E-Commerce Rules Under Consumer Protection Act 2019

Corporate India Blog - E-Commerce Rules Under Consumer Protection Act 2019

Today in our quick read blog (No. 07/2020-21), we continue to present an outlook on the Consumer Protection Act, 2019 (‘Act’ or ‘Act 2019’) which has come into force from July 20, 2020, thereby repealing the erstwhile Consumer Protection Act 1986. Our quick blog will feature this Act in phased manner for next few days.

We have covered some portions of this Act in our previous blogs and today our emphasis is on the e-commerce transaction mechanism, which have been introduced under this Act:

E-commerce has been defined in the Act 2019, which should have been defined long back when we started to move towards a digital economy in mid 2000. Under the Act 2019 it means buying or selling of goods or services including digital products over digital or electronic network. It is clear that this definition has been drafted with open ends to cover any and every good or service, which may possess the component of digitalization or electronic network channel, of any kind. The definitions further include “electronic service provider” which includes any online marketplace or online auction sites, thereby leaving nothing out of its scope. This would mean that from our smallest digital purchases of vegetables, groceries, etc. to our high-end purchases of electronic items, furniture, etc. would be all covered under the e-commerce purview.

Government has released the Consumer Protection (E-Commerce) Rules, 2020[1] (Rules) to further strengthen the framework for dealing with e-commerce transaction on July 23, 2020. The Rules shall apply to the following:

1. all goods and services bought or sold over digital or 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

The major highlight remains the inclusion of “e-commerce entities” which have not been established in India but still have been providing goods or services in India thereby covering such platforms engaged in telemarketing, mobile apps or websites for sale of goods / services, etc. without physically being present in India. A carve out has been provided though, for one-off transactions by people who carry out any activity in their personal capacity, not being part of any professional or commercial activity undertaken on a regular or systematic basis. In this article further, we have also clarified that such entities not established in India cannot undertake direct sales w.e.f. July 23, 2020.

The Rules have introduced plethora of fresh requirements for the “e-commerce entities”. Before we proceed to such requirements, its important to note that “e-commerce entities” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce, but does not include a seller offering his goods or services for sale on a marketplace e-commerce entity. Further, “platform” means an online interface in the form of any software including a website or a part thereof and applications including mobile applications.

Duties of e-commerce entities: Following rules have been laid down to deal with e-commerce entities for enumerating their duties to engage in transactions through their platforms in the e-commerce space:

*FEMA 1999 – Foreign Exchange Management Act 1999[2]

NOTE – The e-Commerce rules further cover liability provisions for marketplace e-commerce entities and also duties of sellers on marketplace e-commerce entities; however the same are not analyzed in this article.

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[1] https://consumeraffairs.nic.in/sites/default/files/E%20commerce%20rules.pdf

[2] http://legislative.gov.in/sites/default/files/A1999-42_0.pdf