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"e-commerce" means buying or selling of goods or services including digital products over digital or electronic network;
An e-commerce entity” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce, but does not include a seller offering his goods or services for sale on a marketplace e-commerce entity;
An "electronic service provider" means a person who provides technologies or processes to enable a product seller to engage in advertising or selling goods or services to a consumer and includes any online market place or online auction sites;
In India, there are three types of e-commerce business model:
Inventory base model of e-commerce
· Marketplace base model of e-commerce
· The hybrid model of inventory based and marketplace model.
Marketplace and Inventory-Based Model
· Marketplace based model of e-commerce means providing an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between the buyer and seller.
· In a marketplace model, the e-commerce firm is not allowed to directly or indirectly influence the sale price of goods or services and is required to offer a level playing field to all vendors.
· Inventory based model of e-commerce means an e-commerce activity where the inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.
The Act prescribes Rules for preventing fraud and unfair trade practices in e-commerce sector. Covers E-Commerce Transactions: The New Act has widened the definition of 'consumer'. The definition now includes any person who buys any goods, whether through offline or online transactions, electronic means, teleshopping, direct selling or multi-level marketing. The earlier Act did not specifically include e-commerce transactions, and this lacuna has been addressed by the New Act.
Under the E-Commerce Rules an "e-commerce entity" is defined broadly to mean any person who owns, operates, or manages digital or electronic facility or platform for e-commerce.
These rules shall apply to:
(a) All goods and services bought or sold over digital or electronic network including digital products;
(b) All models of e-commerce, including marketplace and inventory models of e-commerce;
(c) All e-commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats; and
(d) All forms of unfair trade practices across all models of e-commerce: Provided that these rules shall not apply to any activity of a natural person carried out in a personal capacity not being part of any professional or commercial activity undertaken on a regular or systematic basis.
(e) e-commerce entity which is not established in India, but systematically offers goods or services to consumers in India.
(f) Apply to all e-commerce transactions involving goods or services
In Inventory model the entity owns the goods while in Market place model they don’t own the goods sold or displayed by sellers. In inventory models FDI is not permitted.
The Intermediary due diligence Rules under IT Act do not cover or regulate Unfair trade practices and protect consumer rights. In the new Consumer Protection Act a Central Consumer Protection Authority has been established to regulate Unfair Trade practices in online and offline business.
These Rules have been finalised after taking inputs from the Department for Promotion of Industry and Internal Trade, under the aegis of the commerce ministry, so that they gel with the overall National e-commerce policy. The National E-Commerce Policy being drafted by DIPIT lays down strategies to address issues pertinent to the sector. Consumer protection, data privacy and maintenance of a level-playing field are some of the crucial issues that will find place therein.
The 2019 Act includes the definition of “food” as defined under the Food and Standards Act, 2006. This has replaced the definition of “goods” under the 1986 Act. This would help in bringing the number of food delivery platforms to come under the ambit of consumer protection.
It is preferable that all e-commerce companies should have refund or return policy but there is no such law which enforces it. However, if there is any deficiency, the consumer is protected under Consumer Protection Act and can seek redressal for the same.
Whenever you shop online, read the fine print carefully. Make sure you are aware of shipping charges, delivery time, and cancellation and return policies, as well as the warranty clauses. Keep your financial information and passwords safe and always make payment through secured gateways like ?https and lock image? in its url. If you are shopping on the website for the first, opt for cash on delivery payment option. Always check if the website has a landline phone and postal address.
Convenience, Better choice of similar products, Discounted or competitive prices, Door delivery, Return policy, Refund policy, Comparison of Prices, Crowd Free Shopping.
· e registered under Indian laws and must certify compliance with the proposed Rules;
· Not be promoted or managed by (which includes all key members of the management team) anyone convicted of a criminal offense carrying a punishment of 5 years by any Court of competent jurisdiction. This applies globally and is not restricted to India
· Comply with the provisions of IT (Intermediaries Guidelines) Rules, 2011
· Must confirm to Reserve Bank of India (RBI) guidelines for payment facilities.
