‘Risk for children’: CCPA fines e-commerce site Rs 5 lakh after toys fail quality test

The CCPA had taken suo-moto cognisance of the sale of toys which did not qualify the standards given under the Toys Quality Control Order (QCO) by the BIS on an e-commerce platform because the sale of such toys could be “unsafe, dangerous, hazardous and can cause injury or harm to consumers”.

According to the order, the CCPA had conducted an inquiry into the sale of toys on various e-commerce platforms, which established that despite the QCO 2020 coming into effect, the e-commerce platform had not ensured that only QCO 2020-qualified toys were sold to consumers on its platform.

‘Legally exempted’

The e-commerce platform, through its counsel, advocates Dheeraj Nair and Vrishtyui Sahni, submitted that “they were legally exempted from the liability for any third-party information, data or communication link made available or hosted by them”. It defended itself by contending that it merely provided a platform to sellers and buyers. It further urged that it did not sell, store, supply, or promote for sale any product on its platform.

The platform also stated that, as per the law, the obligation of following the standards set by the BIS was on the “manufacturer, importer, distributor, or seller or lessor of the sale of any goods without the standard mark,” and the e-commerce website was only a “technology platform to facilitate the sale and purchase of the products listed on its platform and not the manufacturer, importer, distributor or the seller of such products.”

According to the e-commerce platform, it fully followed the obligations of a marketplace e-commerce entity as given under the law and that no allegation of unfair trade practices could be put on it for ‘third-party’ goods listed on its network.

‘Active role in sale process’

The CCPA was of the view that the e-commerce platform enabled “listing, hosting, advertising, exhibiting, categorisation, discovery, and facilitation of transactions between buyers and sellers, thereby playing an active role in the sale process” and that “regulatory obligations under consumer law must be determined by the functional role and consumer impact of the platform, and cannot be avoided by platform design choices or self-characterisation”.

The CCPA observed that even after receiving actual knowledge of the hosting, listings and advertising of below-standard toys being sold on their website, the e-commerce platform failed to timely remove such toys and instead, it continued permitting the listing and sale of toys that lacked mandatory BIS certification. It was also noticed by the CCPA that the e-commerce platform had “derived commercial benefit of Rs. 1.42 lakh” from just four sellers by allowing the sale of sub-standard toys.

The CCPA held that “by listing, hosting, advertising or exhibiting sale of non-compliant BIS standard toys, the opposite party has engaged in giving false guarantee of product quality,” and hiding information such as BIS certifications “directly violates the consumer’s right to be informed about the quality and standard of the goods and to be protected against hazardous goods”.

Accordingly, CCPA was satisfied that the e-commerce platform had engaged in unfair trade practice and false and misleading advertisement as per the Consumer Protection Act and imposed a penalty of Rs 5 lakh on the e-commerce platform for selling toys that were not up to the standards as per law on its platform.