A Study on Scope and Applicability of Consumer Protection Laws and OECD Guidelines on E-Commerce By - Ashutosh Tripathi
A Study on Scope and
Applicability of Consumer Protection Laws and OECD Guidelines on E-Commerce
Authored By - Ashutosh Tripathi
Asst.Prof, School Of Law
UPES Dehradun
Introduction
Electronic Commerce businesses isn’t
expressly characterized in any of the consumer enactment, however is commonly
characterized as “activities on internet for purchasing and selling of goods
and services”. As the Internet is developing all over the world, the e-commerce
scope has developed in parallel with the growth of the internet. For Indian
traders, the Internet is a huge stage for trade and trade is noteworthy. As
well as being perfect for consumers, this stage is beneficial for traders.
Consumers have numerous advantages available, such as multiple choices,
convenient delivery services, and quality goods at competitive prices, etc. In
a very limited capacity to focus, e - commerce has revolutionized the system of
buying and selling products and services.
The historical backdrop of e-commerce
begins with the main ever-online deal: on August 11, 1994, through his site
NetMarket, an American retail stage, a man sold a CD by band Sting to his
companion. This is the primary case of a buyer buying an item through the World
Wide Web from a business — or "e-commerce" as we usually know it
today.
E-commerce has since developed to
make items easier to find and purchase through online retailers and shopping
malls. Autonomous consultants, independent firms, and big business have all
benefited from e-commerce, empowering them to sell their products and ventures
on a scale that was impractical with customary disconnected retail.
There are different favourable
circumstances of utilizing online shopping entryways, for example, Amazon,
Flipkart, which guarantee various decisions for a wide scope of online products
with an energetic and effective delivery framework, on the other hand online
tasks are embraced for payment and booking purposes by Railway, State
Electricity Boards, Banks, Movie Theatres, and so forth. The attainability of
online transactions to the Indian exchange industry and different transactions
is astounding thusly. In any case, the bleak reality on the opposite side of
the coin is that there is a disservice in entering such online transactions
even with such an expanded degree, being the dubiousness in the laws
identifying with them.
Note
that E-commerce comprises many segments, some of which have their own names.
Some of the examples are stated as under:
·
electronic catalogues'
“refers to implies whereby sellers can impart their offerings to potential
purchases/buyers”
·
electronic
data interchange (EDI)' “refers to a specific
family of standards for communicating the structured data that represent EC
transactions” and
·
Electronic auctions'
“for a specific set of mechanisms for setting prices.”
The ‘Cyber’ Market
The online medium offers distinctive
facilities that could be used to direct business activities. The Cyber Market
is a place where large number of people of different join together form
different place with the use PC to PC correspondence. World Wide Web,
newsgroups, and email are the types of online correspondence that are enormous
to web-based business. Web-based display sites may be straightforward or
expandable and may allow less consumer interactivity. The least complex type of
advertising site is a page that gives the name of the client organization, a
description of the items or administrations it offers, and ways to talk to the
organization. The most outstanding business destinations allow consumers to
purchase items on the web. Despite of that many websites who are having their
own websites also advertise of the other websites.
Deceitful Marketing Practices
The primary
security issue in internet business is an online credit card hack, that is,
getting cash from another's account without approval. The details which got
without approval are utilized for withdrawal of money from unapproved accounts,
deceitful buys and acquiring false credit.
Due to
these false marketing practices done by these correspondences is very
disappointed. Sales which are done through various websites or e-mails will ask
for additional information just like contact number or address to persuade or
induce the customers. When the payment is made through online portals than
there is a lot of chances of fraud. The most basic types of frauds done online
are:
·
Hacking:
There is no requirement for a
hacker to know the whole details of the cardholder so as to have the capacity
to utilize somebody card since details might be accessible some place on the
web. When the hacker got the individual card number, he could acquire the
cardholder date of birth and address from various social media networking
websites[1].
There are different techniques for getting card details and data.
·
Skimming:
Skimming is the way of storing of
individual personal data on the credit or debit card by utilizing skimming
gadgets to get the card subtleties on the magnetic strip. The number on that
particular magnetic strip are eradicated and another number is embellished and
the transactions are continued by utilizing of new numbers[2].
In contrast to a magnetic strip, a
chip on an RFID transponder gives extra security. Another CVV is produced for
each exchange which is totally unique in relation to the one in the card. The
new CVV is conveyed to the system for it to be utilized for the new exchange.
