Open Access Research Article
E-COMMERCE AND CONSUMER PROTECTION ACT IN INDIA
Published Paper
Article Details
E-COMMERCE AND CONSUMER PROTECTION
ACT IN INDIA
AUTHORED
BY - SMITA R. NAIK1
& KABRA AKSHAY2
(1Student
of first year LLM and 2Assistant Professor, PES’ Modern Law College, Pune)
Abstract
This article explains consumer
protection laws for online shopping which underscores the importance of
understanding the laws that safeguard the interests of online shoppers. This
article delves into the intricacies of these laws, providing a comprehensive
guide to your rights as a consumer in India. This Act serves as the
primary legal framework designed to defend consumer interests, offering a clear
and concise approach to addressing grievances related to online shopping.
Keywords: CP Act (2019) India, e-commerce, online
protection, online shopping, e-daakhil
Introduction
E-commerce has been booming since the advent
of the worldwide web / internet in 1991. First e-commerce transaction took place with Boston Computer Exchange that
launched its first e-commerce platform way back in 1982. E-commerce growth
potential is directly associated with internet penetration. Increase in
worldwide use of mobile devices / smart-phones has primarily led to the growth
of e-commerce. With mobile devices, individuals are more versatile and passive
in buying and selling over the internet. Growth of the millennial digital-savvy
workforce, mobile ubiquity and continuous optimization of e-commerce technology
is pressing the hand and speed of the historically slow-moving buyers to buyers’
market. Now a day, e-commerce has reshaped global retail market and it is vibrant
and ever-expanding business model. Its future is even more competitive than
ever, with the increasing purchasing power of global buyers, the proliferation
of social media users and increasingly advancing infrastructure and technology.[1]
E-commerce development includes a
number of legal as well as consumer challenges. It is not just using
network-based technologies to carry out business. It is about moving a whole
organization to a fully electronic environment through a change in their work
procedures, reengineering their business processes, integrating them with their
business partners beyond their traditional boundaries. It has brought complete
revolution in the way businesses are conducted. There is paradigm change from
paper-based transactions to fully electronic organizations. In this changing
scenario, the law is struggling to keep up.[2]
E-commerce is defined as
a process of businesses and trading with goods and services using electronic
links. It means doing business over the internet selling goods and services
which are delivered offline, as well as goods which are digitalized and delivered
online. Such mode of buying and selling
through internet is termed as e-commerce.
The e-commerce is classified as
1. Business to business (longest
business form and involves supply chain management viz. e-procurement) 2. Business
to consumer (involves businesses introducing and selling products to
consumer through online internet service) 3. Consumer to consumer
(online market one can buy and sell
goods to each other) 4. Businesses to the
Government (sell goods and services).[3]
Person who buys
any goods or avails services viz., offline / online
transactions through electronic means or by teleshopping or
direct selling or multi-level marketing, which has been paid or promised or
partly paid and partly promised or under any system of deferred payment also includes
the user with approval of such goods or beneficiary of services. On the
contrary, person who obtains goods free of charge or who avails services free
of charge or who obtains goods for resale or for commercial purposes or who
avails services for commercial purposes or who avails services under contract of service is not be
considered as consumer.[4]
The 1990s, promised new horizon in the field
of technology and commerce with the meteoric rise of the internet. Ease and
functional value of proliferation in trade wherein, new customer bases or
business scalability reached with use of the internet. This frictionless
process spanning international jurisdictions fetched need of supervisory
mechanism in some form of the regulatory framework. Thus, United Nations
Commission on International Trade Law (UNCITRAL) took up this task and gave a
set of model laws for its signatory countries to ratify which was aimed at removing
any unnecessary obstacles to international trade. IT Act (2000) was amended
(2008) in India for the benefits under Foreign Direct Investment (FDI) policy for e-commerce.
Basis behind this policy change was to protect unorganized, small sellers who cannot economically compete
with major e-commerce entities, yet at the same time, it stunts the growth of
such e-commerce entities that receive funding from offshore investors, thereby
limiting potential market in sectors such as employment.[5]
New digital age has shown new set of
customer expectations in the era of e- commerce and digital branding leading to
new sets of challenges faced by the customers in India. Earlier, Consumer
Protection Act was passed in 1986 that had certain loopholes. Hence there was
need of new Act that was passed in 2019 (hereinafter referred to as CPA)
and implemented 2020 that replaced CPA (1986) to protect interests of consumers
along with timely, effective administration and settlement of consumers
disputes. Thus, lacunas, surged laws, lack of trust and inadequacy of the earlier Act were
eliminated to provide security amongst online consumers to protect their rights
and to build sense of confidence among them.