1. An ecommerce entity shall
a) Be a company incorporated under the Companies Act, 1956 (1 of 1956) or the Companies Act, 2013 (18 of 2013) or a foreign company covered under clause (42) of section 2 of the Companies Act, 2013 (18 of 2013) or an office, branch or agency outside India owned or controlled by a person resident in India as provided in sub-clause (iii) of clause (v) of section 2 of the Foreign Exchange Management Act,1999 (42 of 1999); and
b) Appoint a nodal person of contact or an alternate senior designated functionary who is resident in India, to ensure compliance with the provisions of the Act or the rules made thereunder.
c) Provide the following information in a clear and accessible manner on its platform, displayed prominently to its users, namely:--
ü legal name of the e-commerce entity;
ü principal geographic address of its headquarters and all branches;
ü name and details of its website; and
ü contact details like e-mail address, fax, landline and mobile numbers of customer care as well as of grievance officer.
2. Every e-commerce entity shall establish an adequate grievance redressal mechanism having regard to the number of grievances ordinarily received by such entity from India, and shall appoint a grievance officer for consumer grievance redressal, and shall display the name, contact details, and designation of such officer on its platform.
Every e-commerce entity shall ensure that the grievance officer referred to in sub-rule (4) acknowledges the receipt of any consumer complaint within forty-eight hours and redresses the complaint within onement from the date of receipt of the complaint.
Where an e-commerce entity offers imported goods or services for sale, it shall mention the name and details of any importer from whom it has purchased such goods or services, or who may be a seller units platform.
Every e-commerce entity shall endeavor on a best effort basis to become a partner in the convergence process of the National Consumer Helpline of the Central Government.
3.No e-commerce entity shall,
ü Shall adopt any unfair trade practice, whether in the course of business on its platform or otherwise.
ü Impose cancellation charges on consumers cancelling after confirming purchase unless similar charges are also borne by the e- commerce entity, if they cancel the purchase order unilaterally for any reason.
ü Record the consent of a consumer for the purchase of any good or service offered on its platform where such consent is expressed through an explicit and affirmative action, and no such entity shall record such consent automatically, including in the form of pre-ticked checkboxes.
ü manipulate the price of the goods or services offered on its platform in such a manner as to gain unreasonable profit by imposing on consumers any unjustified price having regard to the prevailing market conditions, the essential nature of the good or service, any extraordinary circumstances under which the good or service is offered, and any other relevant consideration in determining whether the price charged is justified;
ü Discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Act.
(1) A marketplace e-commerce entity which seeks to avail the exemption from liability under sub-section (1) of section 79 of the Information Technology Act, 2000 (21 of 2000)shall comply with sub-sections (2) and (3) of that section, including the provisions of the Information Technology(Intermediary Guidelines) Rules, 2011.
(2) Every marketplace e-commerce entity shall require sellers through an undertaking to ensure that descriptions, images, and other content pertaining to goods or services on their platform is accurate and corresponds directly with the appearance, nature, quality, purpose and other general features of such good or service.
(3) Every marketplace e-commerce entity shall provide the following information in a clear and accessible manner, displayed prominently to its users at the appropriate place on its platform:
(a) details about the sellers offering goods and services, including the name of their business, whether registered or not, their geographic address, customer care number, any rating or other aggregated feedback about such seller, and any other information necessary for enabling consumers to make informed decisions at the pre-purchase stage:
Provided that a marketplace e-commerce entity shall, on a request in writing made by a consumer after the purchase of any goods or services on its platform by such consumer, provide him with information regarding the seller from which such consumer has made such purchase, including the principal geographic address of its headquarters and all branches, name and details of its website, its email address and any other information necessary for communication with the seller for effective dispute resolution;
(b) a ticket number for each complaint lodged through which the consumer can track the status of the complaint;
(c) information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism, and any other similar information which may be required by consumers to make informed decisions;
(d) information on available payment methods, the security of those payment methods, any fees or charges payable by users, the procedure to cancel regular payments under those methods, charge-back options, if any, and the contact information of the relevant payment service provider;
(e) all information provided to it by sellers under sub-rule (5) of rule 6; and
(f) an explanation of the main parameters which, individually or collectively, are most significant in determining the ranking of goods or sellers on its platform and the relative importance of those main parameters through an easily and publicly available description drafted in plain and intelligible language.
