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July 31, 2020

E- Commerce platforms now cannot charge cancellation fees

by Rubina Dsouza in Compliance Law

E- Commerce platforms now cannot charge cancellation fees

Electronic Commerce in India

  1. Electronic commerce (E-commerce) refers to the buying and selling of physical goods or services using the internet. India has become one of the largest consumer markets for e-commerce industries.
  2. E-commerce means buying or selling of goods or services including digital products over digital or electronic network.
  3. The growth of these e-commerce industries in India has bought in many old and new players in the market like Amazon India, Flipkart, Snapdeal, etc.; which are very prominent in this industry and earn a lot of revenue from the nation.
  4. Online shopping has in fact, become a trend owing to the development of the web portals. India is developing rapidly more towards the e-commerce industry due to the benefits it has for instance time saving, etc.

E-commerce during the COVID 19 pandemic

  1. With the outbreak of the COVID 19 pandemic, it has rather become more convenient to shop from the online web portals which is much safer in comparison to visit the physical stores.
  2. Even during the lockdown period when the shops were shut, it was the e-commerce industries only that were providing people with essential commodities at their doorstep. This depicts the importance of these industries in our lives.

E-Commerce platforms cannot charge cancellation fees

The Central Government notified the new Consumer Protection Rules for e-commerce termed as the Consumer Protection (E-Commerce) Rules, 2020. It also notified the new Central Consumer Protection Authority (CCPA), with sweeping powers to book those found violating consumer rights.

The watchdog led by a chief commissioner will enforce the Consumer Protection Act, 2019, regulating issues related to consumer rights, including unfair trade practices and misleading advertisements.

The new rules seek to lay down duties for the sellers on marketplace e-commerce and duties and liabilities of inventory e-commerce entities, making online retailers more accountable and their businesses more transparent.

However, these rules shall not apply to any activity of a natural person carried out in a personal capacity not being part of any professional or commercial activity undertaken on a regular or systematic basis.

The Consumer Protection (E-Commerce) Rules, 2020 states that platforms cannot charge cancellation fees if a consumer chooses to cancel an order after confirming the purchase, which made the lives of the consumers easier. Otherwise, e-tailers should also pay similar charges, if they cancel the purchase order unilaterally for any reason, according to the new guidelines.

Who shall these rules apply to?

These rules shall apply to:-

  1. all goods and services bought or sold over digital/electronic network including digital products
  2. all models of e-commerce, including marketplace and inventory models of e-commerce
  3. all e-commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats and
  4. all forms of unfair trade practices across all models of e-commerce
  5. e-commerce entity which is not established in India, but systematically offers goods or services to consumers in India.

What are the duties of e-commerce entities?

The Rules provide for the duties of the seller and various e-commerce entities.

1.An e-commerce entity shall appoint a nodal person of contact or an alternate senior designated functionary who is resident in India, to ensure compliance with the provisions of the Act or the rules made thereunder.

2. Every e-commerce entity shall provide the following information in a clear and accessible manner on its platform, displayed prominently to its users, namely:-

i. legal name of the e-commerce entity

ii. principal geographic address of its headquarters and all branches

iii. name and details of its website; and

iv. contact details of customer care as well as of grievance officer

3. Every e-commerce entity shall establish an adequate grievance redressal mechanism and shall appoint a grievance officer for consumer grievance redressal

4. Every e-commerce entity shall ensure that the grievance officer acknowledges the receipt of any consumer complaint within 48 hours and redresses the complaint within 1 month from the date of receipt of the complaint.

5. Where an e-commerce entity offers imported goods or services for sale, it shall mention the name and details of any importer from whom it has purchased such goods or services, or who may be a seller on its platform.

6. Every e-commerce entity shall endeavour on a best effort basis to become a partner in the convergence process of the National Consumer Helpline of the Central Government.

7. No e-commerce entity shall impose cancellation charges on consumers cancelling after confirming purchase unless similar charges are also borne by the e- commerce entity, if they cancel the purchase order unilaterally for any reason.

8. Every e-commerce entity shall record the consent of a consumer for the purchase offered on its platform where such consent is expressed through an explicit and affirmative action

9.Every e-commerce entity shall effect all payments towards accepted refund requests of the consumers as prescribed by the RBI or any other competent authority under any law for the time being in force, within a reasonable period of time, or as prescribed under applicable laws.

What restrictions are imposed on e-commerce companies?

No e-commerce entity shall:-

  1. manipulate the price of the goods or services offered on its platform in such a manner as to gain unreasonable profit by imposing on consumers any unjustified price
  2. discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Act.
  3. adopt any unfair trade practice

These rules were formulated in an attempt to create more transparency for buyers, ecommerce platforms selling in India. The effort to create consumer awareness comes against the backdrop of the government’s push to promote Indian products over imported ones in order to boost the startup and the MSME sectors, which took massive hits following the onset of the coronavirus pandemic. The provisions of the Consumer Protection Act, 2019 shall apply for any violation of the provisions of these rules.

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