The Ministry of Consumer Affairs, on 2 August 2019, released draft guidelines on e-commerce for preventing fraud, unfair trade practices and protecting consumer interests. The proposed guidelines are applicable to Business-to-Consumer (B2C) e-commerce, of goods, services and digital content products. These guidelines define an e-commerce entity as a company incorporated under the Companies Act 2013 or a foreign company u/s 2(42) thereof, or an office, branch or agency in India that is owned or controlled by a person resident outside India and includes an electronic service provider or partnership or proprietary firm, whether inventory or market place model or both, conducting the e-commerce business.
The guidelines provide for the following key provisions:
Within 90 days of the notification of the guidelines, e-commerce entities must comply with certain conditions, including, registration as a legal entity under Indian law, submission of a self-declaration to the Department of Consumer Affairs stating that it is in compliance with these guidelines, the promoter or KMP should not have been convicted of any criminal offence in the last five years, compliance with IT (Intermediaries guidelines) Rules 2011, payments for sale must be facilitated in conformity with RBI guidelines, display of details of sellers on its website.
Sellers transacting or advertising their products on an e-commerce platform are, inter alia, required to have a prior written contract with the said platform in order to undertake or solicit sale or offer. Additionally, they should:
E-commerce entities must provide transparent and effective consumer protection at par with that provided by other forms of commerce. They must publish the name and details of the Grievance Officer on its website to whom complaints may be notified. This officer should redress complaints regarding products availed through the entity’s website within one month of receipt of complaint. Consumers should also be provided the facility to lodge/register complaints over phone, email or website, for which they be given a tracking number. A mechanism/system to converge this process with the National Consumer Helpline must also be provided.
This move comes shortly after the Department of Industrial policy and Promotion (now Department for promotion of Industry and Internal Trade) revised its norms for foreign direct investment in e-commerce by way of Press Note 2 of 2018, which came into effect from 1 February 2019, and is indicative of the broader regulatory overhaul for e-commerce entities in India. Given that e-commerce is set to grow substantially, owing to rising disposable incomes, rapid urbanization, and the increasing adoption and penetration of technology, this is a welcome move to enhance consumer protection.
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