E-COMMERCE RULES, 2020 - BENEFICIAL OR DETRIMENTAL TO E-COMMERCE PLATFORMS, ENTITIES AND CONSUMERS?
Author: Maria Binny Palamattom, II year of B.A.,LL.B.(Hons.) from School of Law, CHRIST(Deemed to be University), Bengaluru
E-Commerce has become the new normal for consumers and to the world of marketing due to the increased developments, access and technological advances towards the emerging strata e-business. As the focal length between the rampant usage of e-commerce to meet the needs of the increasing demands of the consumer population and the e-commerce platforms, the need to improve safe and efficient modes of access and usage of such platforms has also increased from time to time.
E-Commerce, the system that provides access for individuals for the exchange of goods and services over the internet is at its highest pace concerning the population to make use of the same. Categorically, the relation in such exchanges ranges from Consumer to Consumer, Consumer to Business, Business to Business and Business to Consumer.
Why and what are E-Commerce rules?
The system of e-commerce its very essence possesses numerous advantages concerning the swift exchange, accessibility, versatile choices and many more; while, on the other hand, it consists of numerous disadvantages such as fraudulent practices and scam, misleading advertisements, intangible picking and so on goes the list. The Consumer Protection Act, 2019 is existent legislation that attempted to cover numerous lacunas the previous legislation possessed to make to it consumer-friendly and thereby ratified the ignored aspects of E-Commerce [S.2(16)] and Misleading Advertisements[S.2(28)] in the updated statute. To resolve the ambiguities in the COPRA, 2019 by addition of specific rules to ensure transparency and equity in the E-Commerce transactions; the Consumer Protection (E-Commerce) Rules, 2020 was notified by the Government of India.
The rules precisely aim to regulate every commercial transaction that is staged over digital platforms, online consumers make use of. This is made possible by the establishment of a duty-liability chain the sellers indulged in e-commerce shall be strung in. The rules can be referred to as the need of the day but are critically acclaimed to adopt notable amendments for its betterment. Major noteworthy changes brought in include the application of models of e-commerce such as market place models and inventory models. The rules further can be referred to as a regulatory body that has the authority to control every goods and service (inclusive of digital goods), e-commerce retails and every other related product and offer for services that circulate digitally or via electronic networks along with the grip over UTPs (Unfair Trade Practices).
Major takeaways from the Rules
The basic labelling inclusive of MRP, Date of Manufacture and Expiry, Warranty, Shipment, Guarantee, Procedures of Return, Refund, Exchange etc. have become mandates on the inventory exchange. The sellers who fall under the latter category will not be able to manipulate the prices and charge for cancellation unless the same has been communicated in advance to the consumers, where the consumer intends to accept the same. Above all the rules attempt to create a protective shield over the consumers from unscrupulous practices of the domains governed by the system.
Statutory governance of E-Commerce Transactions
Irrespective of the fact that the Act and the complementary rules of a major part of the statutory governance, the entities of the e-commerce platforms [Rule 3(b)] are subjected to undergo governance of other statutory authorities as well.
The Rules specifically mandate the entities to be registered under any of the following:
1. Companies Act, 1956
2. Section 2(42) of the Act for Foreign Companies
3. Foreign Exchange Management Act, 1999
Apart from the specifications stated above, the entities are also mandated to create Internal Complaint Grievance Cells within the entities that effectively address the grievances reported by the respective consumers and thereby allotting them followed by their resolution by allotting tickets whose status is track-able on the approach basis. The cooperation and convergence with National Consumer Helpline, adherence to the payment procedures prescribed by Reserve Bank inclusive of the request for refunds, well-defined Terms and Conditions, Ensured compliance, by sellers belonging to the respective e-commerce entity, of Copyright Act, 1957, Information Technology Act, 2000 & Trademark Act, 1999 and prevented manipulation; altogether constitutes to provide a knowledgeable consumer-friendly atmosphere.
Major contentions on the plausibility
The Rules directly imply to perform effectively in protecting consumers from getting exploited or misled via the E-commerce entities and sellers governed by the former. However, a closer analysis on the enforcement of the rules none hesitantly raises contention on the effectiveness of the same.
Delays in escalation and resolution of complaints
A notable insertion among the rules that demand to be consumer-friendly is the 24*7 working Complaint Grievance/ Redressal Mechanisms that operate within the entities. This is a major aspect to improve the accountability of the platforms and the confidence of the consumers. The mandated redressal mechanism headed by the Nodal Grievance Officer or another officer at a higher rank in seniority seeks to attain complaints which will be identified in the form of tickets issued improves the consumer trust. Moreover, similar to the existent order tracking mechanism, these escalated complaints and their status can also be tracked.
The concern that arises concerning this system is the time consumption and possibilities of delay. As per the rules which state that the complaints addressed are to be acknowledged within 48 hours after being received and thereby the process of redressal shall be ensured within 1 month of the receipt. The demands of the consumers concerning the consumption of a particular commodity vary from consumer to consumer. Hence, there will be consumers within the category who will have priority over timely receipt of value or commodity equivalent to the same. Therefore, the cap of one month need not be necessarily efficient for all categories of consumers.
