Draft Consumer Protection (e-commerce) Rules, 2019: Compliances for carrying out e-commerce business in India

The Department of Consumer Affairs (“Department”) on November 11, 2019 released the Draft Consumer Protection (e-Commerce) Rules, 2019(“Rules”) among the eight draft rules that it recently released. This article aims to give a quick insight into it.

To begin with, an e-commerce entity is defined as “any company (Indian or Foreign) which has been incorporated under the Companies laws of India or an office, branch or agency in India owned or controlled by a person resident outside India including an electronic service provider or a partnership or proprietary firm conducting the e-Commerce business.” An Electronic Service Provider is defined as “a person who provides technologies or processes to a product seller which would assist him/her in advertising or selling of goods or services to a consumer. This includes all online market place or online auction sites.”

Compliances for carrying out e-Commerce business (“Business”) in India

The Rules provides certain compliances for an e-commerce business to function in India which they will have to follow within 90 days of publication of these rules in the gazette. They are listed as under-

It should be a registered legal entity under the laws of India.
A declaration has to be made to the Department that the Business is in compliance with these Rules
Any promoter or key managerial person should not have been convicted for a criminal offence punishable with imprisonment in the last 5 years
It should comply with the provisions of Information Technology (Intermediaries guidelines) Rules, 2011.
Payments for sale which are facilitated by these e-commerce entities should be in sync with the Reserve Bank of India Guidelines.
Details of the sellers like identity of their business, legal name, principal geographic address, name of website, e-mail address, contact details etc. should be provided in their website.

Liabilities of an e-commerce entity

Along with compliances, these Rules also, very lucidly, lay out the liabilities of an e-commerce entity. They are as follows –

An e-commerce entity should not influence the prices of goods or services, directly or indirectly or
Adopt any unfair method or trade practice in order to mould the decisions of the customers in relation to goods and services or
Falsely represent itself as the customer or post reviews about goods and services under its name or misrepresent or exaggerate the quality or the features of goods and services.

One of the cardinal obligations for an e-commerce entity that has been spelt out in these Rules is that these entities are obligated to mention clearly the terns of contract between itself and the seller. Further, it should make sure that the advertisements for marketing of such goods or services are not misleading. Other obligations include mentioning of safety and health care information of the goods and service advertised for sale, providing information on available payment methods, protecting personal information of the customers and compliance with the Information and Technology Act, 2008. These entities will be held liable if they makes a claim for the authenticity of the goods sold on its platform.

Liability of sellers

Liability of sellers has also been extensively dealt with in these rules. A few of them are that they should have a written contract with the respective e-commerce entity if they want to perform such sale or offer. They are required to give all the information which is necessary to be given by law regarding disclosing of contractual information and compliance. The sellers are also responsible for the warranty/guarantee obligation of goods and services sold.

Consumer grievance redress procedure–

The Rules also provide for a consumer grievance redress procedure wherein e-commerce entities are mandated to provide the details of the Grievance Officer whom the consumers can approach regarding their complaints with the goods or services purchased from that e-commerce entity’s website. They also have to mention the mechanism through which these complaints are to be notified. The time period for redressal is one month from the date of receipt of the complaint. Other modes like e-mail or website, for the registration of complaints are to be provided to the customers. Complaint number should also be given. The idea is to give as much consumer protection as any other form of commerce gives.

These Rules however, are yet to become a law.

November 11th, 2019