Amendments to e-commerce rules to bring in more accountability: Government

Meenakshi Verma Ambwani New Delhi | Updated on June 23, 2021

The Ministry officials stressed that the amendments have been proposed to protect consumer interest   -  iStockphoto

Changes made to protect consumers and not regulate e-comm entities; experts see operational issues

The Consumer Affairs Ministry has said the provision of mandatory registration for e-commerce entities in the proposed amendment to Consumer Protection E-Commerce Rules 2020 is to bring in accountability and encourage genuine players in the e-commerce space.

Speaking to mediapersons, Nidhi Khare, Additional Secretary, Department of Consumer Affairs, here on Tuesday said the prohibition on fraudulent back-to-back flash sales is being brought-in as an enabling provision for consumers to make complaints against unfair trade practices.

Seeking public views

The Ministry came out with the proposed amendments on Monday seeking public comments. In the amendments, it has proposed to tighten the country of origin norms for imported goods, prevent predatory pricing-led flash sales, mis-selling and cross-selling. It also proposes to bring in the concept of fallback liability on marketplace e-commerce entities and tighten norms to prevent preferential treatment of related parties and private labels, among other provisions.

Khare said conventional flash sales will not be impacted and explained that the proposed amendments refer to prohibiting those back-to-back flash sales where a particular seller that does not carry any inventory or order fulfilment capability is fraudulently placing a “flash or back-to-back” order with another seller controlled by the e-commerce platform. “So the consumers get a very limited choice and it also makes other businesses, especially MSMEs uncompetitive.... Sometimes shell companies, which are controlled by the e-commerce marketplace, are formed for fronting these activities,” she added.

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“We are not saying that we will begin investigating every flash sale or regulating every flash sale. We are not asking for any disclosure from companies on flash sales. The aim is to bring in an enabling provision for consumers to be able to make complaints if they felt they were cheated,” she added.

The Ministry officials stressed that the amendments have been proposed to protect consumer interest and not to regulate trade on e-commerce entities as that comes under the purview of the Department of Promotion of Industry & Internal Trade.

Regulatory landscape

Experts pointed out that proposed amendments envisage a significant shake-up of the regulatory landscape of India’s fast-growing e-commerce sector and will pose operational challenges for the sector.

Ankur Pahwa, e-commerce sector National Leader, EY India said, “While regulations are certainly needed to govern the e-commerce channel, they need to be devised comprehensively and holistically, be consistent in their application to various retail channels and finally be governed by a single law vs various regulations and notifications.”

Nakul Batra, Associate Partner at DSK Legal, said, “Greater liability of the e-commerce entities have been proposed by referring provisions of Competition Act, 2002, introducing concept of related party and associated enterprises, fall-back liability etc. which will compel the e-commerce entities to re-evaluate their business models. Additional compliances have also been put on e-commerce entities in terms of appointing a Chief Compliance Officer, disclosures pertaining to the imported goods or services, cross-selling, sponsored listing etc., which appears to be in line with the IT Rules 2021.”

Supratim Chakraborty, Partner at Khaitan & Co added, “The amendment to the e-commerce rules have proposed to empower consumers with the ability to provide their express and affirmative consent with regard to sharing of their data being collected by the e-commerce platform. Such consent cannot be obtained through mechanisms such as pre-ticked boxes. While these may pose operational challenges to the e-commerce platforms, the government is willing to make that trade-off, in order to ensure that e-commerce platforms can be held accountable to its multiplying consumer base in India.”

Published on June 22, 2021

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