New guidelines on e-commerce and data protection are largely positive

| Updated on August 10, 2019

The norms on returns and refunds favour consumers

India’s e-commerce sector, poised to grow four times to $150 billion by 2022, is still a work in progress when it comes to safeguarding customer interest. Consumers are still compelled to take wild chances in online transactions. There is little they can do if their calls go wrong. Returns and reimbursements are risky and cumbersome. There are no authentic ways to figure out if product reviews, ratings or even discounts are genuine. So, it is heartening to see the government coming up with a set of guidelines to protect interests of consumers. The guidelines released last week by the Consumer Affairs Ministry in this regard emphasise that an e-commerce entity shall not influence the price of the goods or services, adopt any unfair or deceptive methods to influence transactional decisions of consumers or falsely represent themselves as consumers and post reviews about goods and services. The guidelines on returns and refunds favour consumers. The message seems simple: If online companies want to dupe consumers to earn extra bucks, they’re in trouble.

Clearly, the Ministry’s thinking seems to be in line with the way the Centre’s approach to regulating the fast-growing e-commerce sector. It is, however, worth considering whether the Department of Promotion of Industry and Internal Trade (then DIPP) will strike the right the right balance between regulating consumer interests and encouraging innovation and investment, without discriminating against a particular class of investors. Now marketplace entities won’t be able to buy more than 25 per cent from a single vendor, give discounts on products or sell the goods of the companies in which there is equity participation by the marketplace entity. The changes had irked foreign e-tailers who felt the rules would jeopardise their business models and could cost them time and money. But anecdotal evidence does not entirely seem to bear that out.

The DPIIT is also framing an e-commerce policy and, like the Consumer Affairs Ministry, has put up the draft for comments. The draft talks about the country retaining ownership and control of data generated within the country, rigorous monitoring of cross-border imports, placing the responsibility of consumer protection on the intermediary and addressing the issue of piracy. That said, the element of indecision over data localisation requirement is still a worry. Attempts made by both the DPIIT and the MeitY in the e-commerce policy and the data protection policy, respectively, to make a case for storage of personal data locally (along with the RBI in the case of payment systems) have predictably resulted in a lot of protests from the EU and US entities. While the Centre is certainly on a sound wicket here, it should take a call soon — without succumbing to the recent tendency to over-regulate business.

Published on August 09, 2019

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