For this situation, data on the card can't be skimmed as another CVV is
produced for each exchange[3].
·
Identity Theft:
Identity theft refers to that where
one person adopts the identity of another person to get access to the monetary
resources of that particular person. For example: site cloning which means
created a false website which look similar to the legitimate website of the
particular bank to trick the customers of the bank by obtaining their personal
information such as PINs, ID and passwords. In extent of that, false websites
are created for offering cheaper goods or services[4].
·
Phishing:
Just like above, Phishing is the
other way of obtaining the personal details of the customers by way of false
existence. It is a type of internet scam where fake e-mail is popped up and ask
for the update of information of account. The customer unaware about that
provides all of his personal details on that false website, which is just like
the original website of the bank or company and thus the information was hacked
by them and get transfer of funds[5].
·
Pharming:
It is another way of getting the
personal details by fraud. It occurs when the hackers shift the website traffic
to some another website i.e. on false website. It is done through attacking the
host file on a victim personal computer. It is protected by the installation of
the antivirus or spyware on the victim computer.
·
Misleading Advertisement:
When we get few e-mails popped in
our inbox from various shopping websites for offering for free shopping for the
first purchase or free ride for the first online taxi service reservation. An expansion of deceptive
marketing rehearses will trail the development of online trade. Online
deceptive marketing practices can add up to a few billion dollars to shopper's
annual misfortunes.
·
Insufficient
Services:
It is very regular that when people endeavour to exchange money to
financial balances in e-wallets, it falls flat, and once a grievance is
recorded, despite the fact that the purchaser gets a message that it is
remedied, however this disappointment proceeds. This regularly brings about
solidifying money in the e-wallet. Now and then, regardless of whether you get
a message that the money is being exchanged, it doesn't really achieve the
financial records and you get a warning following a few days that the exchange
is being switched. Thus, the purchaser is left with no option of whom to
approach for fixing the issue[6].
Now and then online looking happens that while situating guarantees the
24-hour delivery or delivery inside a fixed date, controlling the customer's
call to settle on a chose item from a specific site over another, the
organization does not deliver the products inside that period. They basically
send a message to the purchaser that in delivery there has been an unexpected
deferral. Essentially, we frequently discover the package left at the doorstep,
or with the security or neighbours, or in the gathering office, regardless of
whether our mark is required to finish the transporter's delivery[7].
The Laws Regulating the E-Commerce Industry in India
India’s
online industry is growing at a very large scale and is expected to surpass US
by 2034 and to become the second largest online industry of the world.[8]
The business is good to go to record the third most astounding development rate
in the Asia-Pacific locale this year and has dramatically multiplied since
2015, in any case, despite everything it has far to go. With the increase of
online business and the way this is just the start of the innovation part in
India preparing itself for another time of web-based business fighting, there
is no uncertainty that India need an administrative system that would connect
the different arms of the legislature. With the regularly expanding pace at
which web-based business is developing in the nation, a desperate need can be
felt for an appropriate structure.
Drafting of E-Commerce Policy of 2018
The much-anticipated
arrangement for web-based business has been deferred by a time of 3 years just
for the discharged draft to cause incredible fomentation among financial
specialists, merchants and retailers who have out and joined together, to
conflict with the draft. A structure is certainly required for
institutionalization just as to guarantee necessities for digital transactions
in India incorporating reasonable cost in the nation's computerized commercial
centre are met with[9].
The draft
Policy of 2018 is by all accounts a positive advancement in the segment which
is a consequence of recommendations that have been gotten from modern players
and different mechanical bodies. This is a marker that the administration is
keen on counselling with different players in the part to guarantee that there
is an approach that contemporarily addresses the issues of the market and is
dynamic enough to adjust to the lively economy of India. That being stated,
this draft arrangement has its very own arrangement of helps and banes[10].
CONSUMER PROTECTION ACT, 1986
Various
laws are available to consumers in accordance with a few enactments. The major
and the standard Act governing the consumers laws in India is The
Consumer Protection Act, 1986[11]
which sets out the rights for consumers and ensures them. This act put
forward the three-tier redress tool that is specifically at district, state,
and national level to resolve any dispute identified with the consumer. These
laws were either to be used in online transactions or not in uncertainty. One
of the State Minister for Consumer Affairs, Public Distribution and Food said
in his statement during the Lok Sabha Session on 8th July, 2014 to
include online transactions within in the scope of the Consumer
Protections Act, 1986 through a composed response[12].
