Consumer Protection (E-commerce) Rules 2020 Proposed Amendment
Source : PIB
GS II : Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Approach for Consumer Protection (E-commerce) Rules 2020 Proposed Amendment : Prelims Mains

• Need For Amendment
• What exactly it aims?
• Propose Feature the amendment
• Indian E-Commerce Market

Why in News ?

• For the purposes of preventing unfair trade practices in e-commerce Central Government had notified the Consumer Protection (E-Commerce) Rules, 2020 with effect from 23 July 2020. 

Key Facts

• Need for Amendment
  • Negatively impacted the consumer and business sentiment : Prevalence of such unfortunate incidents were in

    

    the market causing immense distress and anguish to many.

  • Evident lack of regulatory oversight : It was observed that there was lack of regulation in e-commerce which required some urgent action.
  • Rapid growth of e-commerce platforms : This also brought into the purview the unfair trade practices of the marketplace
    • E-commerce entities engaging in manipulating search result to promote certain sellers, preferential treatment to some sellers, indirectly operating the sellers on their platform
    • This impinging the free choice of consumers, selling goods close to expiration. 
• Impact after the notification
  • Since the notification of these rules the Government has received several representations from aggrieved consumers, traders and associations.
  • With complaining against widespread cheating and unfair trade practices being observed in the e-commerce ecosystem.
• Flash sale 
  • Flash sales by third party sellers are not banned on e-commerce platform.
  • Certain e-commerce entities are engaging in limiting consumer choice by indulging in flash sales.
  • Here one seller selling on platform does not carry any inventory or order fulfilment capability.
  • They places a flash or back to back order with another seller controlled by platform.
  • This prevents a level playing field and ultimately limits customer choice and increases prices.

What is the aim of Consumer Protection (E-commerce) Rules 2020 Proposed Amendment ?

• To protect the interests of consumers, prevent their exploitation and encourage free and fair competition in the market
• The proposed amendments aim to bring transparency in the e-commerce platforms and further strengthen the regulatory regime to curb the prevalent unfair trade practices.

What are the proposed amendments ?

• Chief Compliance Officer
  • It aims to ensure compliance to their orders and deal with compliance of the Consumer Protection Act, 2019 and Rules
  • A nodal contact person for 24×7 coordination with law enforcement agencies.
  • Resident Grievance Officer for redressing of the grievances of the consumers on the e-commerce platform, has been proposed.
  • This would ensure effective compliance with the provisions of the Act and Rules
  • Also strengthen the grievance redressal mechanism on e-commerce entities.
• Framework for registration
  • This aims to verify the genuineness of an e-commerce entity before transacting through their platform.
  • Every e-commerce entity with the Department for Promotion of Industry and Internal Trade (DPIIT) for allotment of registration number which shall be displayed prominently on website
  • Also provide the number in invoice of every order placed the e-commerce entity.
• Prohibition of mis-selling
  • Selling goods or services by deliberate misrepresentation of information
  • This aims to ensure that consumers are aware about the expiry date of the products they are buying on the e-commerce platform
  • All inventory e-commerce entities to provide best before or use before date to enable consumers to make an informed purchase decision.
• Fair and equal treatment
  • To ensure that the domestic manufacturers and suppliers get a fair and equal treatment on the e-commerce platform
  • An e-commerce entity offers imported goods or services shall incorporate a filter mechanism to identify goods based on country of origin.
  • It should suggest alternatives to ensure fair opportunity to domestic goods.
• Failure of delivery of goods
  • Provisions of Fall-back liability for every marketplace e-commerce entity have been provided.
  • This will ensure that consumers are not adversely affected in the event of delayed, fails to deliver and negligent conduct.

Indian E-Commerce Market

• India’s e-commerce orders volume increased by 35-36% in the last quarter of 2020
• E-commerce market is expected to grow to more than US$ 200 billion by 2026.
• It also has huge potential to employment generation. 
• What is the major reason for huge growth ?
  • Penetration of Smartphone
  • Cheap Data availability like 4G network
  • Digital India’ programme
  • Government eMarket place (GeM) listing 

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