Unnoticed Seller Perspective
On one hand, there are numerous complaints and grievances which are left to be addressed. However, on the other hand, failure to perform the duties by a consumer also invites enumerable losses to the sellers/manufacturers. The entities being intermediaries to the grievances of the consumers directly escalate the complaints if any to the manufacturers or sellers who work at the core. Then, even if a commodity is tampered due to the negligence of consumers with increased cases of misuse of the refund policy, sellers who work on small scale and large scale basis are exposed to the losses that arise in this perspective. Therefore, the increased number of complexities in the procedural aspects of e-commerce has affected the small scale sellers and distributors who have meagre access to technological advancements. There arises the urgent need to accommodate the duties of consumers as well as a major aspect.
Cancellation charges and producer grievances
The elimination of cancellation charges in e-commerce transactions can be to an extent referred to as a revolutionary algorithm. This is major because of the insensitivity that has staged towards the entrepreneurs who block a particular commodity from being sold or a service opportunity being offered. To make this more precise, cancellation charges are prefixed charges which are applied in case of the cancellation of a commodity or service which sought to be purchased or accessed. These changes aim to cover up the losses suffered by the entity who offers a commodity or a service in return of a value. Absence of cancellation charges implies devaluing of the purchasing mechanism.
Once a product is booked by a consumer, the same cannot be accessed by another consumer as it is assumed to be pre-booked/purchased. Avoiding cancellation charges from being plied can increase the chances of misuse of such offers and thereby shall make the consumers less cautious on being aware of the type and background of a commodity. This can deny another consumer with similar interest, from purchasing something in exchange of a value and thereby the seller, the opportunity to sell the commodity or offer a service.
Blurred practicability aspect
Many of the insertions in the rules lack the practical essence of being a reality. The increased demands of the e-commerce system in the present scenario have resulted in extensive access to commodities offered via the electronic network and digitally. Therefore, aspects such as grievance mechanism, precise display of information, compulsory adherence to statutes altogether raise concerns for their possibility.
The ideal rules that complement the parent Act, seeks to impose a restriction on many aspects including FDIs. This results in reduced access to the global market and consumer choices to be addressed. Therefore, the possible mechanism to address such issues is the proper hierarchical distinction and delegate legislation. Where plausibility and feasibility stand to be the major concerns, the delegation of tasks as stated in the Rules and distinctive addressing of the same can revert to most of the contentions.
Restrictive Investments and consumer choices
As the e-commerce rules duly recognize both marketplace model and inventory model, the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 recognize them as well. The latter has granted Foreign Direct Investment by cent percent to single-brand retail setups. When it comes to multi-brand retail, the allowance is up to 51% associated with Government approval duly acquired. The single-brand retail, therefore, can perform retail marketing via e-commerce under the non-debt rules.
However, in case of e-commerce rules and their mandated compliance, this can only be made possible by the setting up of a brick-and-mortar store. This has to be commenced within 2 years of the online retail initiation. Therefore, in concise, retail trading cannot be initiated via e-commerce when the entities are pre-engaged in other models and also have access to foreign investments. This, therefore, limits the extensive sale and marketing scope by such enlarged requisites for single retailers.
Uniform rules that lack the business-friendly approach
The Rules precisely seek to establish a uniform list of rules for compliance for all the entities and platforms in a unanimous manner. However, this leaves the versatility of the e-commerce entities unrecognized. To ensure the performance of e-commerce entities are up to the mark, they must be subjected to reasonable analysis staked by rules that meet the demands bilaterally. The rules that are to be enforced by entities that constitute manufacturers, sellers and distributors from distinct backgrounds are to be dealt with under their positions. If not, e-commerce shall restrict to the privileged and reserved categories and investors getting blindfolded to the deprived ones seeking for their means to livelihood. Therefore, the rules so formulated must be business-friendly and dynamic to cope up and be made accessible to various categories.
Concluding Remarks and Suggestions
The Consumer Protection (e-commerce) Rules, 2020 can be referred to as consumer-friendly regulatory authority which looks forth for the betterment of consumer standards and reduced exploitation at the e-commerce strata. Although the Rules successfully complement the parent Act, Consumer Protection Act, 2019 with notable attempts to address the lacunas in addressing the dynamic consumer preferences and needs, it seems to have deprioritized the demands of the manufacturers and entities to a greater extent along with a non-precise notion on the concept of price manipulation. The insensitive stand taken towards single retailers for the complex compliance of procedures also seek to be brought forth. If the above-mentioned concerns practically acquire a seat in the code, it shall triumphantly serve the purpose of the same.
Maria Binny Palamattom, a second-year student of Law from School of Law, CHRIST(Deemed to be University), Bengaluru. She is a civil service aspirant who is interested in Research, Mooting and ADR. She has authored articles on Law and Public Policy and a few other socio-legal issues as well. She spends her leisure time reading and listening to music. Her extra-curricular interests include music and acting. She is immensely interested in Women and Law as well.