(g) Every marketplace e-commerce entity shall include in its terms and conditions generally governing its relationship with sellers on its platform, a description of any differentiated treatment which it gives or might give between goods or services or sellers of the same category.
(h) Every marketplace e-commerce entity shall take reasonable efforts to maintain a record of relevant information allowing for the identification of all sellers who have repeatedly offered goods or services that have previously been removed or access to which has previously been disabled under the Copyright Act, 1957 (14 of 1957), the Trade Marks Act, 1999 (47 of 1999) or the Information Technology Act, 2000 (21 of 2000):
(1) No seller offering goods or services through a marketplace e-commerce entity shall
· adopt any unfair trade practice whether in the course of the offer on the e-commerce entity’s platform or otherwise
· falsely represent itself as a consumer and post reviews about goods or services or misrepresent the quality or the features of any goods or services.
· refuse to take back goods, or withdraw or discontinue services purchased or agreed to be purchased, or refuse to refund consideration, if paid, if such goods or services are defective, deficient or spurious, or if the goods or services are not of the characteristics or features as advertised or as agreed to, or if such goods or services are delivered late from the stated delivery schedule:
(2) Any seller offering goods or services through a marketplace e-commerce entity shall:
(a) have a prior written contract with the respective e-commerce entity in order to undertake or solicit such sale or offer;
(b) appoint a grievance officer for consumer grievance redressal and ensure that the grievance officer acknowledges the receipt of any consumer complaint within forty-eight hours and redresses the complaint within one month from the date of receipt of the complaint;
(c) Ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services.
(d) Provide to the e-commerce entity its legal name, principal geographic address of its headquarters and all branches, the name and details of its website, its e-mail address, customer care contact details such as fax, landline, and mobile numbers and where applicable, its GSTIN and PAN details.
(3) Any seller offering goods or services through a marketplace e-commerce entity shall provide the following information to the e-commerce entity to be displayed on its platform or website:
(a) All contractual information required to be disclosed by law;
(b) total price in single figure of any good or service, along with the breakup price for the good or service, showing all the compulsory and voluntary charges such as delivery charges, postage and handling charges, conveyance charges and the applicable tax, as applicable;
(c) All mandatory notices and information provided by applicable laws, and the expiry date of the good being offered for sale, where applicable;
(d) All relevant details about the goods and services offered for sale by the seller including country of origin which are necessary for enabling the consumer to make an informed decision at the prepurchase stage;
(e) The name and contact numbers, and designation of the grievance officer for consumer grievanceredressal or for reporting any other matter;
(f) Name and details of importer, and guarantees related to the authenticity or genuineness of the imported products;
(g) Accurate information related to terms of exchange, returns, and refund including information related to costs of return shipping in a clear and accessible manner;
(h) Relevant details related to delivery and shipment of such goods or services; and
(i) Any relevant guarantees or warranties applicable to such goods or services.
Provide information in a clear and accessible manner, on:
a. Information related to return, refund, exchange, warranty and guarantee, delivery and shipment, cost of return shipping, mode of payments, grievance redressal mechanism,
b. all mandatory notices and information required by applicable laws;
c. information on available payment methods, the security of those payment methods, the procedure to cancel regular payments under those methods, any fees or charges payable by users, chargeback options,
d. all contractual information required to be disclosed by law;
e. total price in single figure of any good or service along with the breakup price for the good or service, showing all the compulsory and voluntary charges, such as delivery charges, postage and handling charges, conveyance charges and the applicable tax; and
f. a ticket number for each complaint lodged, through which the consumer can track the status of their complaint.
g. No posting of false reviews about goods and services or misrepresent the quality or the features of any goods or services.
h. Every inventory e-commerce entity shall ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services;
i. No inventory e-commerce entity shall refuse to take back goods, or withdraw or discontinue services purchased or agreed to be purchased, or refuse to refund consideration, if paid, if such goods or services are defective, deficient spurious, or if the goods or services are not of the characteristics or features as advertised or as agreed to, or if such goods or services are delivered late from the stated delivery schedule:
b) (j) Any inventory e-commerce entity which explicitly or implicitly vouches for the authenticity of the goods or services sold by it, or guarantees that such goods or services are authentic, shall bear appropriate liability in any action related to the authenticity of such good or service.
The provisions of the Consumer Protection Act, 2019 (35 of 2019) shall apply for any violation of the provisions of these rules.