Discussion
The expressions ‘buys any goods’ and ‘hires or avails any services’
include offline and/or online transactions through electronic means or by
teleshopping or by direct selling or multi-level marketing. Consumer is a
person who buys goods from his earning through
livelihood by means of self-employment for himself. In contrast, the person who
obtains/avails goods /services free of charge and/or who obtains/avails
goods/services for commercial purpose/on contractual
basis is not considered to be consumer. Under this Act, consumer has six rights
viz., Right to safety; Right to be
informed; Right to choose; Right to be heard; Right to seek redressal and Right
to consumer awareness. Ecommerce entities are now required to obtain an express
consent from its consumers for purchase of any good / service offered on its
platform. Price of the goods / services offered cannot be manipulated by
e-commerce entities to gain unreasonable profits. As per e-commerce rules, e-commerce
entity is defined as ‘any person, who
owns, operates or manages digital or electronic facility or platform for
electronic commerce, but does not include seller offering his goods or services
for sale on marketplace’.
Consumer protection concerns in global e-commerce and describes
system that facilitates sales of products and services through electronic
exchange. Through cost reductions, competition, and a better production process
organization, e-commerce boosts productivity and expands choice as the
corporate system is dependent on the consumers. Physical trade was replaced by e-commerce
(online commerce) as technology advanced. E-commerce must be accessible to all
consumers. In order to prevent unfair, deceptive and fraudulent online behaviour,
the ongoing development of transparent and effective consumer protection
systems is necessary to increase the consumer confidence in e-commerce. Due to
the increase in the trend of e-commerce, there is an increase in online fraud
which is affecting the consumers’ interest which in turn is losing trust and
faith of the consumers.
CPA (2019) serves as primary legal framework
designed to defend consumer interests, offering a clear and concise approach to
addressing grievances related to online shopping. Under the Act, the online
retailers are required to provide all necessary information regarding the goods
and services they offer which also include details about prices, expiry dates,
return policies, and other relevant data. E-commerce platforms are required to establish an efficient
grievance redressal mechanism with appointment of grievance officer whose
contact details are to be made available on the website. The Act introduces an ‘Online Dispute Resolution (ODR)’
mechanism, enabling consumers to file complaints online through the e-Daakhil portal. This platform
simplifies the complaint process, making it more accessible and efficient. Consumer
protection laws for online shopping in India provide robust framework to
protect the interests of consumers. By understanding the rights and the mechanisms
in place for redressal, one can shop online with confidence. It’s crucial to
stay informed and be vigilant in ensuring that online shopping experiences are
safe and fair.
All transactions made through online e-commerce
platforms are providing protection to consumers against the unfair trade
practices that include false representation, misleading advertisements,
charging above MRP and refusing to take back defective goods or discontinue
deficient services. If the issue is not resolved, one can file complaint with consumer
forum through the online Consumer Mediation Centre (OCMC) or the e-Daakhil
portal or directly with Consumer Forum, depending on jurisdiction and claim-value.
Complaint must be filed within two years from date on which the cause of action
arises.
Return
policies depend on terms and conditions of the online seller. The Act does not
mandate return unless product is defective or different from what was promised.
Remedies include replacement of product, refund of price paid, removal of defects
in product, discontinuation of unfair trade practices and compensation for any
loss or injury suffered. Consumers can claim compensation for mental agony and
physical harm in addition to the loss or damage suffered due to unfair trade
practices or deficient services. The Central
Consumer Protection Authority (CCPA) regulates matters relating to
violation of consumer rights, unfair trade practices and misleading
advertisements. It can issue directives and penalties against defaulting
manufacturers or service providers.
The
Act includes provisions of mandate disclosure of seller details, grievance
officer, conformity of goods and services with the declared standards. If the
service or product was availed or bought for use in India, consumers can approach
Indian consumer forums despite the seller being based internationally. Misleading
advertisement is any information that falsely describes product or service,
giving misleading impression about its nature, characteristics or quality. Depending on the terms and conditions of the online
seller and type of product or service, consumers may have the right to cancel
or withdraw from a contract within a specified period. Product liability refers
to responsibility of manufacturers, sellers or service providers to compensate
for harm caused by defective products or services. The online reviews can
provide context, consumer complaints are primarily based on the personal
experience and evidence of the complainant. If online seller does not respond
to consumer complaint, consumer can escalate the matter to Consumer Forum,
which can then summon the seller and proceed with the case. More information
can be found on the official websites of Department of Consumer Affairs, CPA (2019)
and National Consumer Helpline (NCH).
