E-COMMERCE ENTITIES IN INDIA – APPLICABLE REGULATIONS
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E-COMMERCE ENTITIES IN INDIA – APPLICABLE REGULATIONS
The Ministry of Consumer Affairs, Food and Public Distribution through the Department of Consumer Affairs has issued
the Consumer Protection (E-Commerce) Rules, 2020 under the Consumer Protection Act, 2019 vide notification bearing
number G.S.R. 462(E) on July 23, 2020 (“E-Commerce Rules”) to regulate the operations of e-commerce entities in
India in a fair and transparent manner and to protect the rights and interest of consumers. The gazette copy of the ECommerce Rules can be accessed here [http://egazette.nic.in/WriteReadData/2020/220661.pdf].
The E-Commerce Rules require the e-commerce entities to adhere to the strict guidelines contained therein inter-alia
to regulate price manipulation; to ensure compulsory display of details related to country of origin of the product, return,
refund, exchange, warranty, delivery and shipment; to ensure quality control to enable the consumers make an informed
decision at a pre-purchase stage. The clear intent of the E-Commerce Rules is to protect the rights and interest of the
consumers and prevent unfair trade practices, fraudulent transactions, and control sale of counterfeits. Non-compliance
with the E-Commerce Rules by any e-commerce entity will be construed as violation of the Consumer Protection Act,
2019 and will attract penal provisions contained therein.
Some of important provisions of the E-Commerce Rules are discussed hereinbelow:
1. Definition of E-Commerce Entities:
The E-Commerce Rules defines “e-commerce entities” as any person who owns, operates, or manages a digital
or electronic facility or platform (i.e., an online interface in the form of any software including a website or mobile
applications) for electronic commerce. A seller who offers his goods or services for sale in a marketplace ecommerce entity is however excluded from the above definition. Therefore, only entities operating or manging a
digital or electronic platform would be included in the definition of “e-commerce entities” and not the sellers
offering their goods and services from a marketplace platform.
E-Commerce entities are classified into two categories (i) “inventory e-commerce entity” which is an e-commerce
entity, owning the inventory of goods or services and sells such goods and services directly to the consumers
and includes single brand retailers as well as multi-channel single brand retailers; and (ii) “marketplace ecommerce entity” which is an e-commerce entity which provides an information technology platform on a digital
or electronic network to facilitate transactions between buyers and sellers such as Amazon, Flipkart, etc.
Effectively, the E-Commerce Rules cover both marketplaces working as well as aggregators and inventory-led
models where the e-retailer owns the stocks.
2. Scope and Applicability:
The E-Commerce Rules apply to: (a) all goods and services bought or sold over digital or electronic network
including digital products; (b) all models of e-commerce, including marketplace and inventory models of ecommerce; (c) all e-commerce retail, including multi-channel single brand retailers and single brand retailers in
single or multiple formats; and (d) all forms of unfair trade practices across all models of e-commerce.
Activities undertaken by a natural person carried out in a personal capacity, not being part of any professional or
commercial activity carried on a regular or systematic basis, will however not be covered by these Rules.
3. Duties of E-Commerce Entities:
The E-Commerce Rules require the e-commerce entity to either be a company incorporated under the
Companies Act, 1956 or the Companies Act, 2013, or a foreign company as per the provisions of Companies
Act, 2013, or an office, branch or agency outside India owned or controlled by a person resident in India as per
the provisions of the Foreign Exchange Management Act, 1999.
Some of the obligations that an e-commerce entity would need to comply include:
(i) displaying prominently to its users, its (a) legal name, (ii) principal geographic address of its headquarter
and all branches, (c) name and details of website, and (d) contact details like e-mail address, fax, landline
and mobile numbers of customer care as well as grievance officer.