The Foreign Exchange Management Rules, 2019 currently recognise the marketplace and inventory model.
· It permits 100% FDI under the automatic route to marketplace entities as also to those engaged in single-brand retail.
· Foreign investments, up to 51%, are permitted in multi-brand retail with prior government approval.
· As per the non-debt rules, entities engaged in single-brand retail are permitted to undertake retail trading through e-commerce.
· However, single-brand retail trading through e-commerce has to open a brick-and-mortar store within two years from the date it commences online retail.
· Retail trading, in any form, by means of e-commerce, is not permissible for entities engaged in inventory-based multi-brand retail trading and having foreign investment.
· The e-commerce market is expected to reach US$ 64 billion by 2020 and US$ 200 billion by 2026. Thus there is a need for clearly laid-down rules for electronic commerce in the country.
· E- commerce is currently regulated by multiplicity of government departments such as IT Department, industrial policy, revenue, and RBI. Hence, a national e-commerce policy would consolidate the various norms and regulations to cover all online retailers.
· With the increasing online frauds, there is a need to strengthen the regulatory regime for protecting the consumer in the context of e-commerce
· New e-commerce rules restrict players from selling the products of companies in which they have a stake and capping the percentage of inventory that a vendor can sell through a marketplace entity (IT platform of an e-commerce entity) or its group companies.
· Also, it curbs the practice of deep discounts, the government said they cannot directly or indirectly influence the price of goods and services, and also brought in a new set of rules that bar the sale of products exclusively in one marketplace.
· The first restriction explicitly disallows e-commerce marketplace companies from selling private labels that are brands they directly or indirectly own, on their platforms.
· E-commerce companies would be barred from selling products sourced from firms in which they have a stake in or control over.
· From the point of view of the vendor too, the clarification said that an entity with an equity stake owned by an e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.
· E-commerce entities will have to maintain a level playing field, and ensure that they do not directly or indirectly influence the sale price of goods and services. The policy mandates that no seller can sell its products exclusively on any marketplace platform
· In February 2019, a draft National e-Commerce policy has been prepared and placed in the public domain, which addresses six broad issues of the e-commerce ecosystem viz. e-commerce marketplaces; regulatory issues; infrastructure development; data; stimulating domestic digital economy and export promotion through e-commerce.
· The Department of Commerce initiated an exercise and established a Think Tank on ‘Framework for National Policy on e-Commerce’ and a Task Force under it to deliberate on the challenges confronting India in the arena of the digital economy and electronic commerce (e-commerce).
· The Reserve Bank of India (RBI) has decided to allow "interoperability" among Prepaid Payment Instruments (PPIs) such as digital wallets, prepaid cash coupons and prepaid telephone top-up cards. RBI has also instructed banks and companies to make all know-your-customer (KYC)-compliant prepaid payment instruments (PPIs), like mobile wallets, interoperable amongst themselves via Unified Payments Interface (UPI).
In India 100% FDI is permitted in B2B e-commerce, however, No FDI is permitted in B2C e-commerce.
· 100% FDI under automatic route is permitted in the marketplace model of e-commerce, while FDI is not permitted in inventory based model of e-commerce.
· India allows 100 percent foreign direct investment (FDI) in the marketplace model of e-commerce, which it defines as a tech platform that connects buyers and sellers.
· India has not allowed FDI in inventory-driven models of e-commerce. The inventory model, which Walmart and Amazon use in the United States, is where the goods and services are owned by an e-commerce firm that sells directly to retail customers.
· The restriction is aimed largely at protecting India’s vast unorganized retail sector that does not have the clout to purchase at scale and offer big discounts.
· In order to increase the participation of foreign players in the e-commerce field, the Government has increased the limit of foreign direct investment (FDI) in the e-commerce marketplace model for up to 100% (in B2B models).
Anyvendor who purchases 25% or more of its inventory from an e-commerce group company will be considered to be controlled by that e-commerce company, and thereby barred from selling on its portal.
The policy mandates that no seller can sell its products exclusively on any marketplace platform and that all vendors on the e-commerce platform should be provided services in a “fair and non-discriminatory manner”. Services include fulfilment, logistics, warehousing, advertisement, payments, and financing among others.