Context

The government has proposed changes to the e-commerce rules under the Consumer Protection Act, 2019 to make the operation framework more stringent.

About

Key changes proposed in the e-commerce rules

• The rules are issued by the Ministry of Consumer Affairs.
• These rules are proposed to change the Consumer Protection (e-commerce) Rules 2020.

e-commerce entity An e-commerce entity is a company incorporated under the Companies Act, 1956 or the Companies Act, 2013. A foreign company covered under clause (42) of section 2 of the Companies Act, 2013  or an office, branch or agency outside India owned or controlled by a person resident in India under the Foreign Exchange Management Act, 1999. Consumer Protection (e-commerce) Rules 2020 No e-commerce entity shall adopt any unfair trade practice, whether in the course of business on its platform or otherwise. Every e-commerce entity shall establish an adequate grievance redressal mechanism. It shall appoint a grievance officer for consumer grievance redressal. Every e-commerce entity shall 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. No e-commerce entity shall 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. No e-commerce entity shallmanipulate the price of the goods or services offered on its platform in such a manner as to gain unreasonable profit.

• The rules seek to ban “specific flash sales” by e-commerce entities.
• The specific flash sales limit the consumer choice.
• It prevents a level playing field.
• It does not ban conventional e-commerce flash sales.
• It also introduced the concept of “fall-back liability”.
• According to this, e-commerce firms will be held liable in case of loss to the customer.
• It also restricts e-commerce companies from “manipulating search results or search indexes”.
• It also protects the personal information of the consumer.
• Any online retailer will first have to register itself with the Department of Promotion for Industry and Internal Trade (DPIIT).
• Any entity having 10 percent or more common ultimate beneficial ownership will be considered an “associated enterprise” of an e-commerce platform.
• It also mandates e-commerce companies to appoint a grievance officer, a chief compliance officer, and a nodal contact person “for 24×7 coordination with law enforcement agencies”.
• To share information with a “government agency which is lawfully authorized for investigative or protective or cybersecurity activities.

India’s e-commerce Industry India e-commerce will reach US$ 99 billion by 2024. It is growing at a 27% CAGR over 2019-24. Since 2014, the Government of India has announced various initiatives, namely Government eMarketplace (GeM) Open Network for Digital Commerce (ONDC) The Consumer Protection (e-commerce) Rules 2020 National Retail Policy Under the Digital India movement, the Government launched various initiatives like Umang, Start-up India Portal, Bharat Interface for Money (BHIM),etc FDI in E-commerce marketplace model to up to 100% (in B2B models)