'Specific' flash sales banned: Centre proposes sweeping changes in e-commerce rules

Ministry of Consumer Affairs, Food, and Public Distribution has proposed several sweeping changes to the Consumer Protection (E-Commerce) Rules, 2020.

The Ministry on Monday in a statement said that conventional flash sales by third-party sellers are not banned on e-commerce platforms. But, certain e-commerce entities are engaging in limiting consumer choice by indulging in "back to back" or "flash" sales wherein one seller selling on a platform does not carry any inventory or order fulfillment capability but merely places a "flash or back to back" order with another seller controlled by the platform. This prevents a level playing field and ultimately limits customer choice and increases prices.

To protect the interests of consumers, prevent their exploitation and encourage free and fair competition in the market, the government of India is sharing a draft of the proposed amendments to the Consumer Protection (E-commerce) Rules, 2020. The proposed amendments aim to bring transparency in the e-commerce platforms and further strengthen the regulatory regime to curb the prevalent unfair trade practices, said the ministry.

For the purposes of preventing unfair trade practices in e-commerce, the Central Government had notified the Consumer Protection (E-Commerce) Rules, 2020 with effect from 23 July 2020. However, since the notification of these rules, the Government has received several representations from aggrieved consumers, traders, and associations complaining against widespread cheating and unfair trade practices being observed in the e-commerce ecosystem,

The ministry in its statement added that prevalence of such unfortunate incidents have negatively impacted the consumer and business sentiment in the market, causing immense distress and anguish to many.

It was observed that there was an evident lack of regulatory oversight in e-commerce which required some urgent action. Moreover, the rapid growth of e-commerce platforms has also brought into the purview the unfair trade practices of the marketplace e-commerce entities engaging in manipulating search result to promote certain sellers, preferential treatment to some sellers, indirectly operating the sellers on their platform, impinging the free choice of consumers, selling goods close to expiration etc.

The draft rules released Monday are broadly in line with the IT intermediary rules announced for social media companies earlier this year. Similarly, like the IT intermediary rules, to ensure compliance of the Consumer Protection Act, 2019 and Rules, the appointment of Chief Compliance Officer, a nodal contact person for 24x7 coordination with law enforcement agencies, officers to ensure compliance to their orders and Resident Grievance Officer for redressing the grievances of the consumers on the e-commerce platform has been proposed.

"This would ensure effective compliance with the provisions of the Act and Rules and also strengthen the grievance redressal mechanism on e-commerce entities," said the ministry.

Further, the government has proposed putting in place a framework for registration of every e-commerce entity with the Department for Promotion of Industry and Internal Trade (DPIIT) for allotment of registration number which shall be displayed prominently on the website as well as invoice of every order placed in the e-commerce entity. Registration of e-commerce entities would help create a database of genuine e-commerce entities and ensure that the consumers are able to verify the genuineness of an e-commerce entity before transacting through their platform.

The ministry also said that to protect the interests of consumers, mis-selling has been prohibited i.e selling goods and services entities selling goods or services by deliberate misrepresentation of information by such entities about such goods or services.

"To ensure that consumers are aware of the expiry date of the products they are buying on the e-commerce platform, all sellers on marketplace e-commerce entities and all inventory e-commerce entities provide best before or use before a date to enable consumers to make an informed purchase decision," said the ministry.

To ensure that the domestic manufacturers and suppliers get a fair and equal treatment on the e-commerce platform it has been provided that where an e-commerce entity offers imported goods or services, it shall incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives to ensure a fair opportunity for domestic goods.

"To ensure that consumers are not adversely affected in the event where a seller fails to deliver the goods or services due to negligent conduct by such seller in fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity, provisions of Fall-back liability for every marketplace e-commerce entity has been provided," added ministry.