Consumer Protection Act draft rules hold ecommerce companies liable for counterfeits, false reviews

The ministry of consumer affairs, food and public distribution on Monday released the Consumer Protection Act 2019 draft rules to protect consumers and regulate ecommerce and direct selling companies. 

The draft rules were formulated after inputs from stakeholders on the model framework of Consumer Protection Act 2019 released in August. 

The draft rules related to ecommerce entities take a strong view of the relationship between seller entities and the online marketplace. 

According to the draft rules, ecommerce websites will be required to display the legal name, address, website, email address and other contact details of the seller.  This makes tracing a seller entity easier and establishing whether the entity has direct links to the online marketplace, which is a violation under the Foreign Direct Investment.

Under the draft rules, ecommerce companies cannot influence the pricing of goods and services. They will also be held liable for posting fake reviews on the platform. 

Fake products will also get ecommerce sites in trouble. Online marketplaces will be responsible for secondary liability for sale of counterfeit products on the platform.

Ecommerce portals are required to notify the seller in case a product is identified to be a counterfeit by a consumer or through other sources. The platform is liable to take down the seller listing if it does not receive proof of the products being genuine.

On the issue of discounts being driven by ecommerce websites bypassing GST, the draft rules mandate sellers to display single figure total of the price of the product, as well as break-up on charges for price transparency.

The draft rules also call for transparent exchange and return policies.

Ecommerce websites, apart from detailing exchange and return policies on their platforms, are also required to display the details and the names of grievance officers. The officers are required to redress complaints within a month from the date of receipt of the complaint over ‘phone, email or website. This will also be streamlined to work with the National Consumer Helpline.

The ministry has invited stakeholder comments on the draft rules by December 2, 2019. The Consumer Protection Act 2019 replaced the previous act from 1986 in August.