New E-commerce rules under Consumer Protection Act

The Consumer Protection (E-Commerce) Rules, 2020 were notified as per the Consumer Protection Act, (“COPRA / new rules“) on July 23, 2020.

Whom does it apply to?

The rules apply to, inter alia, all goods and services sold over digital or electronic network, all modes of e-commerce, and all forms of e-commerce retails.

Obligations of e-commerce business owners under the new rules

E-commerce companies will be required to make data available to the government within 72 hours, which could include information related to public security and assessment collection.

Foreign e-commerce companies offering live streaming types of assistance that use payment tokens shall be regulated to ensure that regular payment channels approved by the authorities are being used.

As per the new rules, the e-commerce players should clearly display the following:

  1.  complete price of merchandise;
  2.  goods available to be purchased; and
  3. A break-up of other charges.

They are likewise required to mention:

  1. the ‘expiry date’ of products offered available to be purchased;
  2. the ‘nation of beginning’ of merchandise;
  3. names of enterprises that are necessary for enabling the consumer to make an informed decision at the pre-purchase stage.

Under the rules, e-commerce players have to show details about the following :-

  1. Return policy
  2. Refund policy
  3. Exchange policy
  4. Guarantee and warranty
  5. Delivery and shipment, and other data that might be required by consumers to make informed decisions.

Obligations of Sellers using various e-commerce platforms

Sellers offering goods and services through an e- commerce marketplace entity should provide the details given above to the e-commerce entity to be displayed on its website.

Pricing & Payment Related Obligations of e-commerce platforms & sellers

Under the new rules, e-commerce entities ought not impose “cancellation charges” on consumers cancelling orders after affirmation unless sellers are ready to pay comparable charges in case cancellation of orders are from their side.

They are additionally not allowed to “manipulate the price” of the products and enterprises offered on their foundation to increase unreasonable benefit and discriminate between consumers of the same class or make any subjective grouping of consumers affecting their privilege.

With respect to payments, e-commerce entities should provide the following data :-

  1. available payment methods;
  2.  the security of those payment methods;
  3.  any fees or charges payable by users; and
  4.  the contact data, among other details, of the relevant payment service provider.

Documents / Legal information to be displayed

Furthermore, e-commerce entities are required to show to its users the following details about the sellers :-

  1. Details about the ‘sellers’ offering goods and services;
  2. The name of their business; and
  3. Whether the business is registered or not;
  4. Geographical address;
  5. Customer care number; and
  6. Any appraising or other aggregated feedback about such seller, among others, as per the new rules.
  7. Privacy policy

In view of the above requirements under the Consumer Protection Act, read with the existing responsibilities of these platforms under the Information Technology Act, 2000, it is now crucial that the terms of use and privacy policies are drafted comprehensibly to include the requirements of different statutes affecting an e-commerce business.

What are Inventory e-commerce businesses and their obligations

The Consumer Protection also touches upon the inventory e-commerce which means that the inventory of the goods is owned and sold by the e-commerce entity directly to the customers. Therefore any company which sells its goods owned by it through their e-commerce platform shall fall under the ambit of “inventory e-commerce”.

The new rules don’t permit any inventory e-commerce entity to “falsely represent itself as a consumer and post reviews about products and enterprises or misrepresent the quality or the features of any merchandise and ventures”. The inventory e-commerce entities will likewise have to ensure that the advertisements for marketing of products are consistent with the real characteristics.

Under the new rules, no inventory e-commerce entity will be allowed to refuse to take back the product or discontinue services purchased or agreed to be purchased, among others, subject to different conditions.

Punishment

The violation of the rules will draw in punishment under the Consumer Protection Act, 2019.

The content of this article is intended to provide general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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