(ii) establishing an adequate grievance redressal mechanism having regard to the number of grievances
ordinarily received by it from India and appointing a grievance officer for consumer grievance redressal,
and displaying the name, contact details and designation of such grievance officer on its platform. Such
grievance officer is required to acknowledge the receipt of any consumer complaint within 48 (forty-eight)
hours and redress the said complaint within 1 (one) month from the date of receipt of the complaint.
(iii) mentioning the name and details of the importer in case of imported goods or services.
(iv) not imposing any cancellation charges on any consumer unless similar charges are also borne by such
entity, if they cancel the purchase order unilaterally for any reason.
(v) effecting all payments towards accepted refund requests of the consumers as per the guidelines
prescribed by Reserve Bank of India.
(vi) not manipulating the price of the goods or services offered on its platform to gain unreasonable profit or
discriminating between consumers of the same class or making any arbitrary classification of consumers
affecting their rights.
4. Liabilities of Marketplace E-Commerce Entities:
A marketplace e-commerce entity is required to ensure that the sellers on its platform through an undertaking
confirm that the descriptions, images and other content pertaining to goods or services sold by them on the
platform are accurate and corresponds directly with the appearance, nature, quality, purpose and other general
features of such good or service.
A marketplace e-commerce entity will need to provide certain information to its users on its platform including
the (a) details about the sellers offering goods and services, (b) information relating to return, refund, exchange,
warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism, etc.
(d) information on available payment methods, the security of those payment methods, etc.
Considering that the goods and services belong to the sellers, a marketplace e-commerce entity is obligated to
ensure that the sellers on its platform comply with their duties provisioned under the E-Commerce Rules. A
marketplace e-commerce entity will however not be liable for any information, data or communication link made
available on its platform by a seller provided it complies with the provisions of sub-section 2 and 3 of Section 79
of the Information Technology Act, 2000 including the Information Technology (Intermediary Guidelines) Rules,
5. Duties and liabilities of Inventory E-Commerce Entities:
Under an inventory e-commerce platform, the inventory of goods or services are owned by the entity operating
the platform and it is liable for the goods or services available therein. Therefore, every inventory e-commerce
entity, is required to provide information on its platform relating to return policy, delivery and shipment, payment
methods, mandatory notices under applicable laws, total price of the goods or services offered along with their
break-up, consumer grievance redressal mechanism, etc. to enable the consumer to make an informed decision
before purchasing the goods or services.
An inventory e-commerce entity is also required (i) not to falsely represent as a consumer and post reviews about
goods and services or misrepresent quality, (ii) ensure that the advertisements for marketing of goods or services
are consistent with the actual characteristics, access and usage, (iii) not refuse to take back goods, or withdraw
or discontinue services purchased or agreed to be purchased or refuse to refund consideration, if paid, if such
goods or services are defective, deficient or spurious, etc.
6. Duties of Sellers on Marketplace:
Some of the important duties of the sellers offering their goods or services on the platforms of the marketplace
e-commerce entities include:
(i) not to adopt unfair trade practices whether during the offer on the e-commerce entity’s platform or
(ii) not to refuse to take back goods, or withdraw or discontinue services purchased or agreed to be
purchased or refuse to refund consideration, if paid, if such goods or services are defective, deficient or
spurious, or if such goods or services are delivered late from the stated delivery schedule, other than
late delivery due to force majeure event.
(iii) to have a written contract with the respective marketplace e-commerce entity on whose platform they
propose to undertake or solicit sale or offer their goods or services.
(iv) to ensure that the advertisements for marketing of their goods or services are consistent with the actual
characteristics, access and usage conditions of such goods or services.
(v) to provide e-commerce entity with their legal name, geographic address of its headquarter and branches,
the name and details of its website, e-mail address, customer care contact details, its GSTIN and PAN
(vi) to provide all relevant details with respect to the goods or services offered by them such as total price of
such goods or services along with its break-up, mandatory notices and information required under
applicable laws, details of grievance officer, details with respect to country of origin, details of importer,
accurate information related to terms of exchange, returns and refund, etc.