Govt working on ‘cash-back’ scheme for counterfeits sold on e-commerce platforms

To tackle the menace of counterfeit products being sold on e-commerce platforms, the Centre is mulling a cash-back scheme where e-commerce companies will reimburse consumers the money spent on an item in case it turns out to be a copied product and not an original that was promised by the merchant.

“The Department of Industrial Policy & Promotion (DIPP) is discussing the proposed cash-back scheme, which is to be implemented on a voluntary basis, with the Consumer Affairs Ministry and e-commerce companies. Talks are in the initial stage and it would take some time to take final shape,” a DIPP official has said.

The Consumer Affairs Ministry, which already operates a helpline for e-commerce customers, will be the nodal Ministry for the scheme which would focus mostly on counterfeits. “In case of items such as mobile phones, a consumer may realise that her purchase is a counterfeit only after she sends it to the company for some repairs. This may be several months after the product is bought and not fall within the replacement period of 30 days offered by most e-retail companies. It may also not be possible to replace a counterfeit item if the vendor that sold it doesn’t have any original item. The new proposal of cash back would be to deal with such cases,” the official explained.

Such schemes already exist in countries like Canada and Hong Kong where it is the banking channel which reimburses customers that are sold counterfeits, the official said. Through back-end channel the e-commerce platform deals with the merchandise provider. “In India, since digital payment is still a very small part of the entire e-commerce business, a modified model has to be worked out. That is why we are looking at a cash-back kind of a scheme. But still a lot of work needs to be done,” the official said.

The DIPP is holding a national conference on counterfeiting and role of enforcement agencies on March 13-14 where the issue is likely to be further fleshed out.

As per the initial plans on the working of the scheme, once consumers realise that they have been sold a counterfeit, they would be required to file their complaint at a single point which is likely to be the Consumer Affairs Ministry. The complaint will then get routed to the e-commerce platform. Once the platform is sure that it is not a genuine product (for which the right holders may also have to be roped in), it will initiate a cash back to the consumers account.

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