This statement implies that the complaint of the consumer can now approach at a
three-tier consumer forum to resolve the disputes between the buyer/consumer and seller such as the:
i.
The
District Consumer Forum
ii.
State
Commission and
iii.
National
Commission
Before this ongoing express
declaration, the Consumer Protection Act, 1986, was implicitly linked to online
transactions as defined by the Act.
Earlier, there was no explicit
reference was made in regard of the e-commerce transactions falling within the
scope of the Consumer Protection Act and this implied that the consumer was
entitled to seek redress under the same. However, only a narrower picture is
provided by the Consumer Protection Act, 1986. This Act does not provide the
solution to various problems which is faced by the consumers or buyers during
the course of online shopping because of the impersonal nature of the problem
which can be regarded as flipside of that. Therefore, the scope of the Act is
limited to provide redress mechanism on online or e-commerce transactions.
The Consumer Protection Act, 1986 defines Consumer[13] as:
“Any person who buys good or avails or service for which he has paid
consideration, except for commercial use is regarded as a Consumer.”
There are two rights vested with the
consumer while doing shopping through online websites:
i.
To
choose the kind, quality and variety of product and
ii.
Right
to know about the product by descriptive form or other
These two rights are fully vested
with the consumers and if the description of the goods provided by the seller
is false or wrong than the consumer has the full right to return the goods[14].
The person who buy goods for further
sale or making any profit from further sale of goods cannot be treated as
Consumer under the Consumer Protection Act and the companies or online portals
who acts as a mediator between seller and buyer will not claim protection under
the Act is held in case of Raj Kumar vs. S. C. Verma[15].
Buyer[16] as per Sale of Goods Act, 1930
is defined as “any person who buys or agrees to buy goods.”
According to the above two
definitions mentioned above clearly indicated that any person who buys goods or
services for which he had paid any consideration shall be considered as
Consumer or Buyer under the above two Acts, irrespective of the fact that such
sale done online. In addition, Contract of Sale[17]
as defined by the Sale of Goods Act, 1930 indicates that this may
apply to online transactions together with regular transactions.
Sale of Goods Act discussed and also
replicate the conditions in which goods sold in online market and the physical
market:
·
In
case of online market buyer read the description of the goods and after reading
the description if he thinks that it is suitable for him, then he placed order,
whereas in the physical market buyer goes to the particular shop and check the
product and if he is happy with that than he buys the product.
·
The
Sales of Goods Act, there is a full opportunity with the buyer in online
shopping to test the product before taking the delivery, because the buyer is
not able to test the product in online shopping while placing the order[18].
·
If
the buyer is not able to get the proper opportunity of testing the product than
he may deny to take the delivery of that particular product[19].
Indian assembly has not instituted
any different resolution for the services and goods rendered online rather, all
such transactions done in that perspective are represented by the standards of
equity and good conscience and consumer protection laws. Likewise, instances of
negligence in administration can be guaranteed under Tort Law, with regard to
the rule of the strict liability set somewhere near the House of Lords in
milestone case Donoghue versus Stevenson[20].
Defect or
Deficiency
In addition, the Consumer Protection
Act, 1986 becomes applicable if there is a "defect or deficiency in
goods or services." It would therefore only come into play in 1986
only if the Consumer Protection Act met one of the above two criteria. The main
concern in e-commerce is the efficient delivery of the goods. However, there is
no redress provided if the goods are not delivered within the specified time.
Such intricacies create more trouble for online consumers because of the
seller's anonymity. Lots of consumers had lodged their complaints in the
consumers forums but due to ambiguity and uncleared laws leads to ignorance of
their grievances.
In case of the online market if the
buyer likes the specification of the goods and ordered the goods, this form a
contract between the seller and buyer and the seller has to perform his duty by
delivering the goods to the address of the buyer and if the seller had not
performed his part than this is known as deficiency of services on the part of
seller[21].
In case of defective goods criminal
laws should also apply. For Ex: creating the false conception about the product
by showing misleading advertisement and the seller can also be liable for
tortious liability and in addition to that also penalised for fraud and
cheating[22] under
Indian Penal Code.
The accused can also be punished with
imprisonment and also liable to pay damages if not able to perform his duty, is
held in case of Wheels World v. Pradeep Kumar[23].
The seller or the manufacturer should
only be held liable for the deficient services or the defective goods and they
are the only one to be blamed. In case of deficient services provided by the
retailer than the action can also be taken against him and he can also made a
third party to the case between the manufacturer and buyer[24].
