Need for a comprehensive E-Commerce Policy
August 17, 2021
Sh. Anumpam Mishra
Join Secretary, Department of Consumer Affairs,
Ministry of Consumer Affairs, Food and Public Distribution
Government of India
On the outset, Swadeshi Jagran Manch takes this opportunity to appreciate and welcome the proposed Consumer Protection (E-Commerce) Rules, 2020, which have been issued under section 94 of the Consumer Protection Act, 2019. This is an important milestone in consumer protection from new E-Commerce giants, which though are running full fledged E-Commerce, call themselves as merely technology platforms. As per your call for observations/comments on these proposed rules, SJM wishes to submit as under:
1. The Consumer Protection (E-Commerce) Rules, 2020 have been issued under section 94 of the Consumer Protection Act, 2019. The definition of ‘consumer’ as defined in section 2(7) of the Act, does not include a person who obtains such goods for resale or for any commercial purposes as well a person who avails of such services for any commercial purposes.
It is apparent that since provisions of the Act do not apply to traders and service providers, as referred above, the rules framed under the Act would also not be applicable to them, and therefore cannot be expected to provide any protection under these rules, even if they are exploited due to dominant position of the E-Commerce giants. There is a general impression that the E-Commerce Rules are applicable to all the parties involved in E-Commerce which is not true. It is therefore, suggested that this aspect must be clarified by way of clarification by the Ministry and DPIIT must make suitable Rules for protection of traders and service providers who avail services through E-Commerce for commercial purposes.
We wish to underline that there are many traders and service providers, which are not getting any protection under the law, due to inadequate or non-existent E-Commerce laws. Small traders (on Amazon, Flipkart-Walmart), drivers on Uber, Ola etc. and small restaurants involved in Zamato etc., hairdressers, carpenters, electricians etc. on Urban Clap etc. and many other workers are subject to severe hardships by these E-Commerce giants, having no protection, at all, against exploitation. Obviously, consumer protection laws cannot provide any protection to these vulnerable sections of the society.
2. Proposed amendment by inserting new Rule 4: Registration of E-Commerce entities-
(a) The proposed amendment requires every E-Commerce entity which intend to operate in India to register itself with DPIIT. It is suggested that the words ‘intend to operate in India’ be replaced with the words ‘supplies goods or services to a consumer in India’. This would be helpful to regulate even those E-Commerce entities also which do not establish offices in India but still have lots of revenue being generated from consumers located in India.
(b) Compulsory registration of giant E-Commerce entities is a welcome step, which will go a long way to regulate for any wrong doings by them. However, it is suggested, to avoid any hardship to E-Commerce entities with very small consumer base in India, a threshold may be prescribed for compulsory registration. This would save small E-Commerce players from avoidable compliances. The definition of MSME may be adopted to define small E-Commerce players.
(c) DPIIT must also create a monitoring mechanism to identify the defaulter E-Commerce entities and must also have an adjudication mechanism for penalising such defaulters.
3. Proposed amendment to Rule 5: duties of e-commerce entities-
(a) Explanation to Clause(a) of Sub-rule (5) of Rule 5 requires E-Commerce entity to appoint a ‘Chief Compliance Officer’ who is resident and citizen of India. Similarly, Explanation to Clause (b) of Sub-rule (5) of Rule 5 requires E-Commerce entity to appoint a ‘Nodal Contact Person’ who is resident and citizen of India and Explanation to Clause(c) of Sub-rule (5) of Rule 5 requires E-Commerce entity to appoint a 'Resident Grievance Officer' who is resident and citizen of India. These designated persons shall be responsible for their respective jobs given in the Rule.
It is suggested that concept of 'officer who is in default' as included in the Companies Act, 2013 be introduced in the E-Commerce Rules also, so that the persons in accordance with whose advice, directions or instructions the E-Commerce entities act can be brought to books in case of any contravention under the Act and the E-Commerce Rules.
(b) Para(e) of sub-rule (2) may be deleted as the same is repeated in sub-rule (3).
4. Proposed amendment of inserting sub-rule (12) to Rule 5 read with Rule 3 (1)(c)
The words “with an intent to maximise the revenue of such E-Commerce entity” may be deleted from the definition of ‘Cross selling’ in Rule 3(1)(c) as the same is communicating a confusing message that disclosures in clear and accessible manner, as referred in proposed sub-rule (12), are to be given only when the intent is to maximise the revenue and not otherwise.