The
Act establishes three-tier grievance redressal mechanism at the district, state
and national levels ensuring that the consumers may seek redressal against
unfair trade practices or unscrupulous exploitation. The legislation ensures
that consumer complaints are heard promptly, with the Consumer Protection
Councils set up at the district, state, and national levels advocating on
behalf of consumers. In addition to this Act, ‘E-Commerce Guidelines for
Consumer Protection (2020) further safeguard online shoppers. These guidelines
mandate transparency in terms of seller details, return policies, and terms of
contract. Financial
jurisdiction under CPA (2019) under the three-tier grievance redressal
mechanism are 1) District Commission
Dispute Redressal Commission: Cases involving value of goods and services paid
for as consideration less than one crore INR. 2) State
Commission Dispute Redressal Commission: Cases involving value of goods and
services paid for consideration less than Ten crore INR. 3) National Commission Dispute Redressal
Commission: Cases involving value of goods and services paid for consideration
more than ten crore INR. In all the three levels, central government may
prescribe such value to exceed the amount, if deemed to be necessary and will
be addressed under this commission. Centre
has notified Jurisdiction Rules (2021) in all these three levels viz.,
the district, state and national commission shall entertain the cases involving value of goods and
services less than fifty lacs INR; more than fifty lacs and less than 2 crores INR; and more
than two crores INR, respectively. The
obligation of appointing a grievance redressal officer has also been extended
to the sellers. E-commerce entities are already taking adequate representations
from the sellers (at the time of onboarding) ensuing compliance with the obligations under the E-commerce
Rules. In order to weed out unscrupulous sellers, the Rules have made it
mandatory for the sellers to disclose certain prescribed information to
marketplace which information is required to be displayed on the marketplace
platform.[6]
Central consumer protection authority whose primary
objective is to protect and enforce consumers rights. The authority is empowered
to conduct investigations into violation of rights and institute complaints,
impose penalties on manufacturers for misleading advertisements. Punishment for
manufacture of spurious goods in case any manufacturer is involved in sale of
expiry products can be held liable, dealing in malicious practices. Any person
aggrieved by the orders given by national commission dispute redressal
commission can approach the Supreme Court within a period of thirty days from
the date of the order.
Primary objective of e-commerce is to ensure the same
level of protection to consumers as in other forms of commerce. Appropriate awareness
in respect of transparency in disclosure of information; data and payment security;
responsible endorsement, and redress seems to be needed to protect consumers’
rights, to build faith in online shopping, to help them in smooth functioning and
to boost the e-commerce system.
In today’s
modern era, e-commerce transaction has indeed become a felt need. Now it has become quite common for the consumers to
place order online instead of going to the market for purchasing by just
clicking on one link. Still then there are lots of problems faced by the online
consumers in different sectors especially like in placing order of food online on
Swiggy, Zomato etc. and also in clothing sector like Meesho, Myntra etc. There
are cases where these companies provided goods and services to customers which
are defective, imitation goods which results in deficiency of services. Today we stand far off from the upsetting
pictures of the past yet it does not take a farfetched imagination for one to
understand the potential risks still borne by customers where the very nature
of transaction compels the customer to be in absolute dependence on the seller
for goods and/or services.
Legislation protecting Indian consumers is
at par with the most global standards and implements various proficient
statutes as per the need and requirements of the market. Points of practical
issues such as ‘defect’ and ‘deficiency’ which come up in standard consumer
complaints have been defined and addressed by the legislation which further
narrows the possibilities of abuse of consumers. Further, the central consumer
protection authority has been delegated with the power to regulate and investigate
issues, which in turn reduces the delay in the delivery of justice. However,
it’s not all smooth sailing and there exist lacunae that require immediate
attention. Except in one chapter the IT Act hardly takes any cognizance of the
consumers as an entity. A glaring example of that would be the absence of any
real IT service consumer in the cyber.
1) Product liability: Since
the Act defines product to include any goods, services or combination thereof,
it is responsibility of the manufacturer, seller or service provider for any
harm caused to consumer due to defective product or service. E-commerce
platforms have an obligation to ensure that the products sold on their
platforms are safe, of good quality and comply with all applicable laws and
regulations.
2) Advertising standards:
Advertising is regulated by Advertising Standards Council of India (ASCI) and
in accordance with its code, advertisements to be truthful, not misleading and
not offensive to the public. E-commerce platforms must ensure that
advertisements displayed on their platforms comply the said code of
self-regulation.
