It seems like the government is trying to compensate with overregulation in the form of cumbersome rules and increased compliance that will add to the costs of business for the e-commerce platforms
The draft to amend the Consumer Protection (E-Commerce) Rules 2020 is a step in the right direction to tighten the legal norms on the e-commerce platforms which were having a field day until recently. I would like to congratulate the government for proposing substantive changes and making some much-needed additions to the law to control the unfair trade practices that are widely prevalent in the e-commerce ecosystem. The structuring out of the definition of e-entities and introducing the concepts of cross-selling and fall-back liability will eliminate the abounding confusion even as it reduces the scope of frauds.
However, delving deeper into the rules is creating the haunting notion that this is too little, too late! The unanticipated COVID-19 pandemic has inadvertently led to a sudden and sharp boost in e-commerce with a proportionate rise in complaints and other issues. With the sword of Damocles literally hanging over the head of the authorities, they were pushed to frame some regulations for the e-commerce sector.
But why was the government turning a blind eye to the proliferating ‘internet shopping’ till now? Why were the rules not formulated when the e-commerce companies first started setting up shop in India? Why don’t we ever do things the right way by creating a congenial environment right from the start itself? Why is our government always stuck in the rut of attracting investments without a thought to the potential problems on the horizon? India has become defined by first allowing businesses to start operating without any clear rules and regulations and then kicking up a storm later in the name of the ethical interests of the consumers. True consumer protection comes from timely regulation and not such a knee-jerk reaction!
It seems like the government is trying to compensate with overregulation in the form of cumbersome rules and increased compliance that will add to the costs of business for the e-commerce platforms. In fact, many ethical brands are open to regulation but do not want the authorities breathing down their neck and making it difficult to do business. The micromanaging will actually distort the competition with the rise of inefficient competitors and the consumer will once again turn out to be the loser in the long run! Will it even make for a fair marketplace when some entities abide by the regulations while others get away without having the registration, redressal officers and other requirements in place?
Where Are The Rules Going Wrong?
Let us start with the outlawing of the flash sales that have become a talking point of online shopping. The government has hastily amended the draft laws saying that instant, unannounced and discriminatory flash sales will not be allowed while the e-commerce platforms can continue with their conventional flash sales. This distinction remains vague and the entities have no clue how to interpret the difference.
This gives rise to the question – why are the authorities killing the joy of attractive promotions and deep discount offers? How can you deny the consumers the choice of getting products and services at the best prices with value for money? Isn’t this a clear case of throwing the baby out with the bathwater when all the e-tailer wants to do is clear its inventory without any predatory or discriminating price strategies? For that matter, even if a seller is getting a preferential treatment or carving a dominant position, it is the domain of the Competition Commission of India to investigate any conflict of interest and impose heavy penalties as needed.
The restraint on sharing of consumer information with third parties without their express and affirmative consent will definitely be a shot in the arm for data privacy. However, the authorities should spare a thought for consumer organizations that are striving to resolve consumer complaints and other issues. There should be a proviso permitting the e-commerce portals to provide the necessary information when presented with the right authorization.
The rules have instituted an exhaustive three-tier grievance redressal mechanism in the form of a chief compliance officer for ensuring compliance with the laws, a resident grievance officer to address customer grievances and a nodal officer for coordination with the law enforcement agencies. But my contention is that what if – even after all the compliances being in place - the officers do not carry out their duties or fail to provide satisfactory redressal? Where should the consumer turn now? For instance, we have been struggling to contact e-commerce giant FlipKart to resolve pending consumer complaints, but have not garnered any response till date.
While the companies are being converged with the National Consumer Helpline, the officers there blindly reply that the wronged consumers should press charges in court. I can’t help but wonder why they are so hesitant to fight on behalf of the consumer! On the other hand, when we contacted ZoomCar, the legal team airily dismissed our query deeming that it was obligated to answer the National Consumer Helpline and would not entertain queries from any other source!
In reality, consumers mostly hesitate to go to court to seek redressal for defective goods, substandard services and other such discrepancies. Is there any point in pursuing the matter only to have to shell out ten to fifty to even hundred times the value of the faulty product or service in long-drawn-out court battles? At the end of the day, they may not even get the expected relief and will only end up with an additional financial burden of legal costs.
