Since time immemorial, the harmony between market dynamics and consumer interests has always been a thin rope to tread on for governments across jurisdictions. Markets have been inclined toward profit margins with scant interests to consumers. With the new avenues of conducting business opening up such as e-commerce platforms, the gap is only widening.
To protect the interests of consumers, governments across the world have stepped in and have enacted legislation. India has been no exception to the challenges and has ensured fair competition in the market through the Competition Act, 2002. However, what touches the individuals in their daily needs as a consumer is Consumer Protection Act. With market dynamics changing every single day, and with e-commerce platforms becoming a new trend, it was imperative to completely revamp the consumer protection law keeping in mind the challenges and providing effective recourse against the same. It was with this intention that the Consumer Protection Rules, 2019 came into effect.
CONSUMER PROTECTION (E-COMMERCE) RULES, 2020
In recent times, the Indian e-commerce industry had been in a phase of upward growth for quite a period of time and thus was further accelerated by the nationwide lockdowns resultant of the unprecedented Corona Virus pandemic. Due to the pandemic and nationwide lockdown Online shopping was no a longer a luxury, but a necessity especially in the urban and suburban areas. As a result, the India Brand Equity foundation also predicted that India is destined to become the second-largest E-commerce market in the world by 2034. But with such rapid growth of the e-commerce market and industry, there have been equally growing concerns around the sale of false and spurious goods through e-commerce sites. So, to protect the consumers from unfair trade practices and to address their concerns, the Ministry of Consumer Affairs, Food, and Public Distribution on July 23, 2020, notified the Consumer Protection (E-Commerce) Rules, 2020.
The E-commerce Rules have primarily been formulated with the objective to regulate the E-commerce sector in India and protect consumers from unfair trade practices on such platforms. The Consumer Protection (Ecommerce) Rules 2020 attempts combine the teeth of the Consumer Protection Act 2019, Indian exchange control laws (IEC Regulations), and the Information Technology Act 2000, to ensure fair play in technology and data-driven e-commerce environment. If we look at the statistics it is projected that nearly 220 million Indian citizens are going to buy products online, which means approximately 55% of the total Indian mobile users will shop online. By looking at this number, we can assume that new rules and act is going to be very useful to Indian users. Earlier the Information Technology Act, 2000 and Intermediate Liability Guidelines, 2011 provided for regulatory guidelines for the intermediaries i.e. the online sites, but this was not enough. Moreover, what adds to this is that since the consumer cannot see the product physically, identifying a genuine product online becomes difficult. Thus, there was an urgent need to define the duties and liabilities of e-commerce entities and to strengthen the laws so that to put a responsibility on the intermediaries to restrict the abuse of their infrastructures for illicit trade. It is with this intention that the e-commerce rules have been introduced by the government.
APPLICABILITY AND SCOPE
The intention and motive of the Parliament to specifically deal with online transactions and e-commerce entities was visible from the enlargement of the definition of consumer under Section 2(7) of the Act by including both online and offline transactions within the scope of ‘buying goods’ and ‘hiring services’. Further, the Act now categorically defines relevant e-commerce, electronic service provider, and misleading advertisement while also specifically addressing the commonly faced issues such as refusing to refund the amount or refusing to take back defective goods. The Rules are applicable to all goods and services bought or sold over the electronic or digital network that includes all the digital products, all models of e-commerce (including marketplace and inventory models of e-commerce), all e-commerce retail (including multi-channel single-brand retailers and single-brand retailers in single or multiple formats) and all forms of unfair trade practices across all models of E-commerce.
The Rules are pretty exhaustive in their nature and declares their application to:
(i) All goods and services bought or sold over the digital or electronic network including digital products.
(ii) All forms of unfair trade practices across all models of e-commerce.
(iii) All e-commerce retail, including multi-channel single-brand retailers and single-brand retailers in single or multiple formats.
(iv) All models of e-commerce, including marketplace and inventory models of e-commerce.
Therefore, now it is abundantly clear that this legislation has brought all possible forms of e-commerce entities and retail models i.e., B2B, B2C, and B2B2C incorporated inside and outside India. Thus, all the types of e-commerce entities whether operating on the inventory model or the marketplace model including e-commerce platforms that are engaged in providing services or renting/leasing goods will fall within the meaning of “e-commerce entity” as defined under the E-Commerce Rules and consequently will be subject to the legal regime prescribed under the Consumer Protection Act and the E-Commerce Rules.
Though the E-commerce Rules legislation can be said to have said some loopholes in it, overall, it can be said that the legislature has walked an extra mile and tried to cover every aspect and done a tremendous job. It can be said that the government has finally started taking consumers and online frauds seriously. The enforcement of the rules will certainly help the consumers to make more informed purchases. Thus, in a nutshell, it can be hereby concluded that the latest incarnation of the e-commerce rules can be said to be robust under the Consumer Protection Act, 2019 and at par with international standards. The rules and regulations that were brought under Consumer Protection Act, 2019 which at last replaced the three-decade-old Consumer Protection Act, 1986, was the need of the modern Indian consumer. But in the end, how effectively these rules are enforced with the passage of time will dictate the terms and future of the market place and this is a thing to be carefully observed.
Author: Vibhor Jain of Government Law College, Mumbai