How many times have you resorted to tweeting or posting on Facebook, trying to grab the attention of a particular seller or brand for an online shopping transaction gone wrong? The newly notified Consumer Protection (E-Commerce) Rules, 2020 ("Rules") that were notified on July 23rd, 2020 may just be the answer to your troubles. These Rules, which have been issued pursuant to the enactment of the Consumer Protection Act, 2019 ("Act"), lay down stricter, tougher requirements for e-commerce entities/ electronic retailers to follow. The Rules, which in their earlier draft format contemplated including provisions regarding data localization, do not in fact touch upon this contentious subject matter and it is assumed that the proposed data protection legislation will deal with the same.

Applicability.

The Rules, while distinguishing between the two types of e-commerce models – marketplace1 and inventory2 models, are applicable to both. Additionally, the Rules are applicable to (a) all goods and services bought or sold over digital or electronic networks, including digital products; (b) all e-commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats; and (c) all forms of unfair trade practices across all models of e-commerce. The Rules also apply to all e-commerce entities registered both in India as well as outside India, offering goods or services to consumers in India.

Duties of E-commerce Entities.

In a major breakthrough, the Rules mandate that no e-commerce entity can impose cancellation charges on consumers cancelling after confirming purchase unless similar charges are also borne by the e- commerce entity if they cancel the purchase order unilaterally for any reason. Further, every e-commerce entity can only record the consent of a consumer for the purchase of any good or service where such consent is expressed through an explicit and affirmative action. It has been clarified that the entity cannot record such consent automatically, including in the form of pre-ticked checkboxes. An e-commerce entity is also prohibited from manipulating the price of the goods or services so as to gain unreasonable profit or discriminate between consumers of the same class or make any arbitrary classification of consumers.

Every e-commerce entity is required to establish a grievance redressal mechanism keeping in mind the number of grievances it ordinarily receives from India and to also appoint a grievance officer dedicated to such consumer grievance redressal. Even sellers on a marketplace entity are required to appoint a grievance officer. The grievance officer appointed by the e-commerce entity as well as the seller shall acknowledge the receipt of any consumer complaint within forty-eight hours and redress the complains well within one month from the date of receipt of the complaint. Entities are also required to appoint a nodal person of contact or an alternate senior designated functionary resident in India to ensure compliance with the provisions of the Act.

An e-commerce entity or seller (on a marketplace) offering imported goods or services is required to mention the name, details of any importer from whom it has purchased such goods or services and guarantees related to the authenticity or genuineness of the imported products. Other information that all e-commerce entities are required to display to its users is as follows:

Legal name of the

e-commerce entity;

 Principal address of its headquarters and branches; Name and details of its website.

Liability of E-Commerce Entities.

Another hotly debated topic this last decade has been Section 79 of the Information Technology Act, 2000 ("IT Act"), which grants conditional immunity to intermediaries from liability for third party acts. Marketplace e-commerce entities have often claimed that they are intermediaries as defined under the IT Act and thereby protected by the safe harbour provision (Section 79 of the IT Act). Intermediaries attempting to claim such exemptions are required to meet certain minimum standards of due diligence, such as requiring users to not commit illegal acts, including infringement of IP, defamation, etc. Once the requirement of Section 79 and other prescribed guidelines thereunder are met, the intermediary cannot be made liable for "any third-party information, data or communication link made available or hosted" by it. Apart from the above, the intermediary essentially is also required to show that tit only provides access to third party content and does not initiate any transmission/does not select the receiver of the transmitted data/cannot select or modify the data being transmitted. Additionally, once an intermediary receives "actual knowledge" or is notified by the government or its agency that any information/data transmitted by the intermediary is being used for an unlawful act, it should remove or disable access to such material.

The Rules, with regard to liability of marketplace e-commerce entities, state that for a marketplace to be protected from liability under Section 79, it shall be required to meet the condition set forth in Section 79 as well as the provisions of the Information Technology (Intermediary Guidelines) Rules, 2011. While on the topic of liability, if an inventory e-commerce entity guarantees or vouches (explicitly or implicitly) for the authenticity of the goods or services sold by it, is responsible for appropriate liability in any action related to the authenticity of such good or service.

