Maximum Governance, Minimum Government’ is the motto of the Central Government. It is in this backdrop that the Government while considering new regulations should seek to balance the interests of the public and the industry. It is pertinent to note that ecommerce sector is still at an emerging stage with huge prospects for further growth. The segment contributes extensively to the economy in job creation, supporting growth of Small and Medium Enterprise, digitizing the economy, increasing transparency in taxation and building infrastructure and logistics. At present, the sector accounts for only 3% of the total Indian retail sector. It is important for the continued growth of the sector for laws to be consistent, enabling growth of the sector and at the same time balancing customer interest.
The e-commerce industry does not have a sector specific regulator; however, it has a plethora of laws governing it and is quite heavily regulated, some of which are:
It is in this background, it is quite surprising that the Government seems to be keen to bring this sector under further regulatory purview by enacting the Consumer Protection Bill, 2018 (“Bill/2018 Bill”) and specifically rules framed under it to govern and regulate ecommerce entities. Multiple news reports have claimed that under the new Billecommerce firms would be required to reveal what data they are recording and the intention behind it .Further, news reports claim that under the provisions of the Bill, it will also be checked if ecommerce platforms are sharing customer details with or without the user’s consent. Etailers and marketplaces will also be held liable for fraudulent sales and defective products sold on their platforms.
While the exact source of such stringent provisions is not known, they may be included in the Rules for ecommerce firms that the Bill envisages. It is important to understand that most of these issues are well settled and covered under the Information Technology Act and Rules as well as the present consumer protection act and hence another regulation may be counter-productive towards the growth of e-commerce sector. In any case, most ecommerce companies have a robust and structured internal Grievance Redressal Mechanisms and all large ecommerce companies are mostly “Registered Convergence Partner” of National Consumer Helpline (NCH) of Ministry of Consumer Affairs and customer grievances are treated with utmost priority.
On a prima-facie reading of the Consumer Protection Bill (“2018 Bill”), the following issues stand out:
Online marketplaces have been categorised as an “Electronic service provider” under Section 2(17) of the Act, extracted below:
“Electronic service provider” means a person who provides technologies or processes to enable a product seller to engage in advertising or selling goods or services to a consumer and includes any online market place or online auction sites.
The above definition of Electronic service provider will create confusion in interpretation by the Courts. Online marketplaces do not charge buyers any fee, i.e. the rendering of services is freeand are thus excluded from the definition of service, both under the present Consumer Protection Act, 1986
And under the 2018 Bill. However, the courts under Consumer Protection Act 1986, have always understood a service provider as a provider of service to the consumer. An intermediary on the other hand provides a contractual obligation to sellers. Thus, it may be confusing for Consumer Courts to appreciate the contractual understanding between the seller and the intermediary and may result in them imposing penalty for any wrong doing of the seller or the manufacturer on the intermediary. Hence, the 2018 Bill should clarify and define Online marketplaces as Intermediaries as envisaged in the Information Technology Act. Further, the 2018 Bill should provide that an intermediary shall not be liable for any third party content/product made available or hosted by the intermediary on the lines of Section 79 of the Information Technology Act (“IT Act”), provided the safeguards and guidelines laid down under the IT Act and Rules are complied by the intermediary.Such, exemption from liability for intermediaries have been considered by the Ministry of Consumer Affairs and Food Safety and Standards Authority of India and have been incorporated in the recentLegal Metrology (Packaged Commodities) Amendment Rules, 2017 and Food Safety and Standards (Licensing and Registration of Food Business) Amendment Regulations, 2018.
The 2018 Bill in S. 2(38) defines product service provider as follows:
“Product service provider”, in relation to a product, means a person who provides any service in respect of such product;
The above definition may result in an electronic service provider to fall under its purview as it may be construed that as the “electronic service provider” provides technology or process which enables transaction through the platform, it may qualify for “any service in respect of such product/ transaction”. Therefore, to avoid any ambiguity, electronic service provider should be expressly excluded from the definition of “product service provider”.
Clause 94 of the 2018 Bill provides for measures to be taken by Central Government to prevent “unfair trade practice” in e-commerce. It seems the Government is keen to draft e-commerce specific rules and provide for stringent provisions regulating the sector under this Clause. However, an assumption seems to have been made that ecommerce is a channel for all unfair trade practice. As stated above, most ecommerce companies have robust internal grievance redressal mechanisms and are also participants of various redressal platforms popularised by the Ministry of Consumer Affairs such as National Consumer Helpline and Online ConsumerMediation Centre (OCMC). Hence, the government should carefully review the requirements for more stringent laws in this regard.
The new Consumer protection bill is a keenly watched legislation, which will have long term impact on the industry as well as the consumers. It is hoped that the Government considers inputs from all stakeholders and comes out with a law which protects the interest of the customer as well as supports the growing e-commerce sector. In the absence of a balances between the two, the industry may get negatively impacted
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