compliance with Rule 11 of Information Technology (Intermediaries Guidelines) Rules, 2011 and are also part of rules to the Consumer Protection Act, 2019, thereby having better enforceability in the court of law.