Barely 11 months after the Government notified the Consumer Protection (E-Commerce) Rules, 2020, the Department of Consumer Affairs has mooted a set of sweeping amendments, apparently “to protect the interests of consumers and encourage free and fair competition in the market”.
WHAT IS ELECTRONIC COMMERCE (E-COMMERCE)?
- Electronic commerce or e-commerce is a business model that lets firms and individuals buy and sell things over the internet.
- It is similar to the digital version of mail-order catalog shopping, which can be conducted over computers, tablets, or smartphones.
- In present times, nearly every imaginable product and service is available through e-commerce transactions, including books, music, plane tickets, and financial services such as stock investing and online banking.
TAKEAWAYS OF THE AMENDMENTS
- Anorm stipulating the appointment of a chief compliance officer;
- A nodal contact person for 24×7 coordination with law enforcement agencies;
- Requiring e-commerce entities offering imported goods or services to ‘incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives to ensure a fair opportunity to domestic goods’;
- Also, it mandates a fall-back liability on online marketplaces in the event of non-delivery of goods or services to the consumer;
- Registration has also been made mandatory for all e-commerce players;
- Specific ‘flash sales’, including ‘back-to-back’ ones, are set to be banned;
- All entities must provide information within 72 hours on any request made by an authorised government agency probing any breach of law including cybersecurity issues.
REASON BEHIND SUCH AMENDMENTS
- E-commerce platforms have topped the National Consumer Helpline’s complaints chart.
- Also, following on the heels of the recent IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, the draft e-commerce amendments show the Government’s increasing keenness to exercise greater oversight over all online platforms.
- The Centre also appears to be signalling its intent to dig in its heels in an intensifying stand-off with Walmart’s unit Flipkart, and Amazon, which are both now in court battling an attempt by the Competition Commission of India to reopen a probe into their business practices.
- The two large e-commerce players have had to contend with accusations that:
- their pricing practices are skewed to favour select sellers on their platforms
- and that their discounting policies have hurt offline retailers
- The latest changes expressly seek to ensure that none of an e-commerce entity’s ‘related parties and associated enterprises is enlisted as a seller for sale to consumers directly’.
- This could impact several platforms that retail products supplied by vendors with arm’s length ties.
- The enforcement of many of these norms is bound to spur protracted legal fights.
- In trying to address shortcomings in its rules from last year, the Government appears to be harking back to an era of tight controls.
- But overregulation with scope for interpretative ambiguity risks retarding growth and job creation in the hitherto expanding e-commerce sector.