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Consumer Protection (E-Commerce) Rules, 2020 and their impact on consumers and e-commerce entities

 By Nevin Clinton, Flywork.io Team, Flywork.io.

The Ministry of Consumer Affairs, Food, and Public Distribution issued the Consumer Protection (E-Commerce) Rules, 2020 last year, and the Rules coupled with the Consumer Protection Act, 2019 have some important implications for consumers and e-commerce entities. E-commerce here refers to the buying and selling of goods or services, including digital products over the digital or electronic network. The Rules also define an e-commerce entity as any person who owns, operates, or manages a digital or electronic facility or platform for electronic commerce, but does not include a seller offering his goods or services for sale on a marketplace.

The 2019 Act brought in an important change by including e-commerce entities under consumer laws when it added an explanation under Section 2(7) stating that the expressions "buy any goods" and "hires or avails any services" include offline or online transactions through electronic means. It is noteworthy here that even before the Act was passed, there were rules on e-commerce released by the government in both 2018 and 2019. The 2020 rules are still significant as there are plenty of important changes that have been introduced. 

Concept of ‘user’ defined

  First and foremost, the e-commerce rules have brought in the concept of ‘user’ which is a wider term than ‘consumer’. Here, all persons (individuals or companies) who make use of a computer resource of an e-commerce entity are covered. This is important because, in all the rules where an obligation is imposed on the entities, it is that which has the corresponding right to be informed and not the ‘consumer’. Thus, the rules have brought in entities that have users or consumers on the internet under the purview of consumer laws.

E-commerce entities to disclose information

  Under the e-commerce rules, every e-commerce entity has to provide various information on its platform that is displayed ‘prominently’ to its users. These duties are listed down by the 7th rule and it includes details like mentioning the legal name of the e-commerce entity, details of website and contact details, address of headquarters and branches, and so on. Further, marketplace entities (those that connect buyers and sellers) must provide details on refund,  return, exchange, warranty, guarantee, delivery, shipment, modes of payment, the security of the methods, fees or charges payable by users, details on how to cancel payments under the said methods, charge-back options and contact information. Similarly, obligations are imposed on inventory entities (those that own inventory of goods and sell directly to consumers) as well. 

Other salient features of the rules

 Another important inclusion in the rules is the one concerning grievance redressal mechanisms in e-commerce entities. Every entity is required to have such a mechanism and a grievance officer must be appointed. Further, on the platform, the contact details of the said officer must be displayed. The officer has the duty of acknowledging every consumer complaint within 48 hours before redressing it in a maximum of one month.

    The rules also protect users from being subject to false representation and price manipulation. The e-commerce entity posing as a user and posting reviews and the likes of such things are prohibited. Further, the entity must not subject its consumers to ‘unjustified’ prices considering the existing market conditions.

How do the rules impact e-commerce entities and consumers?

   The e-commerce rules are directed at ensuring that e-commerce entities don’t manipulate their consumers online by misleading them. By providing for the prohibition of false representation and price manipulation, the rules safeguard the consumers while the obligations of disclosing a plethora of information help them stay aware.

Further, in a notification released in May 2021, the government has asked every e-commerce entity to appoint a nodal officer to ensure compliance with the rules. Therefore, the rules as a whole have made things more burdensome for entities concerning how they treat consumers and rightly so. In today’s digital world, there is plenty of scope for consumers to be misled or even cheated, leading to the need for stricter laws. The Consumer Protection (E-Commerce) Rules, 2020 seek to achieve this objective and while they might seem to be causing a great deal of hassle for the entities, consumers’ rights must be protected.

    Thus for the service providers who provide e-commerce services and the entities themselves, it is of huge importance to acknowledge the rules and comply with them. Requirements of disclosure of all necessary information, grievance redressal mechanisms, the appointment of nodal officers, and avoiding false representation and manipulation of prices must be kept in mind. The consumers too must stay aware and know their rights.

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