Definition of E-commerce (Section 2(16)) and E-commerce Consumer (Section 2(17))

The Consumer Protection Act, 2019, explicitly addresses the growing importance of e-commerce and online transactions in the marketplace. It includes definitions for 'e-commerce' and 'e-commerce consumer' to bring transactions conducted through electronic means within the purview of the Act and the rules framed thereunder, particularly the Consumer Protection (E-commerce) Rules, 2020.

Definition of E-commerce (Section 2(16))

According to **Section 2(16)** of the Consumer Protection Act, 2019, e-commerce means the buying or selling of goods or services including digital products over digital or electronic network.

Key Aspects:

• **Buying or selling:** The definition covers the core commercial activity of exchange for value.
• **Goods or services including digital products:** The scope includes tangible goods, services of any description, and digital products (like software, e-books, music files etc.).
• **Over digital or electronic network:** This specifies the medium of transaction, encompassing the internet, mobile networks, and other digital platforms used for online transactions.

This broad definition covers various models of online business, including marketplace models (where e-commerce entities facilitate transactions between sellers and buyers) and inventory-based models (where the e-commerce entity owns the goods or services and sells them directly to the consumer).

Definition of E-commerce Consumer (Section 2(17))

According to **Section 2(17)** of the Consumer Protection Act, 2019, e-commerce consumer means a **consumer as defined in clause (7)** who purchases any goods or services through e-commerce.

Key Aspects:

• **Must be a 'Consumer':** The person must first satisfy the definition of a 'consumer' as per Section 2(7) of the Act (i.e., buying goods or hiring services for consideration, not for resale or commercial purpose, with the self-employment exception).
• **Purchases through E-commerce:** The transaction must be conducted through an e-commerce medium (digital or electronic network).

Essentially, an e-commerce consumer is simply a standard consumer whose transaction happens to take place online. They are entitled to all the rights and protections available to any other consumer under the Act, with specific additional protections and rules tailored for the online environment as provided by the E-commerce Rules.

These definitions bring online transactions squarely within the ambit of the Consumer Protection Act, enabling the regulation of e-commerce entities and providing specific recourse to consumers facing issues with online purchases.

Obligations of E-commerce Entities

The Consumer Protection (E-commerce) Rules, 2020, framed under the Consumer Protection Act, 2019, lay down specific duties and liabilities for e-commerce entities. These obligations are designed to protect consumers in the online space by ensuring transparency, fair practices, and effective grievance redressal.

The Rules differentiate between **e-commerce entities** (which can be marketplace or inventory models) and **sellers** (selling on a marketplace or their own platform). Both have obligations.

Disclosure of information

E-commerce entities and sellers are mandated to provide clear and accessible information to consumers. This includes:

• **Information about the E-commerce Entity:** Legal name of the entity, principal geographic address of its headquarters and branches, name and details of its website, and contact details like email address and customer care helpline (Rule 4 for E-commerce Entity).
• **Information about Sellers on Marketplace (for marketplace model):** Legal name of the seller, principal geographic address of its headquarters and all branches, name and details of its website, and contact details. Also, information about the seller's customer care and a ticket number for tracking (Rule 5 for Marketplace E-commerce Entity regarding sellers).
• **Terms and Conditions:** Clear and accessible information about the terms and conditions governing the relationship with the consumer.
• **Policies:** Information regarding return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism must be clearly displayed on the platform (Rule 4 & 5).
• **Product Information:** Details about goods or services offered for sale, including country of origin, necessary mandatory notices and information required by applicable laws (e.g., expiry date for food, warnings) (Rule 5).
• **Details required for informed decision-making:** Any information necessary for consumers to make an informed decision regarding the transaction.

All this information must be available on the platform in a clear and accessible manner, ensuring consumers are well-informed before making a purchase.

Grievance redressal mechanism

E-commerce entities are required to establish a robust **grievance redressal mechanism** for consumers (Rule 4 & 5).

• They must appoint a **Grievance Officer** and prominently publish the name, contact details, and designation of the Grievance Officer on their platform.
• The Grievance Officer is responsible for redressal of grievances of the consumers.
• They must acknowledge the receipt of any consumer complaint within **forty-eight hours** and redress the complaint within **one month** from the date of receipt.

This ensures that consumers have a designated point of contact for their complaints and that there are timelines for resolving them within the e-commerce platform itself before the consumer needs to approach a consumer forum.

Cancellation and refund policies

E-commerce entities must clearly provide information about their **cancellation and refund policies** (Rule 4 & 5).

• The procedure for cancellation and refund must be clearly explained.
• Refunds must be processed in a timely manner as per the displayed policy and applicable laws.
• A seller offering goods or services through a marketplace e-commerce entity must ensure that their displayed return and refund policy is consistent with the return and refund policy of the marketplace e-commerce entity (Rule 5).

