On August 2, the Ministry of Consumer Affairs, Food & Public Distribution (Department of Consumer Affairs), Government of India, released the draft "E-commerce Guidelines for Consumer Protection, 2019" ("Guidelines"). The government has solicited comments and suggestions from the stakeholders on various aspects of the Guidelines by September 16, 2019. The Guidelines, once finalised and enforced, will be applicable to business-to-consumer (B2C) e-commerce of goods and services, including digital content products, within the broader framework of India's consumer protection law.

The Guidelines impose certain obligations on e-commerce entities with an overall objective of curbing unfair trade practices, safeguarding consumer interest and preventing fraud. The Guidelines provide for the following conditions on e-commerce entities:

  1. General Conditions: E-commerce entities are required to comply with certain conditions, such as, registration as a legal entity under Indian law, submission of a self-declaration confirming compliance with the Guidelines and compliance with the provisions of the Information Technology (Intermediaries Guidelines) Rules, 2011. Further, any payments for sale facilitated by the e-commerce entity, are required to be in conformity with the Reserve Bank of India guidelines. The Guidelines also mandate that the promoter or key managerial personnel of the e-commerce entity, should not have been convicted of any criminal offence punishable with imprisonment, in the last five years by a court of competent jurisdiction.
  1. Liabilities of E-commerce entities: The Guidelines prohibit e-commerce entities from: (a) directly or indirectly influencing the price of goods or services; (b) adopting any unfair trade practice that influences transactional decisions of the consumer; (c) falsely representing themselves as consumers or posting reviews about goods and services in their name; and (d) misrepresenting or exaggerating the quality or features of the goods and services being sold.

E-commerce entities are also obligated to, inter alia: (a) display the terms of contract between the e-commerce entity and the product seller, relating to return, refund, exchange, warranty/ guarantee, delivery, mode of payment, grievance redressal mechanism, etc., to enable consumers to make informed decisions; (b) ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such of goods or services; (c) mention safety and health care information of the goods or services; (d) provide information on payment methods; (e) ensure that personally identifiable information of customers are adequately protected and that such data collection, storage and use of the information is lawful; and (f) effect all payments towards accepted refund requests of the customers within a maximum period of 14 days.

  1. Grievance Redressal: E-commerce entities are mandated to provide transparent and effective consumer protection at par with that provided by other forms of commerce. They must publish the name and details of the 'grievance officer' on their website to whom complaints can be notified, as well as the mechanism to notify consumer complaints to the grievance officer. The grievance officer should redress complaints regarding products availed through the entity's website, within one month of receipt of complaint. Consumers should also be provided the facility to lodge/ register complaints over the phone, email or website, for which they will be given a tracking number. A mechanism to converge this process with the National Consumer Helpline must also be provided.

This move comes shortly after the Department of Industrial Policy and Promotion revised its norms pertaining to foreign direct investment in e-commerce by way of Press Note 2 of 2018, which came into effect from February 1, 2019, and is indicative of the broader regulatory overhaul for e-commerce entities in India. Given that e-commerce is set to grow substantially, owing to rising disposable incomes, rapid urbanization, and the increasing adoption and penetration of technology, this is a welcome move to enhance consumer protection.

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