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Monday, July 26, 2021

Share info with Govt, ban on ‘specific’ flash sales: Move to tighten e-commerce norms

The draft rules released Monday are broadly in line with the IT intermediary rules announced for social media companies earlier this year. Representatives of local traders and sellers described the proposed norms as a step to “purify” the e-commerce landscape of the country.

Written by Pranav Mukul | New Delhi |
Updated: June 22, 2021 7:34:18 am
E-Commerce, E-Commerce flash sale, Consumer Protection rules, E-Commerce Rules, E-Commerce Consumer Protection, flipcart flash sale, amazon flash sale, online fraud, Indian expressOn the lines of IT intermediary rules, the Consumer Affairs Ministry has proposed to mandate e-commerce companies to appoint a grievance officer, a chief compliance officer, and a nodal contact person “for 24x7 coordination with law enforcement agencies”.

THE MINISTRY of Consumer Affairs, Food and Public Distribution has initiated sweeping changes to the Consumer Protection (E-Commerce) Rules, 2020, imposing new registration requirements for online retailers and a ban on “specific” flash sales — and mandating sharing of information with Government agencies.

The draft rules released Monday are broadly in line with the IT intermediary rules announced for social media companies earlier this year. Representatives of local traders and sellers described the proposed norms as a step to “purify” the e-commerce landscape of the country.

According to the new provisions, e-commerce companies would need to register with the Department of Promotion for Industry and Internal Trade (DPIIT). They would also have to share information with the “Government agency, which is lawfully authorised for investigative or protective or cyber security activities, for the purposes of verification of identity, or for the prevention, detection, investigation, or prosecution, of offences under any law for the time being in force, or for cyber security incidents”.

They propose that the information sought by the Government agency will have to be produced by the e-commerce company “within 72 hours of the receipt of an order from the said authority”.

On the lines of IT intermediary rules, the Consumer Affairs Ministry has proposed to mandate e-commerce companies to appoint a grievance officer, a chief compliance officer, and a nodal contact person “for 24×7 coordination with law enforcement agencies”.

In February, the Centre brought out a set of rules mandating social media companies to appoint officials and laying down requirements such as providing traceability of content originators. These intermediary rules have been challenged in the Delhi High Court by messaging platform WhatsApp, which has said that they are violative of user privacy.

The Government had notified the Consumer Protection (E-commerce) Rules on July 23, 2020, for online retailers registered in India or abroad but offering goods and services to Indian consumers. Any violation of these rules attract penal action under the Consumer Protection Act, 2019.

While the original rules focused on aspects such as transparency about product information to help consumers make informed decisions, the amendments aim to curb the circumventing of other laws. The Ministry has sought comments and views from stakeholders on the proposed amendments by July 6.

The rules are applicable for all goods and services bought or sold over digital or electronic networks, including digital products. They are valid for all models of e-commerce, including marketplace and inventory models, including multi-channel single brand retailers and single brand retailers.

Furthermore, to make the existing e-commerce norms more stringent, the Ministry is looking to ensure that these firms do not use data collected through their business for “unfair advantage” and prevent any possible links they may have with traders selling goods and services on their platforms. On this front, the Government has called for disallowing “specific flash sales” on e-commerce platforms.

Issuing a statement, the Consumer Affairs Ministry said: “Conventional e-commerce flash sales are not banned. Only specific flash sales or back-to-back sales which limit customer choice, increase prices and prevents a level playing field are not allowed.”

A “flash sale” is defined as a sale organised by an e-commerce entity at significantly reduced prices, high discounts or any other such promotions or attractive offers for a predetermined period of time.

Additionally, the proposed rules also look to add to the Centre’s push behind domestic goods. They propose that e-commerce firms should mention the name and details of any importer from whom it has purchased such goods or services. These firms will also have to provide alternative suggestions to customers before they make a purchase “to ensure fair opportunity for domestic goods”.

The Confederation of All India Traders, a body representing local traders and sellers who have been opposing practices by major e-commerce firms like Amazon and Flipkart, said in a statement: “The new draft is a guiding stone to purify the e-commerce landscape of the country, which has been greatly vitiated by various e-commerce global companies…”.

In December 2018, the Industry Department had published changes to its foreign direct investment policy for e-commerce to tighten loopholes exploited by online marketplaces in previous policies announced by the Centre. These included curbing marketplaces from exercising control over inventory and restricting the relationship between the marketplace and sellers on its platform.

In the proposed amendments to e-commerce norms, the Government is looking at bolstering these aspects by mandating that no logistics service provider of a marketplace e-commerce entity shall provide differentiated treatment between sellers of the same category.

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