Consumer Protection Bill 2019, (E-Commerce) Rules, 2020

An Act to provide for protection of the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers’ disputes and for matters connected therewith or incidental thereto.

The Indian Parliament, on 6 August 2019, passed the landmark Consumer Protection Bill, 2019 which aims to provide the timely and effective administration and settlement of consumer disputes. The Consumer Protection Act, 2019 (New Act) received the assent of the President of India and was published in the official gazette on 9 August 2019. The New Act will come into force on such date as the Central Government may so notify. The New Act seeks to replace the more than 3 (three) decades old Consumer Protection Act, 1986 (Act).

While e-commerce has opened new avenues and has made transactions faster and more convenient, they have also been prone to unfair trade practices. Although e-commerce platforms tried to resolve the grievance of the customers, there was a need to streamline the functioning of the same. With this perspective, the Central government notified the Consumer Protection (E-commerce) Rules, 2020.

From Amazon to Walmart and now Facebook and Google, through Reliance Jio are all betting on India being their next big online consumer market.

Walmart has invested $1.2 billion in Flipkart in an equity round, two years after it bought a 77% stake in the Indian retail giant for $16 billion. Walmart’s investment came just days after Amazon invested ₹2300 crore or $305 million into its Indian arm, following Jeff Bezos’ $1 billion investment promise to India. Earlier this year, Amazon had also signed a long-term business agreement with Kishore Biyani’s Future Group.

Meanwhile, Facebook’s $5.7 billion investment and Google’s $4.5 billion bet on Reliance Jio come at a time when Reliance chairperson Mukesh Ambani is betting on retail as the next big venture. One of the most significant factors of the Facebook-Jio deal was that Reliance Retail and WhatsApp are now in a commercial partnership to accelerate JioMart’s growth. Through JioMart and WhatsApp, the entities will now help support consumer businesses.

E-commerce Rule, 2020

The intention of the Legislature to specifically deal with e-commerce and online transactions was evident from the very enlargement of the definition of consumer under Section 2(7) of the Act by including both online and offline transactions within the scope of ‘buying goods’ and ‘hiring services’. Further, the Act categorically defines relevant e-commerce, electronic service provider and misleading advertisement while specifically addressing the most commonly faced issues such as refusing to take back defective goods or refusing to refund the amount.

The Rules are pretty exhaustive in their sweep and, at the outset, declares its application to:

(i) All goods and services bought or sold over digital or electronic network including digital products;

(ii) All models of e-commerce, including marketplace and inventory models of e-commerce;

(iii) All e-commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats; and

(iv) All forms of unfair trade practices across all models of e-commerce.

A bare perusal of the same demonstrates that the intention of the Legislature is, clearly, to encompass every aspect of e-commerce and keep consumer interests on the highest pedestal while streamlining the functioning of e-commerce platforms. This is also demonstrated from the fact that the Rules clearly define the relevant players of the e-commerce space, such as e-commerce entity, inventory e-commerce entity, marketplace e-commerce entity and seller.