Consumer Protection Bill to increase compliance cost for ecommerce companies

Online shoppers now have a formal body looking into complaints against ecommerce entities as well as enforcing class action against erring online businesses. Experts, however, believe the new rules might increase the compliance cost for ecommerce companies.

The Consumer Protection Bill 2019 passed by the Parliament on Tuesday lays the groundwork for the formation of the Central Consumer Protection Authority (CCPA), which can enforce consumer rights for online and offline businesses.

The new bill also gives the centre the power to frame rules and prevent unfair trade practices in ecommerce, direct selling through multi-level marketing schemes or tele-shopping to protect the interest of consumers.

“The Consumer Protection Bill imposes restrictions on ecommerce players from engaging in predatory pricing and disclosure of all the details of the sellers on the ecommerce platforms. However, it may increase compliance costs for ecommerce players but in the long run as the trust of the consumer will rise, it will benefit the industry as well as the consumer,” said Atul Pandey, partner at legal firm Khaitan & Co.

CCPA will be headed by a chief commissioner appointed by the central government. It will also have an investigation wing headed by a director-general for conducting an inquiry into relevant cases.

The bill will replace the Consumer Protection Act, 1986. It also gives CCPA the authority to prevent false or misleading advertisements and hold celebrity endorsers liable for false claims.

The formation of CCPA to deal with consumer issues has also been mentioned in the draft national ecommerce policy.

Recently, the department of consumer affairs also released a set of guidelines aimed at ecommerce entities for the protection of consumer rights.