5. Proposed amendment to sub-rule (14) to Rule 5 -
(a) The intent of these amendments seems to discourage flash sales, with ultimately affecting the consumers by limiting their choices and other ways. However, to avoid any ambiguity, the words ‘manipulate the price’ in Para (a) and the words “mislead users by manipulating” in Para (c) need more clarity and the parameters may be defined for the same. The following additional paragraphs may be added after (14) (c):
(i) refrain from treating more favourably in ranking services and products offered by the marketplace entity itself or by any third party belonging to the same undertaking compared to similar services or products of third party and apply fair and non-discriminatory conditions to such ranking; and
(ii) provide advertisers and publishers, upon their request and free of charge, with access to the performance measuring tools of the gatekeeper and the information necessary for advertisers and publishers to carry out their own independent verification of the ad inventory; and
(iii) provide to any third party providers of online search engines, upon their request, with access on fair, reasonable and non-discriminatory terms to ranking, query, click and view data in relation to free and paid search generated by end users on online search engines of the gatekeeper, subject to anonymisation for the query, click and view data that constitutes personal data;
(b) Further provisions are required to be included as to which authority/regulator shall be monitoring these actions, if any, by E-Commerce entities.
(c) Para (f) may be replaced with the following paragraphs: “refrain from using, in competition with business users, any data not publicly available, which is generated through activities by those business users, including by the end users of these business users, of its core platform services or provided by those business users of its core platform services or by the end users of these business users; and provide business users, or third parties authorised by a business user, free of charge, with effective, high-quality, continuous and real-time access and use of aggregated or non-aggregated data, that is provided for or generated in the context of the use of the relevant core platform services by those business users and the end users engaging with the products or services provided by those business users; for personal data, provide access and use only where directly connected with the use effectuated by the end user in respect of the products or services offered by the relevant business user through the relevant core platform service, and when the end user opts in to such sharing with a consent.”
6. Proposed sub-rule (17) to Rule 5
The past experience is that dominant E-Commerce market places have been misusing their positions to help their related parties and associates and exploited small suppliers operating on their market places and consumers in general. The proposed rules do not define dominant position as well as ‘abuse the position’. It is therefore, suggested that the proposed Rule may be replaced with the following para:
“(17) No E-Commerce entity which holds a dominant position in any market shall, abuse its position as provided in subsection (2) of Section 4 of the Competition Act, 2002.”
7. Proposed sub-rule (19) to Rule 5
The past experience with dominant market places is that the consumers are not provided complete information about the actual supplier of goods or service and in its absence, proper redressal of consumer complaints is not happening. With the object of having two ways communication between buyers and sellers and without compromising the privacy of the sellers and the consumers, the proposed Rule may be replaced with the following para:
"(19) Every E-Commerce entity shall display clearly and prominently in its invoice, the name, address and contact details in the same font size as that of the e-commerce entity’s."
8. Proposed amendments to new Rule 6
It has been noticed that dominant E-Commerce market places are collecting data of fast moving items with goods margins being sold by vendors and provide the same to their related parties or associates to manufacture and /or trade the same on their e-market place with profit sharing or higher percentages of commissions. It is therefore, suggested that para (a) of sub rule (6) of Rule 6 may be replaced with the following:
“(a) ensure that it does not use any information collected through its platform for its unfair advantage or for unfair disadvantage to the sellers.”“
9. It is suggested that the following be inserted as Rule (10)
“In the larger interest of the consumers, the E-Commerce market places shall disclose the following information on their website on quarterly basis –
a) Total business executed on their platform
b) Advertisement cost incurred
c) No of complaints received and redressed”
10. (a) It is suggested that suitable rule may also be inserted to provide for capacity building for inspection and enforcement of E-Commerce transactions, unfair trade practices, mis-selling, manipulation of prices, search algorithm and other technical aspects of digital transactions with consumer protection perspective.
(b) E-courts may be established for consumers’ grievances redressal.
Dr. Ashwani Mahajan
National Co-convenor, Swadeshi Jagran Manch