Consumer Protection in Electronic Commerce

In one line

The Consumer Protection Act, 2019, brought electronic commerce inside consumer law for the first time, the E-Commerce Rules 2020 impose duties on the marketplace and heavier ones on the inventory seller, and none of it is displaced by the section 79 exemption because the two statutes ask different questions.

What the 2019 Act changed

The Consumer Protection Act, 1986, said nothing about the internet. The 2019 Act, in force from 20 July 2020, changed four things that matter here.

The definition of consumer. Section 2(7) defines a consumer as one who buys goods or hires services for consideration, and the Explanation provides that the expressions "buys any goods" and "hires or avails any services" include offline or online transactions through electronic means, teleshopping, direct selling or multi-level marketing. That single Explanation is what brings electronic commerce inside the Act.

A definition of electronic commerce. Section 2(16): "e-commerce" means buying or selling of goods or services including digital products over digital or electronic network. And section 2(17) defines an "electronic service provider" as a person who provides technologies or processes to enable a product seller to engage in advertising or selling, including an online marketplace or online auction site.

Jurisdiction where the complainant is. Section 34(2)(d) allows a complaint to be filed in the District Commission within whose jurisdiction the complainant resides or personally works for gain. That reverses the ordinary rule of section 20 of the Code of Civil Procedure and is the provision that makes consumer litigation practical against a distant platform. Chapter 860.

And product liability. Chapter VI, sections 82 to 87, creates a statutory product liability action against a product manufacturer, product service provider and product seller, and section 2(37) defines a product seller in terms wide enough to include a person who, in the course of business, imports, sells, distributes or otherwise places a product in the stream of commerce.

The Central Consumer Protection Authority

Sections 10 to 27 create the Central Consumer Protection Authority, which is new in 2019 and has no predecessor.

Its powers: to inquire into violations of consumer rights, unfair trade practices and false or misleading advertisements, on its own motion or on a complaint; to order recall, refund and discontinuance; and under section 21 to issue directions on false or misleading advertisements, with penalties up to ten lakh rupees and up to fifty lakh rupees for a subsequent contravention, and to prohibit an endorser from endorsing for up to one year, and three years on a subsequent contravention.

Why it matters here. It is a regulator that can act without a complainant, which is what the 1986 Act lacked.

The E-Commerce Rules 2020

The Consumer Protection (E-Commerce) Rules, 2020, notified 23 July 2020 under section 101(1)(zg).