Consumer Protection Bill: Time for careful rethinking

By: | Published: September 19, 2018 2:07 AM

Govt must ensure interests of e-commerce players and consumers are balanced

Internet users in India are expected to increase from 481 million (December 2017) to 829 million by 2021, which will have a direct impact on e-commerce, with more Indians taking to the internet for purchases.

As per India Brand Equity Foundation, India’s e-commerce industry is expected to surpass the US as the second-largest in the world by 2034. Internet users in India are expected to increase from 481 million (December 2017) to 829 million by 2021, which will have a direct impact on e-commerce, with more Indians taking to the internet for purchases.

The government has been advocating policy steps and a draft national e-commerce policy was introduced, but it attracted criticism from the industry as well as from some governmental departments, for proposing measures that would be counterproductive to the e-commerce industry.

The government introduced Consumer Protection Bill, 2018, in the Lok Sabha to replace Consumer Protection Act, 1986. The Bill acknowledges the long-standing requirement for ensuring enhanced safeguarding of consumer rights on account of rapid changes that have taken place due to e-commerce.

The Statement of Objects and Reasons of the Bill states that “the emergence of global supply chains, rise in international trade and the rapid development of e-commerce have led to new delivery systems for goods and services and have provided new options and opportunities for consumers. Equally, this has rendered the consumer vulnerable to new forms of unfair trade and unethical business practices. Misleading advertisements, telemarketing, multilevel marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive interventions to prevent consumer detriment.”

The Bill empowers the Centre to formulate measures to prevent unfair trade practices in e-commerce.

While there are no official indications regarding the measures, the draft policy throws light on thought process of the government. Among other things, the e-commerce entities would be: (1) mandated to share with consumers the main features of their terms and conditions in a simplified and an easily understandable form; and (2) required to disclose to consumers the terms and conditions governing their arrangement with vendors. As per the draft policy, the exemption for IT intermediaries under Section 79 of the Information Technology Act, 2000, will be reviewed. Neither the draft e-commerce policy nor the Consumer Protection Bill lays down any concrete indicators on involving e-commerce players in consumer grievance redressal process.

Another aspect that both the Bill and the draft e-commerce policy will need to consider is the variety of products that are available through e-commerce. For example, the definition of ‘product’ under the Bill pertains to tangible physical products that would obviously not include financial products (insurance policies sold online) or services (housekeeping, pest control, etc). Another conceptual gap in the Bill is that the definition of a product seller includes a service provider, which could include an electronic service provider or any person/entity who/which provides any service in relation to a product. While finalising the Bill and the e-commerce policy, it would be useful for lawmakers to take into account the range of products and services available online to consumers in order to safeguard the interest of consumers, also keeping in mind that e-commerce players are not severely exposed to frivolous litigations.

Another positive step is the introduction of the concept of ‘product liability’. As per the Bill, a consumer can initiate product liability action against a manufacturer or a service provider or a seller (as the case may be) as per the provisions of the Bill, for any harm caused to her on account of a defective product or deficiency in services. Here again, it would be useful if policy-makers review the product liability stipulation considering the definition of products available online to make sure that interests of e-commerce players and consumers are balanced.

E-commerce in India has grown leaps and bounds, and is set to record unprecedented growth owing to increasing penetration of internet. We are living in the times where disruption and novel ideas pour in almost on a daily basis. It is often said that law always plays catch-up to novel business ideas, and e-commerce is no exception. The present time is perhaps the most challenging yet interesting, where the law (and lawmakers) has to play catch-up faster than ever to make sure that the aspirations of the industry and consumers are met evenly.

-Rupinder Malik, Sidharrth Shankar & Srikant CV. Malik and Shankar are partners, Srikant is senior associate, J Sagar Associates. Views are personal

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