Other Obligations (Illustrative):

• **Payment Security:** Ensuring payment methods are safe and secure.
• **No Imposing Cancellation Charges Unilaterally:** Marketplace e-commerce entities cannot impose cancellation charges on customers unless they also bear similar charges if they cancel the purchase order unilaterally (Rule 5).
• **Consent for Sensitive Data:** Requiring explicit consent for collection of sensitive personal data (Rule 4).
• **Appointment of Nodal Officer:** Appointing a nodal person for coordination with law enforcement agencies (Rule 4).
• **No Manipulation of Price:** No manipulation of the price of the goods or services offered on their platform with the intent to gain unreasonable profit (Rule 4).

These obligations aim to create a safe and transparent environment for online shopping, placing significant responsibility on e-commerce platforms and sellers to ensure consumer welfare.

Rules related to online sales

The Consumer Protection (E-commerce) Rules, 2020, provide specific regulations governing various aspects of online sales, impacting both marketplace and inventory models, as well as sellers operating through these platforms. These rules go beyond general obligations to address specific practices in the online retail space.

Specific Rules for E-commerce Entities and Sellers:

Duties of Marketplace E-commerce Entities (Rule 5):

• **Provide Seller Information:** As mentioned earlier, they must provide information about individual sellers on their platform.
• **Terms and Conditions:** Clearly display the terms and conditions applicable to sellers and consumers.
• **Not Discriminate:** Not adopt unfair practices in offering goods or services, such as manipulating search results or giving preferential treatment to certain sellers without disclosing the basis.
• **No False Review:** Not falsely represent themselves as consumers and post reviews about goods or services or misrepresent the quality or features of any goods or services.
• **Prominent Display:** Ensure that terms of contract are clearly visible to the consumer.

Duties of Inventory E-commerce Entities (Rule 4):

• **Seller Obligations Apply:** Many of the obligations placed on sellers (like providing product information, policies) also apply to inventory e-commerce entities since they are the sellers themselves in this model.
• **No Unfair Price Manipulation:** They cannot manipulate the price of the goods or services offered on their platform.

Liabilities of Sellers on Marketplace (Rule 5):

• **No Misleading Information:** Not make false representations or omit material information about the goods or services.
• **Deliver as Promised:** Deliver goods or services within the promised time.
• **Honour Policies:** Honour the policies on return, refund, exchange, warranty, and guarantee.
• **Issue Invoice:** Issue an invoice for every purchase.
• **Not Record False Reviews:** Not refuse to take back goods or withdraw services or refuse refunds, if the goods or services are defective, deficient, or do not match the advertisement or are spurious.

Restrictions on Sellers (Rule 6):

• **No Offer to Pay Back:** No seller shall offer to pay back the money paid by a consumer without the prior consent of the consumer.
• **No Cancellation without Consent:** No seller shall cancel a confirmed order placed by a consumer, unless such cancellation is on grounds as may be prescribed.

Addressing Specific Unfair Practices in Online Sales:

The Rules explicitly address practices like misleading advertisements, price manipulation, refusal of refunds, and unfair terms, bringing them under the scanner of the Consumer Protection Act and the CCPA.

These rules provide a tailored framework for regulating the behaviour of entities and sellers in the e-commerce space, ensuring that the convenience of online shopping is coupled with adequate protection for the consumers, similar to or even exceeding the protections available in the physical marketplace.

Protection against unfair trade practices

Consumers engaging in e-commerce transactions are entitled to the same fundamental rights as consumers in the offline world. The Consumer Protection Act, 2019, and the Consumer Protection (E-commerce) Rules, 2020, specifically extend the protection against unfair trade practices to the online realm, addressing the unique challenges posed by digital transactions.

Applicability of Unfair Trade Practice definition to E-commerce:

The broad definition of **"unfair trade practice"** in **Section 2(47)** of the Act, which includes any "unfair method or unfair or deceptive practice for the purpose of promoting the sale... of goods or... service", is applicable to e-commerce. This is reinforced by Section 2(16) defining "e-commerce" and Section 2(17) defining "e-commerce consumer".

Furthermore, the E-commerce Rules, 2020, explicitly list several practices prevalent in online sales that would constitute unfair trade practices. Examples include:

• **Misleading Advertisements:** Making false or misleading claims about products, services, discounts, or offers online.
• **Fake Reviews:** Posting or allowing the posting of false reviews about goods or services to mislead consumers about their quality or features (Rule 5(3)(iv)).
• **Misrepresenting as Consumer:** An e-commerce entity falsely representing itself as a consumer (Rule 5(3)(iii)).
• **Failure to Deliver as Promised:** Not delivering goods or services within the promised time or failing to honour commitments regarding quality, features, etc.
• **Refusal of Refund/Return:** Refusing to take back defective/deficient goods or services, or refusing refunds, when required by law or policy (Rule 5(4)(b)).
• **Price Manipulation:** Manipulating the price to gain unreasonable profit (Rule 4(4)(ii)).
• **Discriminatory Practices:** Adopting unfair practices in the display of goods or services such as manipulating search results or giving preferential treatment to certain sellers without disclosing the basis (Rule 5(3)(v)).

