Stricter Rules Proposed for E-Commerce Entities

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Registration. All e-commerce entities that intend to operate in India need to be registered with the Department of Promotion of Industry and Internal Trade (DPIIT) and the registration number must then be displayed on their platform.

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Appointment of officers. The Draft Rules propose that each e-commerce entity shall appoint: (i) a chief compliance officer who will be liable for obligations of the e-commerce entity for compliance with the Act and the E-Commerce Rules and for the information or data made available or hosted by the e-commerce entity; (ii) a nodal contact person for coordination with law enforcement agencies; and (iii) a resident grievance officer who would be responsible for certain obligations of the e-commerce entity. Each of these officers needs to be a resident and citizen of India.

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Grievance redressal. E-commerce entities will also be required to publish the contact details of the grievance officer on their online platforms, along with the relevant procedure for a consumer to register a complaint.

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National consumer helpline. E-commerce entities will be required to partner with the National Consumer Helpline.

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Ban on flash sales. E-commerce entities are not to engage in organizing flash sales. A “flash sale” has been defined as a sale organized by an e-commerce entity at significantly reduced prices, high discounts or promotions for a pre-determined period of time for select goods or with the intent of drawing a large number of customers. The ban on flash sales has been further clarified by the government in a press release which stated that conventional flash sales by third party sellers are not banned on an e-commerce platform but only flash sales which limit consumer choice by indulging in ‘back-to-back’ or ‘flash’ sales are banned.

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Misleading advertisements. E-Commerce entities are to ensure that they do not display or promote misleading advertisements.

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Imported goods. If any imported goods or services are offered for sale, the e-commerce entity will be required to: (i) provide identification details of the importer; (ii) identify goods based on country of origin; (iii) provide an option to filter according to country of origin; and (iv) present users with suggestions and alternatives of domestic goods at the time the imported goods are being viewed. Further, e-commerce entities will be required to provide ranking for goods in a manner that does not discriminate against domestic goods or sellers.

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Mis-selling. The e-commerce entities are not to indulge in mis-selling. Mis-selling means the selling of goods and services by the deliberate misrepresentation of the information provided by the e-commerce entity about the suitability of goods and services to the consumer purchasing it.

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Cross-selling. The e-commerce entities must display in a clear manner on their platform the name of the entity providing data for cross-selling and the data of such entity used for cross-selling.

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Express consent requirements. Explicit consent is to be taken for consumer information being made available to third parties and for recording a purchase. The explicit consent has to be recorded through an affirmative action and cannot be in the form of pre-ticked checkboxes.

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Abuse of dominant position. E-commerce entities cannot abuse their dominant position including the use of any information collected by them to give themselves an unfair advantage.

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Product disclosure. The ‘best before’ or ‘use before date’ of the product must be prominently displayed on the platform of the e-commerce entity.

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Other disclosures.

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The name of the seller shall be displayed in the same size font as the name of the e-commerce entity on the invoice provided by the e-commerce entity.

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Clear and prominent disclosures must be made by the e-commerce entity for the identification of sponsored products on their platform.

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Other obligations.

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The name or brand associated with that of the marketplace e-commerce entity cannot be used by sellers of goods or services for promotion or offer for sale, on an e-commerce platform in a manner which would imply brand association between these two entities.

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E-commerce entities shall not mislead consumers by manipulating search indexes based on the search query provided by the consumer.

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E-commerce entities shall not use information collected by marketplace e-commerce entities for sale of goods bearing a brand or name which is common with that of the marketplace e-commerce entity or promote themselves as being associated with the marketplace e-commerce entity if it amounts to an unfair trade practice and impinges on consumer interest.

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E-commerce entities are to provide information under their control and/or assist government agencies within 72 hours from being provided with a written order for prevention, detection, investigation, etc of offences under any law.

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Fall back liability. The concept of “Fall back liability” has been introduced in the Draft Rules wherein marketplace e-commerce entities will be liable for losses caused to consumers as a result of a failure in the delivery of goods and services by a seller on their platform due to negligent conduct, omission, or through commission of any act by a seller in fulfilling their duties and liabilities in the manner as prescribed by the marketplace e-commerce entity, which causes loss to the consumer.

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Ban on sale of goods to sellers. Marketplace e-commerce entities cannot sell goods or services to their registered sellers on their platforms or advertise a body of sellers for the purpose of subsidizing a sale on their platform.

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Limitations on indirect activities. Related parties and associated enterprises of marketplace e-commerce entities shall not take an action which the e-commerce entities themselves cannot undertake. Further, the related parties and associated enterprises of marketplace e-commerce entities cannot be listed as sellers on their platforms and any information collected by them shall not be used to provide an unfair advantage to them.

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Non-discrimination by logistics service providers: Logistics service providers of the e-commerce entity are not to provide differential treatment to sellers of the same category on their platform. However, logistics service providers of a marketplace e-commerce entity are required to provide a disclaimer including terms and conditions governing their relationship with the sellers and any differential treatment that it gives between sellers of the same category.