Nasscom makes suggestions on proposed amendments to e-commerce rules

Technology services industry body National Association of Software and Services Companies (Nasscom) has made suggestions to the Department of Consumer Affairs (DoCA), Ministry of Consumer Affairs on the proposed amendments to the Consumer Protection (e-Commerce) Rules, which were open for feedback until Wednesday.

The Consumer Affairs ministry proposed changes to Consumer Protection (E-Commerce) Rules, 2020. According to the draft, the rules will be applicable to “all goods and services bought or sold over digital or electronic network including digital products”.

Nasscom has said the proposed amendments dealing with misleading information, provision of accurate information to consumers, appointment of additional officials for grievance redressal and compliance with the e-Commerce Rules “appear to be beyond the scope of the Consumer Protection Act 2019 (COPA19) and are instead a subject matter of either the Competition Act, 2002 or the Information Technology Act, 2000”.

In such cases, we have made suggestions to strengthen consumer protection in a manner that is consistent with the COPA19 wherever possible. Nasscom said.

On issues relating to regulation of data management practices for cross-selling by e-commerce entities, regulating behaviour of entities not directly engaged in e-commerce business with a consumer, regulating competition in the market, etc., Nasscom has suggested that the proposed requirement be either done away with or aligned with the objective of COPA19.

For example, Rule 6(7) of the proposed amendments restricts marketplace entities from offering any goods or services to registered sellers. Nasscom has suggested removing this obligation as this is not an unfair trade practice per se and at a policy level, is already dealt with under the Foreign Direct Investment (FDI) Policy.

Other suggestions from Nasscom include removing the word “own” from the definition of an e-commerce entity. “This is with the aim of excluding from the scope those technology entities that own the digital platform and license/provide it to e-commerce companies. e-Commerce companies in turn operate and manage the front-end platforms. Therefore, the definition should only include entities that operate and manage the e-commerce platforms,” it said.

It has also provided a suggested definition of ‘mis-selling,’ as applicable to a seller under the proposed amendments.

Nasscom believes that instead of prohibiting certain activities, an indicative list of unfair trade practices that the Central Consumer Protection Authority (CCPA) may investigate, should be included for ensuring consumer protection. These could include, according to the industry body, misleading users by manipulation of search result or search indexes having regard to the search query of the user, user information collected by marketplace e-commerce entities, if practices for sale of goods of a brand which is owned/associated by and e-commerce entity amount to unfair trade practice and impinges on the interests or rights of the consumers.

Further, it said if flash sales, cross-selling, mis-selling, manipulation in ranking of goods and services, and similar practices amount to unfair trade practice or impinge on the interests or rights of the consumers, they could also be added to this indicative list.

The proposed rules define mis-selling as an e-commerce entity selling goods or services by deliberate misrepresentation of information by the e-commerce entity about such goods or services as suitable for the user who is purchasing it. Misrepresentation includes causing a mistake, “however innocently,” in what a consumer buys and what he receives.

This essentially means that an innocent or honest mistake that causes a customer to receive the wrong product would make the e-commerce entity liable.

Nasscom has also suggested that consumer consent be taken for sharing consumer information with any person unless it is for the fulfilment of an order or providing any services as promised by the e-commerce entity.

It further asked that certain obligations be imposed on all e-commerce entities. For example, an explanation in plain language about the parameters used to rank sellers, goods or services on the platform.

In case of fallback liability, which was a big issue for e-commerce industry, Nasscom has suggested that the obligation on a marketplace e-commerce entity should be to the extent of ensuring timely refund to consumers if the consumer has already paid for such goods or services.

The Rules define “fall back liability” as the liability of a marketplace e-commerce entity where a seller registered with the entity fails to deliver the goods or services exactly in the way described on the platform, as a result of negligent conduct, omission or a seller’s fault.

“There are many areas where the proposed amendments are unclear, and we have taken the opportunity to highlight these in detail. We believe these suggested changes will address the concerns of both the DoCA as well as the industry,” Nasscom said. “Moreover, keeping in view the uniqueness of different e-commerce models and rationalising obligations in line with activities of relevant entities in the e-commerce supply chain, is crucial in revising the existing framework for consumer protection,” it added.

Nasscom said it will continue to work closely with the Government and the industry towards enabling a robust regulatory regime, as that is essential for ensuring consumer protection and growing trust in the market.