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Draft E-commerce Rules face backlash from the major stakeholders

Legal Correspondent: Mansi Tekam


August 29, 2021: The Government of India, earlier this month, has brought changes under the Consumer Protection Act, 1986 by proposing the new Draft E-commerce Rules to protect the rights of consumers and impose stricter compliance rules. The new rules announced by the Consumer Affairs Ministry will govern the e-commerce retailers by dealing with unfair trade practices and thus increasing liabilities for them. The proposed draft rules faced backlash from significant stakeholders in the market. One of the main contentions arose regarding the rules for flash sales; as per the Ministry, is that flash sales are not banned entirely; however, 'back-to-back sales' or those which limit consumer choice, increase prices, and prevent a level playing field are not allowed. The ambiguity of the term "Flash Sale" will make it difficult for businesses to operate and impact small businesses and MSMEs trying to sell their products on these platforms.

The e-commerce platforms will also be subject to 'fall-back liability,' which means they will be held accountable if a seller fails to ship goods or delivers a faulty product to a customer. Furthermore, the platform will not alter search results for customers based on their search algorithm. It will prevent particular sellers from being given preferential treatment when searching for specific items on these sites. A grievance redressal officer will be required to assist the consumer further. Primarily these rules are proposed to protect the rights of the consumers, but the same hurts the online retailers or sellers. The aim is to give all small e-commerce businesses a platform equally and not limit it to big e-commerce businesses like Amazon or Flipkart. There have been instances where only selected sellers on these platforms were favoured due to discriminatory pricing practices, hurting offline and local retailers. If such practices are tackled, it'll create an equitable platform for all retailers. Many big e-commerce platforms claimed their attention would be taken away from the business functions and divert towards participating in compliance and bureaucratic activities. The mandatory rule of appointing a chief compliance officer will further increase their economic burden. It will further impact giants like Amazon as the Competition Commission of India would be conducting antitrust probes to investigate for not allowing retailers associated with the platform to sell on their portal. The compliance costs would overburden these platforms, but they also have to bear the brunt of overregulation, thus causing harm to their freedom. The government hasn't yet clarified the application of these rules.


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