Q) The proposed Consumer Protection (E-Commerce) Rules, 2020, have been drafted ostensibly in the name of the consumer. But the welfare of the consumer seems to be an afterthought. Examine.
Why this question?
Important part of GS Paper-III.
Key demand of the Question
Examine the proposed Consumer Protection (E-Commerce) Rules, 2020 and its provisions.
Examine – When asked to ‘Examine’, we must look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.
Start by giving an introduction about Consumer Protection (E-Commerce) Rules, 2020.
In the first part, give an account of the provisions of Consumer Protection (E-Commerce) Rules, 2020.
In the next part, explain the concerns related to these rules.
Conclude with a way forward
The Government had notified the Consumer Protection (E-Commerce) Rules, 2020 about 11 months ago. The Department of Consumer Affairs has now mooted a set of sweeping amendments, ostensibly “to protect the interests of consumers and encourage free and fair competition in the market”. According to the government, 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.
The CPA provides for protection of the interests of consumers.
- According to Section 2(7) of the Act, a consumer is any person who buys goods or avails himself of any service for a consideration and includes any user except for the person who has availed such services or goods for the purpose of resale or commercial use.
- With these amendments to protect the sellers on e-commerce platforms, the government is attempting to over-reach the mandate of the CPA and cause legislative ambiguity in the presence of a separate regulator for unfair trade practices, the Competition Commission of India (CCI).
- In some countries, such as Australia, consumer protection and competition laws are enforced by a single authority, while in India these are enforced by different forums.
- It is prudent to note that the CCI is already running an investigation on big e-commerce players over concerns such as preferential treatment of certain sellers and deep discounting, based upon a complaint filed by trader’s association.
Benefits provided by the rules:
- The rules restrict e-commerce companies from “manipulating search results or search indexes”. It is a long-standing demand from sellers and traders to prevent preferential treatment to certain platforms.
- Further, the rules also mandate the logistics service provider to not provide differentiated treatment between sellers of the same category.
- The proposed amendments will lead to more accountability from stakeholders of e-commerce firms. The e-commerce companies need to provide an explanation on how they rank the products, which consumers can understand easily, and also create transparency.
- With mandatory registration for e-tailers with DPIIT, the fraudulent e-commerce operators can be tackled.
- The e-commerce companies will have to provide domestic alternatives to imported goods. This will boost made-in-India goods.
- The rules also protect against unfair trade practices and also against misleading advertising.
- The draft rules show the Government’s increasing enthusiasm to exercise greater oversight over all online platforms.
- The new e-commerce rules create over-regulation, along with a scope for interpretative ambiguity in rules. This will retard growth and job creation in the hitherto expanding e-commerce sector.
- E-commerce also has provided MSMEs with a wider audience to sell their products. Tightening of rules for marketplaces will discourage these MSMEs from coming online.
- The enforcement of many of these norms is bound to spur extended legal fights which may overburden the Judiciary.
- The rules are not clear as to how identifying goods based on “country of origin” will offer domestic manufacturers a better deal unless it is assumed that consumers are driven by patriotism rather than value.
- Asserting that the amendments were not aimed at conventional flash sales, the Government said it was only targeting certain entities engaged in limiting consumer choice by indulging in ‘back-to-back’ sales wherein a seller does not have the capability to meet an order.
- In trying to address shortcomings in its rules from last year, the Government appears to be harking back to an era of tight controls.
- Overregulation with scope for interpretative ambiguity risks retarding growth and job creation in the hitherto expanding e-commerce sector.
- The enforcement of many of these norms is bound to spur protracted legal fights., thus there is a need to strengthen the Arbitration, Mediation and Conciliation and other alternative legal measures.
- There is a need for the government to remove ambiguities that arise from multiple ministries governing the e-commerce sector.