New consumer protection rules for e-commerce propose end to flash sales

The Ministry of Consumer Affairs, Food and Public Distribution has proposed a host of revisions in the revised Consumer Protection (E-Commerce) Rules, 2020 to make it more stringent.

The revised draft, released for stakeholder consultations, will define 'cross selling', 'fall-back liability', 'flash sale', 'mis-selling', among others, to avoid misrepresentation. It proposes to end the practice of flash sale and distinct identification of sponsored list of products displayed on the e-commerce platform. It will also make registration with the Department for Promotion of Industry and Internal Trade (DPIIT) mandatory for all e-commerce entities.

The proposed changes will also incorporate a provision to appoint a chief compliance officer in every e-commerce entity for a proper grievance redressal mechanism. In case of imported goods, the e-commerce entity will have to ensure that the product carries adequate additional information, including the country of origin. A pre-purchase search provision by country of origin on e-commerce websites has also been proposed.

The draft rules say that no logistics service provider of a marketplace e-commerce entity shall provide differentiated treatment between sellers of the same category.

It is also proposed that e-commerce entities will not use any information collected through its platform for unfair advantage of its related parties and associated enterprises. The related parties and associated enterprises have also been prohibited from enlisting as sellers for sale to consumers directly.

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The revised rules may also introduce a fall-back liability concept under which if a seller registered on a platform fails to deliver the goods or services ordered by a consumer due to negligent conduct, omission or commission, then the e-commerce entity will be responsible.

The Confederation of All India Traders (CAIT) welcomed the proposed changes and said that the draft rules have been proposed on the basis of several rounds of discussions held in the past with stakeholders.

"The new draft is a guiding stone to purify e-commerce landscape of the country which has been greatly vitiated by various e-commerce global companies to the extent that not only the domestic trade has been damaged  but even the consumers are also feeling the heat of their unethical business practices," CAIT Secretary General Praveen Khandelwal said.

Hoping that the new rules will also carry enough provisions for their strong implementation, Khandelwal said that CAIT will study the rules in depth and will submit its comments.

The government has given time till July 6 to stakeholders to submit their comments and suggestions on the proposed changes.

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