Just in case the consumer happens to get a favourable judgment, the method of calculating compensation for deficient products and services is inherently flawed. The miniscule penalty does not pinch the manufacturer/trader – they will easily dole out the payment and get back to their erring ways! The law is actually becoming a barrier by short-changing the consumers while playing into the hands of the culprits!
And what is the government doing? Why does it shrug the responsibility in such a thoughtless manner? While consumer protection laws have been in force for three and a half decades, never has the government been bothered enough to file a case on behalf of the consumer in any of the state or national commissions, High Court or Supreme Court. The lone instance of the late Consumer Affairs Minister, Mr. Ram Vilas Paswan using the hitherto unused provision to file a class action suit against FMCG giant Nestle India in the National Consumer Disputes Redressal Commission (NCDRC) was hastily dismissed on grounds of faulty filing.
Why doesn’t the government take steps to ensure that consumers get proper redressal within a specific period of time? Why does the consumer have to foot the legal costs, that too without any surety of getting adequate redressal? Shouldn’t the service provider be held liable to compensate the costs for delays? Why does the government not consider reimbursing the expenses borne by the consumers from the Consumer Welfare Fund?
The Consumer Welfare Fund Rules were notified in the Gazette of India in 1992 for crediting the money collected from manufacturers and traders for overcharging consumers and other such crimes. Even after being subsumed under the CGST rules, 2017, the funds are ideally our hard-earned money and the government is just sitting on it without serving any purpose. It should ideally be used for the benefit of the consumers, that too in a way that we deem fit and not the authorities as usual!
Come to think of it, why is the consumer expected to run behind the offending party every time his rights are eroded or trampled upon? He is the sufferer, the victim of the game and still the onus is again on him to seek appropriate redressal. But fact of the matter is that the consumer does not want to go through a protracted legal recourse. He does not care about the laws and regulations; nor does he want to navigate through complicated hurdles and fight for his rights at every instance of violation. All that he wants is that the defective/damaged/deficient product or service should be replaced quickly or he should get his money
back. The demand is for a simple and straightforward exchange and refund policy without having to jump through hoops every time something goes wrong.
While consumer organizations want to help out the anguished consumers, their hands are literally tied due to lack of funds. They keep struggling at every juncture, sans any power, authority or resources. Why doesn’t the government consider bankrolling such NGOs from the Consumer Welfare Fund so that they can continue with the good work?
In fact, whenever there is an abuse of consumer rights, it should be the regulator that walks in and provides relief to the victim. Better yet, institute such deterrent punishments that the perpetrator will think twice before committing such consumer right violations.
The focus has to shift to purifying the entire landscape as e-commerce is just a drop in the ocean of the marketplace. It will be a level-playing field when and only when all retail entities – be it online or brick-and-mortar setups – are ruled by the same law. For instance, registration with the Department for Promotion of Industry and Internal Trade (DPIIT) should be made mandatory for all offline stores too and they should appoint the same hierarchy of redressal officers.
Global Best Practices, stringent penalties and other deterrent actions can be a guiding light for curbing unethical practices and promoting consumer protection across market platforms. In the US, the Federal Trade Commission (FTC) has outlined clear prohibitions on companies using unfair or deceptive acts so as to safeguard the interests of consumers. In 2017, the Competition Bureau of Canada, levied a whopping US $1 million fine against Amazon Canada for misleading price comparisons. The European Union’s Unfair Terms in Consumer Contracts Directive requires contract terms to be drafted in plain and intelligible language. A judge can rule to remove any unfair terms from the contract and ambiguities are interpreted in favour of the consumers.
In this intensely disappointing and discouraging scenario in our country, I leave you with a few questions – are you really promoting fair practices, let alone protecting the consumers? While the rules have been formulated to control unfair trade practices that are hurting the consumers, are the rules even fair to begin with? Are there even enough provisions for proper implementation of the new rules, per se?
Let us not shoot ourselves in the foot in a bid to tighten the noose on e-commerce players. Consider making the law a win-win for the consumers, the traders and the regulators all together!
The author is Prof. Bejon Kumar Misra, International Consumer Policy Expert
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