Recent developments have drawn attention back to the Consumer Protection (E-Commerce) Rules, 2020. A parliamentary panel has advocated for certain amendments aimed at enhancing consumer rights protections and putting a stop to unfair practices. E-commerce refers to a business model that allows firms and individuals to perform transactions over the internet.
Predatory Pricing: An Issue Highlighted by the Panel
The issue of predatory pricing has been brought to the forefront. It is considered a short-term strategy employed by major market entities which may result in the obliteration of competition. This can potentially harm consumers in the long run. Predatory pricing involves offering goods or services at such low prices that it becomes impossible for other companies to compete, forcing them out of the market.
Unfair Practices in E-Commerce
E-commerce offers many advantages but also leads to certain vulnerabilities. Consumers are increasingly exposed to unfair trade practices, privacy violations, and unattended grievances. Incidences of false product reviews and biased product displays are escalating.
Panel’s Major Recommendations
The panel put forward several recommendations. Firstly, there is a need for a clearer definition of Unfair Trade Practices, with practical legal remedies specifically designed to tackle such practices. The concept of ‘drip pricing’, where the final cost of a product increases due to added charges, should be clearly defined. Provisions for penalising violations should also be integrated.
Regulations on Delivery Charges and Data Protection
Guidelines should be introduced by the Ministry of Consumer Affairs for fixing delivery charges levied by e-commerce entities. Misinformation, lack of information, and misleading correct information should be distinguished in the Rules, with clear penal provisions in each case. For data protection, user data should be categorised according to sensitivity and appropriate protection measures should be assigned.
Ensuring Transaction Security and Local Data Centres
A robust payment gateway system should be established to protect transaction-related data of users. To ensure local data security, all major e-marketplace entities should have a data centre in India, preventing misuse by foreign countries.
Customer Care and Small Business Protection
E-commerce entities should provide a dedicated customer care number and a mechanism to monitor issue resolution times. Regulatory mechanisms are needed to protect local vendors and small businesses, ensuring they can also participate in e-commerce.
Discouraging Deceptive Practices
Corrective mechanisms should be established to prevent deceptive tactics such as manipulated algorithms, fake reviews, and ratings in order to safeguard consumer interests.
About the Consumer Protection (E-Commerce) Rules, 2020
These rules apply to all e-commerce retailers, regardless of whether they are registered in India or abroad. All relevant details about goods and services, including country of origin and details about importers, must be provided to consumers. A nodal officer must be appointed to ensure compliance with the provisions of the act or rules.
Restrictions on Unfair Trade Practices and Misleading Consumers
No e-commerce entity is allowed to manipulate prices for unreasonable profit, discriminate between consumers, or falsify reviews. There should be no cancellation charges imposed on consumers, and entities should accept returns for defective, deficient, or spurious goods or services.
Record of Sellers Selling Counterfeit Products
Entities must maintain records of sellers who have repeatedly offered goods or services previously removed or restricted under the Copyright Act, 1957, the Trade Marks Act, 1999, or the Information Technology Act, 2000.
Penalties Under the Rules
Violations of these rules would incur penalties as per the Consumer Protection Act, 2019.
