E-commerce regulation in India "EMPOWER IAS"

 

In news:

• The Department for Promotion of Industry and Internal Trade (DPIIT) will soon come out with a common acceptable draft e-commerce policy.

 

Earlier policy

• The previous draft in July last year had proposed a regulator, an e-commerce law, periodic audit of companies that store or mirror Indian users’ data overseas.
• The latest draft calls for streamlining of regulatory processes to ease the burden of compliance for activities related to e-commerce and regulations for data that will provide for sharing mechanism.

 

Advantages of e-Commerce

• The process of e-commerce enables sellers to come closer to customers that lead to increased productivity and perfect competition. The customer can also choose between different sellers and buy the most relevant products as per requirements, preferences, and budget. Moreover, customers now have access to virtual stores 24/7.
• e-Commerce also leads to significant transaction cost reduction for consumers.
• e-commerce has emerged as one of the fast-growing trade channels available for the cross-border trade of goods and services.
• It provides a wider reach and reception across the global market, with minimum investments. It enables sellers to sell to a global audience and also customers to make a global choice. Geographical boundaries and challenges are eradicated/drastically reduced.
• Through direct interaction with final customers, this e-commerce process cuts the product distribution chain to a significant extent. A direct and transparent channel between the producer or service provider and the final customer is made. This way products and services that are created to cater to the individual preferences of the target audience.
• Customers can easily locate products since e-commerce can be one store set up for all the customers’ business needs
• Ease of doing business: It makes starting, managing business easy and simple.
• The growth in the e-commerce sector can boost employment, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term.
• The e-commerce industry has been directly impacting the micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training and has a favourable cascading effect on other industries as well.

 

Disadvantages of e-Commerce

• There is lesser accountability on part of e-commerce companies and the product quality may or may not meet the expectations of the customers.
• It depends strongly on network connectivity and information technology. Mechanical failures can cause unpredictable effects on total processes.
• Definite legislations both domestically and internationally to regulate e-commerce transactions are still to be framed leading to lack of regulation of the sector.
• At times, there is a loss of privacy, culture or economic identity of the customer.
• There is a chance of fraudulent financial transactions and loss of sensitive financial information.
• The Internet is borderless with minimum regulation, and therefore protecting intellectual property rights (IPR) on the Internet is a growing concern. There are currently several significant IPR issues including misuse of trademark rights.

 

What are the provisions of the new law?

Data Usage

• According to a revised draft, the government would lay down principles for the usage of data for industrial development, where such norms do not already exist.
• They aim to put in place safeguards to prevent misuse and access of data by unauthorized persons.
• Such safeguards may include regulating the cross-border flow of data pertaining to Indians and transactions taking place in India and the requirement of adequacy audits to be carried out by Indian firms.
• As per the recent draft policy, violation of safeguards shall be viewed seriously and attract heavy penalties.

 

Regulation, exports

• Conformity assessment procedures will be put in place to verify that goods and services sold on e-commerce platforms meet required standards and technical regulations.
• The government shall collect information from e-commerce platforms to aid it in making necessary decisions.
• In order to ensure that e-commerce is not used to defraud customers, registration with an authority identified by the Government shall be mandatory.
• The policy shall bring e-commerce exports on par with non-e-commerce exports by enabling online grant of drawbacks, advance authorization and GST refund.

 

Consumer protection

• As per the draft, e-commerce operators must ensure to bring out clear and transparent policies on discounts, including the basis of discount rates funded by platforms.
• Such a move aims to ensure fair and equal treatment.
• It said consumers have a right to be made aware of all relevant details about the goods and services offered for sale including country of origin, value addition in India etc.
• In case the seller fails to establish the genuineness of his products within a reasonable time frame, the e-commerce platform shall delist the seller.

 

Consumer Protection Act, 2019: Key Features

1) Definition of consumer

• A consumer is defined as a person who buys any good or avails a service for a consideration. 
• It does not include a person who obtains a good for resale or a good or service for commercial purpose. 
• It covers transactions through all modes including offline, and online through electronic means, teleshopping, multi-level marketing or direct selling.

 

2) Rights of consumers

• The following consumer rights have been defined in the Act, including the right to:
• be protected against marketing of goods and services which are hazardous to life and property;
• be informed of the quality, quantity, potency, purity, standard and price of goods or services;
• be assured of access to a variety of goods or services at competitive prices; and
• seek redressal against unfair or restrictive trade practices

 

3) Establishment of Central Consumer Protection Authority

• The central government will set up a CCPA to promote, protect and enforce the rights of consumers. 
• It will regulate matters related to violation of consumer rights, unfair trade practices, and misleading advertisements. 
• The CCPA will have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into such violations. 

 

4) Penalties for misleading advertisement

• The CCPA may impose a penalty on a manufacturer or an endorser of up to Rs 10 lakh and imprisonment for up to two years for a false or misleading advertisement. 
• In case of a subsequent offence, the fine may extend to Rs 50 lakh and imprisonment of up to five years. 
• CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to one year.
• For every subsequent offence, the period of prohibition may extend to three years.  

 

5) Consumer Disputes Redressal Commission

• CDRCs will be set up at the district, state, and national levels. 
• A consumer can file a complaint with CDRCs in relation to: unfair or restrictive trade practices; defective goods or services etc.
• Complaints against an unfair contract can be filed with only the State and National   Appeals from a District CDRC will be heard by the State CDRC. 
• Appeals from the State CDRC will be heard by the National CDRC.  Final appeal will lie before the Supreme Court.

 

6) Jurisdiction of CDRCs

• The District CDRC will entertain complaints where value of goods and services does not exceed Rs one crore. 
• The State CDRC will entertain complaints when the value is more than Rs one crore but does not exceed Rs 10 crore. 
• Complaints with value of goods and services over Rs 10 crore will be entertained by the National CDRC.

 

7) Product liability

• Product liability means the liability of a product manufacturer, service provider or seller to compensate a consumer for any harm or injury caused by a defective good or deficient service. 
• To claim compensation, a consumer has to prove any one of the conditions for defect or deficiency, as given in the Act.