E-Commerce laws in India

Consumer Products Act ; 2019

Consumers, can cheer as the Consumer Protection Act, 2019 has recently replaced the three decade old Consumer Protection Act, 1986.

The new Act proposes a slew of measures and tightens the existing rules to further safeguard consumer rights. Introduction of a central regulator, strict penalties for misleading advertisement and guidelines e-commerce and electronic service providers are some of the key highlights. Consumer redressal commissions, aka consumer courts, are present at the district, state and national levels to address consumer complaints. The Act has increased the pecuniary jurisdiction, which means ability of courts to take up cases depending on the value of the case, of the consumer courts. Since access to district courts is better compared to state and national commissions, the increase in limit to Rs 1 crore of district courts will be a convenience point. Another crucial change says that now the money spent on buying the product till that time will determine the value of the case as opposed to the previous parameter of total value of the purchased goods/service.

The Act allows consumers to file their complaint with the court from anywhere. This comes as a big relief as earlier they were required to file complaint in the area where the seller or service provider was located. This is a fitting move considering the rise in e-commerce purchases, where the seller could be located anywhere. In addition, the Act also enables the consumer to seek a hearing through video conferencing, saving him both money and time. The Act has proposed provisions for product liability under which a manufacturer or a service provider has to compensate a consumer if their good/service cause injury or loss to the consumer due to manufacturing defect or poor service. For instance, if a pressure cooker explodes due to a manufacturing defect and harms the consumer, the manufacturer is liable to compensate the consumer for the injury. Earlier, the consumer would only be compensated with the cooker’s cost. The consumer could ask for compensation, but through a civil court, which usually takes years to resolve a case, and not consumer forum.

E-commerce under the Act

E-commerce will now be governed by all the laws that apply to direct selling. The guidelines propose that platforms like Amazon, Flipkart, Snapdeal etc will have to disclose sellers’ details, such as their address, website, email, etc and other conditions related to refund, exchange, terms of contract and warranty on their website to increase transparency.

The onus of ensuring that no counterfeit products are sold on these platforms will also most likely lie with the companies. If any such product is reported or recognised, the company could be penalised. This move is fitting since cases of fake products sold through e-commerce platforms is rampant. A survey by a social community platform LocalCircles conducted in December last year showed that 38% respondents out of 6,923 were sold counterfeit products from an ecommerce site in one year.

Description of E-commerce

The e-commerce entity has been defined as a company or a foreign company, as defined in the Companies Act, 2013/1956 or an office, branch or agency as covered under FEMA 1999, owned or controlled by a person, resident 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.

General conditions for carrying out an e-commerce business

All e-commerce entities carrying out or intending to carry out e-commerce business in India shall have to be a registered legal entity and shall be required to comply with the conditions mentioned in the Guidelines within 90 days. Further, the entities are required to submit a self-declaration confirming compliance of the Guidelines to the department. The Guidelines mandates that no e-commerce entity shall have a promoter of key managerial personnel who has been convicted of any criminal offence, punishable with imprisonment in the last 5 years by any Court of competent jurisdiction. Further, it is mandatory for the e-commerce entities to comply with the provisions of the Information Technology (Intermediaries guidelines) Rules, 2011 and in case of facilitation of any payments for sale, guidelines of Reserve Bank of India shall be complied with. All details about the sellers supplying the goods and services on an e-commerce platform (including identity of their business, legal name, principal geographic address, name of website, contact details, the products they sell) shall be displayed by an e-commerce entity on their website.

Activities not to be undertaken by the e-commerce entity

The e-commerce entity shall not indulge in any unfair trade practice that may influence the transactional decisions of consumers in relation to products and services or influence the price of the goods and services. Further, the e-commerce entity shall not be indulged in falsely representing the customers or posting false reviews on their behalf. The quality or features of the goods and services shall at no point be exaggerated or misrepresented to the customers by the e-commerce entity.

Liabilities of the e-commerce entity

Informed Choice: An e-commerce entity shall have an obligation to display all the terms relating to refund, exchange, warranty/guarantee, delivery and shipment etc. and such other information as may be required to enable a customer to make informed decisions. Further, all safety and health care information of the goods and services are always required to be duly advertised for sale.
No deception: An e-commerce entity shall ensure the images or information as displayed in the advertisement are always consistent with the actual goods or services and its features.
Payment Security: An e-commerce entity shall ensure that adequate information is provided regarding the methods of payment available and the security of the same, information regarding cancellations, refund, charge back options and any additional costs if applicable shall also be made available on the website.

Personal Data: An e-commerce entity shall have the duty to safeguard and protect all personal data of the customers and shall ensure compliance of the Information Technology (Amendment) Act, 2008.
Return of Product: An e-commerce entity shall not deny any return of goods if the return is being made due to delay in delivery, delivery of defective or spurious or wrong products and or deception from the product received with the advertisement. Further, all payments towards any accepted requests for refund shall be made no later than 14 days from the date of acceptance of such a refund request.
Counterfeit Product: An e-commerce entity, upon receiving information either directly or indirectly, about any counterfeit product being sold on its platform, shall satisfy itself of the legitimacy of the information. Post due diligence, the e-commerce entity shall notify the seller and in the absence of any evidence of the genuineness of the product by the seller, it shall delist the product from its platform and notify its customers accordingly.
Contributory Liability: E-commerce shall have the liability of all the products being sold on its platform that it assures or guarantees to be authentic and shall be guilty of contributory or secondary liability if such assurance or guarantee is found untrue or false.