OECD Guidelines for Consumer
Protection in the Context of Electronic Commerce (1999)
The Consumer Protection Guidelines in the Context of
Electronic Commerce, by the OECD Council on 9th December, 1999, are
intended to help ensure that consumers are no less secure when shopping than
they are when buying from their neighbourhood store or requesting from a list.
By establishing the centre attributes of powerful consumer protection for online
business-to-consumer exchanges, the rules are designed to help dispense with a
portion of the vulnerabilities experienced by both consumers and businesses
when buying and selling online. The year-and-a-half after effect of talks
between OECD government officials and consumer association.
The guidelines reflect existing legal protection
available to consumers in more traditional forms of trade; encourage
initiatives in the private sector that include consumer participation; and
emphasize the need for cooperation between governments, businesses and
consumers. Their aim is to promote: fair business, advertising and marketing
practices; clear information on the identity of an online business, the goods
or services it offers and the terms and conditions of any transaction; a
transparent process for confirming transactions; safe payment mechanisms; fair,
timely and affordable dispute resolution and redress; protection of privacy;
and consumer and buyer.
Following its exhaustive review, the Committee
agreed in 2014 to amend the 1999 Recommendation to address recognized
difficulties and achieve strong consumer protection while boosting market
advancement and rivalry. Key new improvements to the re-examined proposal in
online business and it includes:
·
Transactions which not included money:
People now a days included in the
transaction of getting free services or goods by offering their personal
details to the seller and these types are transactions are now included in the
scope of OECD guidelines for Recommendation and the Governments should take
proper steps to redress the people who are facing these types of laws and
should make laws on these issues.
·
Digital Content Items:
Transactions including digital
content regularly accompany specialized or authoritative access or use
constraints and numerous customers experience issues understanding their rights
and commitments. New dialect has been added to elucidate that customers ought
to be given clear data about such confinements, just as on usefulness and
interoperability.
·
Active Shoppers:
Current web-based business plans of
action progressively obscure the limits among purchasers and organizations,
with buyers assuming a participatory job in item advancement and improvement,
and going into transactions with different buyers. The extent of the
Recommendation has in this manner been expanded and it currently includes
business exercises that encourage customer to-purchaser transactions. Another
arrangement is added to guarantee that purchaser supports are honest and straightforward.
·
Cell Phones:
The developing utilization of cell
phones for web-based business conveys various specialized difficulties to
making data exposures successful (for example on little screens) and can oblige
record keeping by shoppers. Two new arrangements are incorporated to feature
the need to represent the mechanical impediments or exceptional attributes of
the gadget utilized.
·
Security and Privacy Dangers:
Consumer information is at the centre
of numerous web-based business benefits and lifts protection and security
dangers. The Recommendation reviews the need to address these dangers reliable
with other OECD instruments and incorporates two new arrangements featuring
explicit insurances of specific significance for B2C online business.
·
Payment Assurance:
Recognizing that the dimension of
payment security can differ contingent upon the kind of payment instrument
utilized, the Recommendation approaches governments and partners to cooperate
to create least dimensions of buyer insurance crosswise over payment systems.
·
Product Security:
In various nations, a scope of
dangerous items, which have been denied from deal or reviewed from the
disconnected retail advertise, are accessible in web-based business. Another
arrangement is added to guarantee that hazardous items are not offered to
buyers online, and that organizations participate with the applicable experts
to address the issue.
Some other
Measures:Competence
of Customers through Education & Awareness
Governments
ought to endeavour to teach customers, government authorities, and industry to
encourage educated basic leadership and reasonable disposal of grievances from
shoppers. They should be made mindful of the system for purchaser assurance
appropriate to online transactions, regardless of whether local or
cross-fringe, including their rights and commitments. Such mindfulness plans
ought to likewise intend to improve advanced aptitudes for purchasers through
preparing in computerized innovation abilities advancement. The necessities of
different shopper gatherings ought to be considered when structuring such
projects.
Self- Regulation of Industry
Members in
the business industry must execute different kinds of self-guideline went for
controlling misleading online promoting practices, for example,
Necessary
set of accepted rules relevant to online business exercises;
·
Centres for lodging complaints
·
Not to support unlawful conduct
·
Connectivity between the two authorities
Trade
associations can assume a noteworthy job in realizing viable components of
self-guideline. By ousting the individuals who neglect to agree to its
participation, the trade affiliation that executes a code can verify
consistency. Suppliers that give administrations basic to the activity of a
misleading promoting plan ought to be mindful so as not to offer help for such
plans. ISPs, payment administration administrators, online shopping proprietors
and publicizing offices may decide not to encourage frustrating and out of line
promoting rehearses.