3) Data-privacy and security:
Data privacy and security are governed by personal data protection bill that seeks
to provide comprehensive framework for the protection of personal data and
e-commerce transactions. E-commerce platforms have to ensure that consumers’
personal data is collected, processed and stored in compliance with the law.
4) Consumer education: Govt.
of India has launched several initiatives to educate consumers about their
rights and to create awareness about risks and challenges of e-commerce.
National Consumer Helpline provides toll-free number that consumers can call to
seek information and guidance on consumer issues. The government has also
launched a portal called Grahak Suvidha Kendra, which provides information on consumer rights and redressal
mechanisms.
5) Payment options:
E-commerce platforms in India offer multiple payment options, including credit
cards, debit cards, net banking and mobile wallets. These payment options offer
convenience to consumers, they also come with certain risks. Consumers must
exercise caution while making online payments and ensure that they use a secure
payment gateway.
Jurisprudence
in E-commerce
1990s promised new horizon in the field of
technology and commerce with meteoric rise of the Internet. The corporate
sector was engaged in the efforts to put together ease and functional
value of proliferation in the trade where new customer bases or business
scalability could be reached via the use of the internet. Since it was to be
frictionless process spanning international jurisdictions, there had to be
supervisory body that would present some form of regulatory framework. UN Commission
on International Trade Law (UNCITRAL) took up this task and gave set of Model
Laws for its signatory countries to ratify which was aimed at removing any
unnecessary obstacles to international trade. IT Act (2000) and its Amendment (2008) is
India’s candidate to fulfill its signatory obligations. However, MLEC is a set
of model laws that only provide guideline for its signatory countries who can modify
and bring in legislation that suits its demographics the best. Although it does
often lead to strict and sometimes biased regulations to have to be followed by
offshore business entities. India made changes the in Foreign Direct Investment (FDI) policy for e-commerce.
Rationale behind this policy change is to protect unorganized / small sellers
of the country who cannot economically compete with major e-commerce entities.
Earlier, Consumer
Protection Act (1986) was replaced by CPA (2019) and implemented 2020 to
protect interests of consumers along with timely, effective administration and
settlement of consumers disputes.
Notable Case Laws in India
Writ petition was filed
by the Association seeking Supreme Court to declare that CPA doesn’t apply to
medical profession and the Association validated that medical professionals are
governed by separate code of ethics. The Court held that District, State and
National Consumer Forums can summon experts in the field of medicine, examine
evidence and protect the interest of consumers. Doctors and hospitals that
render services without any charge would not fall within the ambit of ‘service’.
In government hospital services are provided free of charge and hence the CPA would
not be applied. However, if customers are being provided for free to the poor,
then it shall be covered as a service under the act. In case the insurance
policy company pays for the treatment on behalf of customer, then it will be
covered under the Act. Consumer is
having the rights under this Act viz.,
right to safety, right to be informed, right to choose, right to be heard, right
to seek redressal and right to consumer awareness.
2) Sehgal School of Competition v. Dalbir
Singh (2009, CPJ 33): Student was asked to deposit lump sum fees of Rs. 18,734 for coaching of
medical entrance examination for the next two years and the amount was
deposited by him in two complete installments. However, he realized that the
quality of coaching institute was not up to the mark and therefore sought
refund for remaining period which was refused by the institute. National
Commission stated that fees once paid shall not be refunded is an unfair trade
practice. It quoted UGC guidelines declaring that even if a student has
not attended single class, an amount of Rs. 1000 can get deducted and
proportionate charges for hostel fees and the balance amount could be refunded.
State Consumer Forum, mentioned that not just the balance amount of fee, but
also higher compensation for legal costs as well as the pain that the student
had to undertake, could be availed in such cases.
3) MCX Stock Exchange Ltd. v.
Securities and Exchange Board of India (2013: WP no. 213 of 2011): This case
pertained to regulation of online trading platforms and their compliance with
securities laws. Supreme Court held that online trading platforms must adhere
to the regulations set by the Securities and Exchange Board of India to ensure
investor protection and market integrity.
4) Amazon Seller Services Pvt. Ltd. v.
Love Kumar Sahu & Anr (Appeal No. FA/2018/05):
The case raises questions regarding
the legality of seller-determined refund policies in e-commerce and protection
of consumers under the IT Act, highlighting the need for consumer confidence
and adequate safeguards for growth in the sector.
