The Centre on Monday suggested amendments to the Consumer Protection (E-commerce) Rules, 2020, including a ban on fraudulent flash sales by e-commerce companies.
In a statement, the Ministry of Consumer Affairs, Food and Public Distribution said that some e-commerce entities were limiting consumer choice by indulging in “back to back” or “flash sales”. The ministry defined the term as sales 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 on selective goods and services or otherwise with an intent to draw large number of consumers”.
The ministry has also proposed prohibiting mis-selling, in which entities sell goods or services by misrepresenting information. “To ensure that consumers are aware about the expiry date of the products they are buying on the e-commerce platform all sellers on marketplace e-commerce entities and all inventory e-commerce entities to provide best before or use before date to enable consumers to make an informed purchase decision,” the statement said.
According to the proposed rules, the e-commerce platforms will need to appoint a chief compliance officer, a nodal officer, a resident grievance officer and other officials to ensure compliance with the government’s orders.
The companies would also need to register with the ministry’s Department for Promotion of Industry and Internal Trade. They will then be given a registration number, which the platforms will “prominently display” on their websites as well as on the invoice of every order.
The ministry also said that the e-commerce platforms will need to set up a filter mechanism to identify goods based on the country of origin and also suggest their domestic alternatives. This is done to ensure fair and equal treatment for domestic manufacturers and suppliers, the ministry said.
It said that the e-commerce entities with a dominant position will not be allowed to abuse their power. The rules also stated that e-commerce companies would ensure that there is no differential treatment between sellers.
For cross-selling, in which the companies show goods or services related to the purchase by the customer, the platform has to provide adequate disclosure, including the name and data of the seller.
The ministry said the e-commerce platforms cannot mislead consumers by manipulating search results or search indexes.
The ministry also said that in case a seller fails to deliver a good or service, the final liability will fall on the e-commerce platform. “The proposed amendments aim to bring transparency in the e-commerce platforms and further strengthen the regulatory regime to curb the prevalent unfair trade practices,” it said.
The proposed amendments are available on the Department of Consumer Affairs website and the government has sought suggestions on the draft rules within 15 days by July 6.
The changes came at a time when Amazon and Flipkart have challenged a Karnataka High Court order, allowing the Competition Commission of India to inquire both the companies over predatory pricing and deep discounting, reported The News Minute.
The Confederation of All India Traders, however, has welcomed the new rules with its Secretary General Praveen Khandelwal calling it “a guiding stone to purify e-commerce landscape of the country”.