The Rules further provide for certain duties, liabilities and obligations for marketplace e-commerce entities and its sellers and inventory e-commerce inventories. These have been summarized below:

Marketplace E-Commerce Entities Sellers on Marketplace

E-Commerce Entities

 Inventory E-Commerce Entities
  • Require sellers to ensure that descriptions, images, and other content pertaining to goods or services on the platform is accurate and in accordance with the appearance, nature, quality, purpose and other general features of such good or service.
  • Require the e-commerce entity to take reasonable efforts to maintain a record of relevant information allowing for the identification of all sellers who have repeatedly offered goods or services that have previously been removed or access to which has previously been disabled under the Copyright Act, 1957, the Trade Marks Act, 1999 or the IT Act.
  • The e-commerce entity is not compelled to terminate the access of such seller to its platform pursuant to this sub-rule but may do so on a voluntary basis.
  • Include in its sellers' terms and conditions, a description of any differentiated treatment which it gives or might give between goods or services or sellers of the same category.
 Sellers are to provide the e-commerce entity its legal name, address of its headquarters and branches, the name and details of its website, its e-mail address, customer care contact details such as fax, landline, and mobile numbers and its GSTIN and PAN details. Sellers are also required to provide the e-commerce entity the following information for display on the platform or website:

  • total price in 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 tax, as applicable;
  • all information and notices mandated by applicable laws, including the expiry date of the goods, country of origin;
  • the name, contact numbers, and designation of the grievance officer for consumer grievance redressal or for reporting any other matter;
  • information regarding delivery and shipment, guarantees or warranties, exchange, returns, and refund including information related to costs of return shipping; and
  • all contractual information required to be disclosed by law.
 Display the following information in a clear and accessible manner, for its users:

  • total price in 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;
  • all information and notices mandated by applicable laws;
  • accurate information related to return, refund, exchange, warranty and guarantee, delivery and shipment, cost of return shipping, mode of payments, grievance redressal mechanism, and any other similar information which may be required by consumers to make informed decisions;
  • information on available payment methods and related security, the procedure to cancel regular payments, any fees or charges payable by users, charge back options and the contact information of the relevant payment service provider;
  • a ticket number for each complaint lodged, through which the consumer can track the status of their complaint; and
  • all contractual information required to be disclosed by law.
Display the following information prominently on its platform:

  • details about the sellers offering goods and services, including the name of their business, whether registered or not, their address, customer care number, any rating or other aggregated feedback about such seller;
  • a ticket number for each complaint lodged through which the consumer can track the status of the complaint;
  • information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism, and any other similar information which may be required by consumers to make informed decisions;
  • information on available payment methods, the security of those payment methods, any fees or charges payable by users, the procedure to cancel regular payments under those methods, charge-back options, if any, and the contact information of the relevant payment service provider; and
  • an explanation of the main parameters based on which goods or sellers are ranked on its platform.
  • A seller offering goods or services through a marketplace e-commerce entity is prohibited from adopting any unfair trade practice, including falsely posing as a customer to post reviews about goods or services or misrepresent the quality or the features of any goods or services.
  • A Seller is required to ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services.
  • Sellers are also not permitted to refuse to take back goods, or withdraw or discontinue services purchased, or refuse to refund consideration, if such goods or services are defective, deficient or spurious, or do not match the description/features advertised on the platform or even if such goods or services are delivered late from the stated delivery schedule (only for deviations not attributable to force majeure events).
  • Sellers are required to have in place a written contract with the respective e-commerce entity to sell the goods and services on the platform.
  • The inventory e-commerce entity is prohibited from falsely posing as a customer to post reviews about goods or services or misrepresent the quality or the features of any goods or services.
  • The inventory e-commerce entity is required to ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services;
  • Inventory e-commerce entities are not permitted to refuse to take back goods, or withdraw or discontinue services purchased, or refuse to refund consideration, if such goods or services are defective, deficient or spurious, or do not match the description/features advertised on the platform or even if such goods or services are delivered late from the stated delivery schedule (only for deviations not attributable to force majeure events).

The penalties that are applicable to flouting the Rules shall be as provided in the Act which includes monetary penalties as well as imprisonment.

Footnotes

1 Marketplace e-commerce entity is an e-commerce entity which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.

2 Inventory e-commerce entity is an e-commerce entity which owns the inventory of goods or services and sells such goods or services directly to the consumers and shall include single brand retailers and multi-channel single brand retailers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.