5) Mohit
v. Amazon Seller Service (2018): Complaint was filed to the District Redressal
Commission against the service provider claiming that they do not having an
adequate grievance redressal mechanism as specified by the Consumer Protection
(e-commerce) Rules (2020). The
Commission ordered the Service provider for payment of one lac INR along with
litigation expense of 1100 INR. Further mentioned that if the order is not
complied by Service provider then complainant may file execution petition u/s
71 and prosecution u/s 72 of CPA (2019).
6) Anti-Corruption
Council of India v. Secretary (2019, WP no. 14866/2019): The plea was submitted
by the petitioner to Karnataka High Court that e-commerce market is not customer friendly so far as return
and refund policies are concerned, and large companies involved in e-commerce state in their disclaimer clauses that they will
not be liable for damages of any kind. Petition was dismissed on the substance
of no public interest was involved in therein.
7)
Satavra Bhavana Rameshbhai v. Myntra, e-commerce company (2023): The complaint was filed against
the e-commerce company
to the District Redressal Commission for providing empty box that can be held
liable u/s 85 of Consumer Protection (e-commerce)
Rules (2020). Company was found
responsible for providing deficiency in service by absolute negligence.
8) Patel Rekhaben Panka v. Harsh
Vision Deal (2023): Protection (e-commerce) Rules 2020 are
clearly made for the better protection of the consumer
wherein, under rule 4 duties of e-commerce entities
and rule 5 liabilities of marketplace e- commerce are
given. Rule 5 (2) says that every marketplace is the e-commerce entity
shall require sellers through an undertaking to ensure that descriptions, images and other content pertaining to
goods.
Future of e-commerce regulations in
India is likely to witness further evolution as the industry expands. Some key
areas that require attention include strengthening consumer dispute resolution mechanisms,
cyber-security and data protection, enhancing market competition etc.
Conclusion
An inference that the CPA (2019) and IT
Act (2000) with its amendment (2008) has not only been an uncommitted effort to
protect consumers but have had noteworthy thoughts and analytical deductions to
incorporate various consequences that might be fall consumer and go as far as
to even hold foreign business entities accountable, even if they do not have
legal presence in India for aggrieving the consumer. Laws cannot be perfect
by any standard as they always try to play catch-up with the dynamic field of
technology. However, the need of the hour is to not only think ahead but use
every day as a new opportunity to manage and strategize the legal crux that
arises from development in the field of consumer and e-commerce
business. It was most helpful in the recent restraints on the freedom of
movement of consumer and ensuing increased dependence on e-commerce courtesy
during pandemics.
E-commerce has revolutionized the way
consumers shop in India. An obligation to ensure that consumers are protected
and consumers must be aware of their rights and take necessary precautions
while shopping online. Consumer protection laws have evolved to keep pace with
this changing landscape. However, this
consecration has not been unadulterated as everyday online scams and unfair
trade practices have had consumers reel under the fear of exposing themselves
to unscrupulous sellers and service providers. E-commerce rules are far ahead
in respect of transparency and lead to a dignified marketplace where consumers
are well-informed and have strong checks to curb deceptive and unfair trade
practices.
It is obligatory for e-commerce platforms
that consumers are protected and they are also aware of their rights and they
take all the precautions while shopping online. Sometimes they are hesitant to
file a complaint as they think of the lengthy processes and the initiative like
e-dakhil reduces burden of customer
and can file complaint even without hiring lawyer.
[1] Neelam Chawla and Basanta Kumar.
(2021).Published online 9-7- 2021. doi: 10.1007/s10551-021-04884-3,
last seen on 12-4-24
[3] Chinmay
Patra (2021).
Relevance of consumer protection Act (2019 in e-commerce. Ind. J. of Law& Justice.
vol. 12 (1)
pp. 291-300. ISSN: 0976-3570
[4] C:\Users\Admin\Desktop\Semester -
III\Cons prot for online shopping\consumer protection act 2019.pdf, last
seen on 12-4-24
[5] https://blog.ipleaders.in/consumer-protection-and-e-commerce-jurisprudence-in-india/, last seen on 12-4-24
[6] https://inc42.com/resources/an-overview-of-consumer-protection-e-commerce-rules/, last seen on 12-4-24
[7]
ttps://www.linkedin.com/pulse/e-commerce-consumer-protection-india-laws-online-shopping?trk=article-ssr
frontend-pulse_more-articles_related-content-card,
last
seen on 12-4-24
Article Information
E-COMMERCE AND CONSUMER PROTECTION ACT IN INDIA
Authors: SMITA R. NAIK, KABRA AKSHAY
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/04/26
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
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