The Ministry of Consumer Affairs, Food and Public Distribution recently notified the Consumer Protection (E-Commerce) Rules, 2020 (available here) (“Rules”). E-commerce has been defined in the Consumer Protection Act, 2019 (“Act”) as ‘buying or selling of goods or services including digital products over digital or electronic network’. The e-commerce related provisions of the Act (Section 2(16) and Section 94) were notified on July 23, 2020 (available here) and brought into effect from July 24, 2020. 

The Rules apply to: (a) goods and services bought or sold over a digital or electronic network; (b) all models of e-commerce including marketplace and inventory models of e-commerce; (c) e-commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats; and (d) all unfair trade practices occurring on e-commerce platforms. The Rules also apply to an e-commerce entity which is not established in India, but systematically offers goods or services to consumers in India.

Key definitions:

1. “E-commerce entity” means any person who owns, operates or manages a digital or electronic facility or platform for electronic commerce. Such entities can be of two types: a) marketplace e-commerce entity, which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers online; and b) inventory e-commerce entity, which owns an inventory of goods and services and sells such goods or services directly to the consumers and shall include single brand retailers and multi-channel single brand retailers.
2. “Seller” includes a product seller or service provider (as defined in Section 2(37) of the Act). 
3. “User” means any person who accesses or avails any computer resource of an e-commerce entity.

Liabilities of e-commerce entities:

Every e-commerce entity shall, inter alia:

1. appoint a nodal person of contact to ensure compliance with the provisions of the Act or the rules made thereunder.
2. not adopt any unfair trade practice (as defined in Section 2(47) of the Act).
3. establish an adequate grievance redressal mechanism and appoint a grievance officer for consumer grievance redressal, and shall display the name, contact details, and designation of such officer on its platform. Any consumer complaint shall be redressed within a month from receipt of the complaint.
4. record the consent of a consumer for the purchase of any good or service offered on its platform where such consent is expressed through an explicit and affirmative action.
5. provide a ticket number for a complaint lodged by any consumer, and provide all information pertaining to return, refund, warranty and all other relevant information which may be required by consumers to make informed decisions.

Marketplace e-commerce entities are additionally subject to the following liabilities, inter-alia, that such marketplace entities shall:

1. require sellers to, through an undertaking, ensure that descriptions, images, and other content pertaining to the goods and services are accurate.
2. provide all details pertaining to the seller, including any rating or other aggregated feedback about such seller to enable the consumer to make informed decisions prior to purchase.
3. include in their terms and conditions generally governing their relationship with sellers on the platform, a description of any differentiated treatment between goods or services or sellers of the same category.
4. take reasonable efforts to maintain a record of relevant information allowing for the identification of all sellers who have repeatedly offered goods or services that have previously been removed or access to which has previously been disabled under intellectual property laws and information technology laws.

Inventory e-commerce entities are additionally subject to the following duties and liabilities, inter alia, that such inventory e-commerce entities:

1. cannot falsely represent themselves as consumers and post reviews about goods and services or misrepresent the quality or the features of any goods or services.
2. must not unfairly refuse refunds or return of goods if it is found that the goods are defective, deficient, spurious or do not match the description in the advertisement.

Duties of sellers on marketplace: 

Sellers on marketplace shall, inter-alia:

1. not engage in unfair trade practices or cannot falsely represent themselves as consumers and post reviews about goods and services or misrepresent the quality or the features of any goods or services.
2. not unfairly refuse refunds or return of goods if it is found that the goods are defective, deficient, spurious or do not match the description in the advertisement.
3. have a written agreement with the e-commerce entity to undertake sales and offers and appoint grievance officers to address any complaints raised by consumers, which complaints shall be redressed within a month from receipt.
4. provide certain prescribed information to the e-commerce entity to be displayed on its platform or website, including, total price in single figure of any good or service along with the breakup price, all relevant details about the goods and services offered for sale by the seller including country of origin, the name and contact numbers, and designation of the grievance officer for consumer grievance redressal, relevant details related to returns, refunds, exchanges, delivery and shipment of such goods or services, etc.

Advertisements: Sellers and inventory e-commerce entities must ensure that all advertisements depict the actual characteristics, access and usage conditions of the product or service.

Contraventions:  The provisions of the Act shall apply for any violation of the provisions of these Rules.

While these Rules seek to cover the rights, duties and obligations of e-commerce entities and sellers, such entities must also comply with the provisions of the Legal Metrology Act, 2009, and rules thereunder, the Information Technology Act, 2000, the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, and the Information Technology (Intermediary Guidelines) Rules, 2000.

This update has been contributed by Suchita Ambadipudi (Partner) and Sheetal Srikanth (Associate).