Redressal against Online Unfair Trade Practices:

• **Consumer Forums:** Consumers can file complaints with the appropriate District, State, or National Commission against e-commerce entities or sellers for engaging in unfair trade practices, seeking remedies like discontinuation of the practice, refund, compensation, etc.
• **Central Consumer Protection Authority (CCPA):** The CCPA has wide powers to take action against unfair trade practices affecting consumers as a class, including those occurring in the e-commerce space. It can issue directions, conduct investigations, impose penalties on manufacturers, endorsers, and publishers for misleading advertisements (Section 21), and issue directions to e-commerce entities regarding unfair practices (Section 18).

By explicitly including e-commerce within the scope and laying down specific rules, the Act provides robust protection to online consumers against deceptive and unfair business practices prevalent in the digital marketplace.

Data Protection and Privacy

E-commerce transactions involve the collection and processing of significant amounts of consumer data, including personal and sensitive information. While the Consumer Protection Act, 2019, itself does not provide a comprehensive data protection law (which is expected to come from a separate dedicated legislation like the proposed Digital Personal Data Protection Bill), it does touch upon aspects of consumer data privacy in the context of trade practices.

Protection under the Consumer Protection Act and Rules:

The Consumer Protection (E-commerce) Rules, 2020, include a specific provision related to the collection of consumer data:

• **Prior Explicit Consent (Rule 4(3)):** E-commerce entities are required to ensure that the personally identifiable information of consumers is protected. They shall not use such information in any manner which is an unfair trade practice. Furthermore, an e-commerce entity shall not record consent for the purpose of automatic enabling of the marketing offers and shall not take such consent without the **explicit consent** of the consumer. This implies that consumers must explicitly agree to receive marketing communications, and their personal data should not be used unfairly.
• **Disclosure of Personal Information (Section 2(47)(xiv)):** As noted earlier under Unfair Trade Practices, disclosing personal information given in confidence by a consumer, unless such disclosure is made in accordance with the provisions of any other law, is defined as an unfair trade practice. This provides a basis for consumers to complain if their personal data is shared without authorisation.

Protection under other Laws:

Consumer data protection and privacy in India are also governed by other laws and regulations:

• **Information Technology Act, 2000 and Rules:** The Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, framed under the IT Act, provide a framework for the collection, storage, and disclosure of sensitive personal data or information. They mandate security practices and require consent for collection and disclosure.
• **Proposed Digital Personal Data Protection Bill:** This legislation, once enacted, is expected to provide a comprehensive framework for processing of digital personal data, defining the obligations of data fiduciaries and the rights of data principals, and establishing a Data Protection Board.

In the context of consumer protection, the Act and E-commerce Rules highlight the need for transparency and consent in using consumer data for marketing and prohibit its unauthorised disclosure as an unfair practice. While broader data protection is covered elsewhere, these provisions offer consumers some level of recourse under consumer law for misuse of their personal information in commercial dealings.

Redressal Mechanism for E-commerce Disputes

Consumers who face issues with e-commerce transactions have access to the same three-tier consumer dispute redressal mechanism as for offline transactions. The Consumer Protection Act, 2019, ensures that the online nature of the transaction does not deprive consumers of their right to seek redressal.

Access to Consumer Forums:

An e-commerce consumer (as defined in Section 2(17)) is a 'consumer' under the Act. Therefore, they can file a complaint with the appropriate District, State, or National Commission based on the pecuniary and territorial jurisdiction. The territorial jurisdiction rule under Section 34(2)(d), allowing a consumer to file a complaint where they **reside or personally work for gain**, is particularly beneficial for e-commerce consumers, who might purchase goods from sellers located in different cities or states.

Complaints can be filed for:

• Defect in goods purchased online.
• Deficiency in services availed online (e.g., issues with online booking platforms, digital service delivery).
• Unfair trade practices by the e-commerce entity or seller (e.g., misleading product descriptions online, fake reviews, refusal of refunds).
• Product liability action if a product purchased online causes harm.

Role of Grievance Redressal Mechanism on Platform:

As discussed under the obligations of e-commerce entities, the E-commerce Rules, 2020, mandate that e-commerce entities establish an internal grievance redressal mechanism with a designated Grievance Officer. Consumers are expected to first utilise this mechanism provided by the e-commerce platform or seller to resolve their issues. If the issue is not resolved within the stipulated time (usually one month) or to the consumer's satisfaction, they can then escalate the matter by filing a formal complaint with the consumer forum.

Role of Central Consumer Protection Authority (CCPA):

The CCPA can also take action against unfair trade practices and misleading advertisements in the e-commerce sector that affect consumers as a class. For example, if a specific e-commerce platform is found to be habitually engaging in deceptive practices or promoting widespread misleading advertisements, the CCPA can initiate suo motu action or based on complaints from consumer associations.

The process for filing a complaint with the consumer forum is the same as for offline transactions, including the option for e-filing, which is convenient for e-commerce disputes. The Commission will follow the standard adjudication process, including issuing notice to the opposite party (e-commerce entity/seller) and hearing both sides before passing an order.

In summary, the Consumer Protection Act, 2019, and the E-commerce Rules, 2020, provide a comprehensive framework for protecting consumers in online transactions, granting them clear rights and access to a dedicated, accessible, and efficient redressal mechanism.