No ban on conventional e-commerce flash sales, says Govt
New Delhi, June 22, 2021
The Government on Monday clarified that it did not propose to ban the conventional e-commerce flash sales but only specific flash sales or back-to-back sales that limit customer choice, increase prices and prevent a level playing field.
The Ministry of Consumer Affairs, Food & Public Distribution said in a press release on Monday that the Government move was in response to several complaints against widespread cheating and unfair trade practices in the e-commerce ecosystem.
To protect the interests of consumers and encourage free and fair competition in the market, the Government was sharing a draft of the proposed amendments to the Consumer Protection (E-commerce) Rules, 2020.
The proposed amendments aim to bring transparency to e-commerce platforms and further strengthen the regulatory regime, it added.
The Government had notified the Consumer Protection (E-Commerce) Rules, 2020 with effect from July 23, 2020. However, since the notification of these rules, it received several representations from aggrieved consumers, traders and associations complaining against widespread cheating and unfair trade practices being observed in the e-commerce ecosystem.
The prevalence of such unfortunate incidents has negatively impacted the consumer and business sentiment in the market, causing immense distress and anguish to many. It was observed that there was an evident lack of regulatory oversight in e-commerce which required some urgent action.
Moreover, the rapid growth of e-commerce platforms has also brought into the purview the unfair trade practices of the marketplace e-commerce entities engaging in manipulating search result to promote certain sellers, preferential treatment to some sellers, indirectly operating the sellers on their platform, impinging the free choice of consumers, selling goods close to expiration etc.
Additionally, conventional flash sales by third-party sellers are not banned on the e-commerce platform. But, certain e-commerce entities are engaging in limiting consumer choice by indulging in “back to back” or “flash” sales wherein one seller selling on the platform does not carry any inventory or order fulfilment capability but merely places a “flash or back to back” order with another seller controlled by the platform. This prevents a level playing field and ultimately limits customer choice and increases prices.
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 release said.
According to it, the amendments are to ensure compliance with the Consumer Protection Act, 2019 and Rules, the appointment of Chief Compliance Officer, a nodal contact person for 24x7 coordination with law enforcement agencies, officers to ensure compliance with their orders and Resident Grievance Officer for redressing of the grievances of the consumers on the e-commerce platform. This would ensure effective compliance with the provisions of the Act and Rules and also strengthen the grievance redressal mechanism on e-commerce entities, the release said.
The amendments will put in place a framework for registration of every e-commerce entity with the Department for Promotion of Industry and Internal Trade (DPIIT) for allotment of a registration number which shall be displayed prominently on the website as well as invoice of every order placed the e-commerce entity. Registration of e-commerce entities would help create a database of genuine e-commerce entities and ensure that the consumers can verify the genuineness of an e-commerce entity before transacting through their platform, it said.
To protect the interests of consumers, selling goods or services by deliberate misrepresentation of information has been prohibited. To ensure that consumers are aware of the expiry date of the products all sellers on marketplace e-commerce entities and all inventory e-commerce entities are required to provide the best before or use before date to enable consumers to make an informed purchase decision.
To ensure that the domestic manufacturers and suppliers get a fair and equal treatment on the e-commerce platform it has been provided that where an e-commerce entity offers imported goods or services, it shall incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives to ensure a fair opportunity to domestic goods.
To ensure that consumers are not adversely affected in the event where a seller fails to deliver the goods or services due to negligent conduct by such seller in fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity, provisions of fall-back liability for every marketplace e-commerce entity has been provided.
The proposed amendments are available here on the website of the Department of Consumer Affairs and views/comments/suggestions on the draft rules could be submitted by July 6, the Ministry said.