Ecommerce rules: NASSCOM says rationalise obligations, limit fallback liability to timely refund

The IT industry body on Friday said its recommendations on the proposed ecommerce rules "focus on strengthening consumer protection, ensuring that the obligations are proportionate to the underlying risks and are unambiguous".
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Rationalising obligations in line with activities of relevant entities, and limiting the fallback liability of online retailers to ensuring timely refunds to consumers are among the recommendations suggested by NASSCOM to the proposed ecommerce rules.

The IT industry body on Friday said its recommendations on the proposed e-commerce rules "focus on strengthening consumer protection, ensuring that the obligations are proportionate to the underlying risks and are unambiguous".

The draft ecommerce rules released by the government on June 21 propose to ban fraudulent flash sales and mis-selling of goods and services on ecommerce platforms. Appointments of chief compliance officer/grievance redressal officer are among the key amendments proposed under the Consumer Protection (E-Commerce) Rules, 2020.

NASSCOM said some of the proposed amendments "appear to be beyond the scope of the Consumer Protection Act 2019 (COPA19) and are instead a subject matter of either the Competition Act, 2002 or the Information Technology Act, 2000...in our submission, we undertook a clause-by-clause review of the proposed amendments and suggested the way forward".

The government on Monday extended the deadline for public comments on proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020 till August 5. Earlier, the last date for public comments on the draft ecommerce rules was July 6.

Some of the recommendations include the removal of the word 'own' from the definition of an ecommerce entity.

"This is with the aim of excluding from the scope those technology entities that own the digital platform and license/provide it to ecommerce companies. Ecommerce companies, in turn, operate and manage the front-end platforms. Therefore, the definition should only include entities that operate and manage the ecommerce platforms," NASSCOM argued.

It also noted that instead of prohibiting certain activities, an indicative list of unfair trade practices be included that the Central Consumer Protection Authority (CCPA) may investigate upon, for ensuring consumer protection.

"In case of fallback liability, suggested that the obligation on a marketplace e-commerce entity should be to the extent of ensuring timely refund to consumers if the consumer has already paid for such goods or services," NASSCOM said.

One of the proposals says that a marketplace ecommerce entity will be subject to a 'fallback liability' when a seller registered on its platform fails to deliver the goods or services ordered by a consumer due to negligent conduct, omission or commission of any act by such seller.

NASSCOM emphasised that keeping in view the uniqueness of different ecommerce models, rationalising obligations in line with activities of relevant entities in the ecommerce supply chain is crucial to revising the existing framework for consumer protection.

"NASSCOM has always advocated in favour of consumer protection, and we are against unethical business practices or violation of laws. We will continue to work closely with the government and the industry towards enabling a robust regulatory regime, as that is essential for ensuring consumer protection and growing trust in the market," it added.

Various industry bodies have raised concerns around various provisions of the proposed regulations.

Recently, Internet and Mobile Association of India — which represents various digital platforms like Google, Ola, Flipkart and Amazon — had said the proposed ecommerce regulations could negatively impact consumer interest, while creating a high level of uncertainty and increased compliance burden for not just ecommerce companies, but MSMEs providing services to online retailers.

The Indo American Chamber of Commerce (IACC) had stated that the proposed regulations could increase compliance liabilities, affect global investor sentiment with respect to ease of doing business in the country, and severely impair growth of the online commerce sector, while Supreme Court senior advocate Gopal Jain had said holding ecommerce companies responsible for goods sold by some other sellers and proposed restrictions on the sale of goods by related parties on the platform will hurt the MSMEs.

While Alliance of Digital India Foundation (ADIF) — a group of homegrown startups — had welcomed the proposals saying these will protect consumer interests, in the long run, it had also highlighted that smaller ecommerce entities will find it difficult to appoint three separate people as chief compliance officer, nodal contact person, and resident grievance officer as mandated by the proposed rules.

Edited by Kanishk Singh