On the off
chance that confirmation by outsiders is broadly acknowledged, the absence of
affirmation will have a slandering impact, which thusly will ask venders to
raise their gauges to fit the bill for accreditation. Administrative oversight
of such outsiders, be that as it may, is important to anticipate misuse.
The
purchaser is unconscious of the notoriety of the dealer when transactions are
made at a separation. On the off chance that there is a framework that gathers
and brings together buyer protests about dealers, this issue can be redressed.
Such a framework must be successful on the off chance that it is available at
no expense to the shopper by means of an open system. This must likewise defend
the purchaser's grumbling security intrigue and ought to have apparatuses to
shield dealers from vexatious and pernicious protests being unjustifiably
trashed.
Alternate Dispute Redressal & Resolution
There
should be reasonable access to buyer equity and justice for e-shoppers. That
is, reasonable, simple to utilize, straightforward and viable question goals
strategies, including those for traverse online business. Such a framework must
give immediate and economical cures. This ought to incorporate access to
components for elective question goals and taking care of inward protests.
Inner objection dealing with systems implies inside question goals stages that
empower purchasers to determine their grievances casually at the most punctual
conceivable stage through direct exchanges between the shopper and the dealer
or specialist co-op.
ADR
instrument ought to incorporate online question goals frameworks to encourage
the goals of web based business claims with exceptional consideration regarding
low-esteem or cross-outskirt transactions. Government should work to guarantee
that requirement specialists, buyer associations and other self-administrative
experts managing customer complaints are fit for making a move, acquiring and
encouraging shopper change.
Conclusion
As the
technology is increasing day by day due to this reason the consumers who are
doing online shopping is increasing at a high rate because of
straightforwardness in transactions and it will crush the physical purchaser
inside a brief timeframe. There are various subordinate laws that ensure'
e-customers ' in a roundabout way. In any case, the requirement for the hour is
to have an exhaustive enactment that will cover all parts of online
transactions explicitly and solely. It requires a severe and easy to understand
law that gives security at the season of exchange just as ensures the
purchaser's after-exchange interests. The mechanical parts of online
transactions make it hard to make such enactment for the insurance of
computerized purchasers, as it includes legitimate issues and encourages
traders to conceal their character; thusly, the horde difficulties of ensuring
customers ' rights in internet business must be tended to through the aggregate
activity of different government offices, business elements and organizations.
In any case, the legislature and the brokers would not deal with the privileges
of customers in all conditions. Shoppers ought to be very much aware of their
rights and ought to maintain such rights and defend them.
[1]
Lisa Rogak, ‘ 10 things you should know about identity theft’, http://www.creditcards.com/credit-card-news/help/10-things-you-should-know-about-identity-theft-6000.php,
as accessed on April 1, 2022.
[2] J
K Mathur, ‘Credit Card Fraud- Improving Security’, www.chillibreeze.com/articles/creditcardfraud.
Asp, as accessed on April 3, 2022.
[3]
Mark Roberti, ‘Are RFID-Enabled Credit Cards Safer Than Magstripe Cards?’, RFID
Journal, 15 September, 2011.
[4] J
K Mathur, ‘Credit Card Fraud- Improving Security’, www.chillibreeze.com/articles/creditcardfraud.
Asp, as accessed on April 3, 2022.
[5]
‘Phishing scams attempt to collect credit card numbers, passwords, etc.’, http://www.webopedia.com/TERM/P/phishing.html,
as accessed on April 3, 2022.
[6]
‘Application of Consumer Protection Laws on goods sold online- who is liable
for defective goods’, https://blog.ipleaders.in/consumer-protection-laws-ecommerce/
[7]
‘Application of Consumer Protection Laws on goods sold online- who is liable
for defective goods’, https://blog.ipleaders.in/consumer-protection-laws-ecommerce/
[10] Ibid. 14
[12] Press
Information Bureau, Government of India, Ministry of Consumer Affairs, Food and
Public Distribution.
[17] Section 4(1) of Sale of Goods
Act, 1930 states that a contract of sale of goods is a contract whereby the
seller transfers or agrees to transfer the property in goods to the buyer for a
price.