E-commerce: consumer protection was an article of faith but now it gets teeth

E-commerce has become a preferred route for many consumers to buy goods over the years, upending the retail trade industry. Its growing popularity and size has also attracted regulatory attention. The government has now framed regulations to address the interests of e-commerce consumers. A draft  has been released on Monday and suggestions have been invited on the proposals.

E-commerce has been primarily unregulated and the government has worked to bring every aspect of its operations under its legal framework. The creation of guidelines on consumer protection was one of the last aspects of the draft National e-commerce Policy proposed in February.

The government has proposed that e-commerce companies should abide by a 14-day deadline for refund requests. Besides, it wants e-commerce retailers to disclose details of sellers, protect “personally identifiable information of customers (under the provisions of the Information Technology (Amendment) Act, 2008) and have a defined procedure for redressal of consumer complaints.

Additionally, the proposed guidelines make e-commerce firms, and also the seller (as details will be disclosed to consumers), accountable for any fake or counterfeit products being sold on the platform. Will that be enough to curb sales of counterfeit products? In reality it may not, as those seeking to commit fraud will find ways of doing it. But e-commerce platforms cannot shrug away their responsibility and neither can sellers, and the proposed guidelines could result in more safeguards for consumers.

To be sure, none of the above is mandatory at present and if these proposals are implemented, uniform rules will be enforced.

To be fair to e-commerce companies, the main companies in this sector have already been following these practices in some form. Refund is usually done within 2-5 business days through electronic mode (wallet, UPI, net banking, credit and debit cards), and within 10 business days if refund is made through paper cheque. The proposed guidelines actually extend the deadlines for the same.

Companies like Amazon and Flipkart, the top two e-commerce marketplaces in India, disclose sellers’ details and do have customer care service for resolutions of customer grievances, besides addressing usual queries.

The big e-commerce companies, therefore, may already be equipped to fulfil the new requirements. And, smaller players follow common practices by top companies to remain competitive. What purpose do the proposed guidelines serve then? They bring existing practices under a formal framework, with mandatory processes, and present a uniform system by which consumers know their rights and can redress grievances.

The guidelines also address issues related to pricing. To ensure a level-playing field, it wants e-commerce marketplaces to not influence the price of goods or services directly or indirectly. This was required. Jon Reily, vice president (global commerce strategy lead), Publicis Sapient, sums it up well in an e-mailed statement. “Amazon is facing pricing issues across the globe. In addition to the new stricter rules for e-commerce in India, it is facing increased scrutiny in the US. There have been reports that Amazon is indirectly pressuring US sellers to raise prices through price alerts, comparing them to competitors on other platforms,” Reily said.

If the proposed guidelines are implemented, the bigger players may need to make only small tweaks to their existing customer support practices. Smaller players may need to make more substantial changes and be prepared for consequences of falling short.

Overall, it is good that the government is trying to create a policy framework for consumers who are behind the e-commerce industry’s rapid growth. Since their support is responsible for the valuations enjoyed by these companies, it is only fair that they are tasked with protecting the rights of these consumers.