Tighter controls proposed for ecommerce platforms

The department of consumer affairs on Monday sought comments on amendments to the Consumer Protection (E-Commerce) Rules 2020. The amendments require all ecommerce entities operating in India to register with the Department for Industry and Internal trade (DPIIT) apart from appointing an Indian citizen as chief compliance officer, nodal officer and grievance officer for such platforms.

The amendments also require the ecommerce entities to provide information or assistance to authorised government agencies for investigation into cybersecurity activities.

Additionally, the new rules have asked ecommerce entities to not indulge in flash sales, which garner revenues for exclusive launches on these platforms, especially for smartphones. 

Ecommerce platforms will also be required to clearly mark sponsored listings of products. This will effectively impact revenues from bids for keywords and listing for large ecommerce platforms such as Amazon and Flipkart, apart from other ecommerce marketplaces. 

The department has sought feedback on the amendments before July 6 from stakeholders. 

Some of the salient proposed amendments include:

• Every e-commerce entity which intends to operate in India shall register itself with the DPIIT within such period as prescribed by DPIIT for allotment of a registration number 
• All ecommerce entities must appoint a Chief Compliance Officer who shall be responsible for ensuring compliance with the Act and rules made thereunder and shall be liable in any proceedings relating to any relevant third-party information, data or communication link made available or hosted by the ecommerce entity 
• All ecommerce entities must appoint a nodal contact person for 24x7 coordination with law enforcement agencies 
• All ecommerce entities must appoint a resident grievance officer 
• In case of imported goods and services, the ecommerce entity must mention details of the importer or seller, identify country of origin, provide ranking for goods and ensure that the parameters do not discriminate against domestic goods and sellers 
• The ecommerce entities cannot share consumer data without the affirmative consent of such consumer and the entity cannot record such content with pre-ticked checkboxes 
• E-commerce entities shall ensure that sponsored listing of products and services are distinctly identified with clear and prominent disclosures 
• No e-commerce entity shall organize flash sale of goods on its platform 

“At first glance it will be interesting to see how practically these changes will be implemented. The proposed rules also seek to regulate the manner in which consent will be obtained from consumers, for the sharing of their data with other persons,” Archana Tewary, partner at law firm J Sagar Associates said. She further added, “The proposed rules require e-commerce marketplaces to ensure that none of its related parties and associated enterprises are enlisted as sellers for sale to consumers directly - the definition of associated enterprises also seems to be wide. These changes are wide-ranging and will have significant implications.”