Ban on Flash Sales, Appointment of Compliance Officers - New E-Commerce Rules Explained

The Government of India announced amendments to the country’s Consumer Protection (E-Commerce) Rules, 2020 to reduce unfair trade practices and protect consumers from getting cheated.

Created On: Jun 22, 2021 15:18 IST
E-Commerce in India, Source: PTI
E-Commerce in India, Source: PTI

The Government of India on June 21, 2021, announced amendments to the country’s Consumer Protection (E-Commerce) Rules, 2020 to reduce unfair trade practices and protect consumers from getting cheated.

The government has asked for views and suggestions on the proposed amendments to the e-commerce rules within 15 days (by July 6, 2021).

The most significant change in the rules is the ban on certain kinds of flash sales and punitive action against the platforms that do not comply, stated in a statement by the Ministry of Food and Consumer Affairs.

Will all e-commerce flash sales be banned?

• No, conventional flash sales by third-party sellers are not banned on e-commerce platforms, the statement further clarified. The ban will be on certain flash sales or back-to-back sales that prevent a level-playing field in the e-commerce field, increase prices or limit consumer choices.

• The Ministry stated, “Certain e-commerce engaging in limiting consumer choice wherein one seller selling on the platform does not carry any inventory or order fulfillment capability but merely places a ‘flash or back-to-back’ order with another seller controlled by the platform.”

• Selling goods or services through deliberate wrong or misrepresentation of information will be prohibited. “Mis-selling has been prohibited,” the statement added.

Fall-back liability for every e-commerce entity

• Fall-back liability for every e-commerce entity has also been provided so that a consumer is protected in case a seller fails to deliver goods or services or negligent conduct.

• Further to strengthen the grievance redressal mechanism on e-commerce platforms, Chief Compliance Officers and Nodal Contact Persons for 24x7 coordination with law enforcement agencies shall also be appointed now to ensure compliance with the Consumer Protection Act, 2019.

• Registration of every e-commerce entity with the Department for Promotion of Industry and Internal Trade (DPIIT) has also been proposed post which the registration number will be displayed on the website as well as invoices generated. This will aid in creating a database of genuine e-commerce entities and help consumers in verifying the existence of entities.

Why e-commerce rules, 2020 have been amended?

• The Government of India on July 23, 2020, had notified the Consumer Protection (E-Commerce) Rules, 2020, with the aim to prevent unfair trade practices in e-commerce.

• However, since then, several aggrieved traders, associations, and consumers complained against widespread cheating and unfair trade practices on e-commerce platforms.

• Therefore, the Government of India is sharing a draft of amendments to the Consumer Protection (E-Commerce) Rules, 2020 to help curb the exploitation of consumers and promote fair trade practices.

Where are the proposed e-commerce amendments available?

• The proposed amendments can be viewed on the website of the Department of Consumer Affairs.

• Suggestions and comments can be emailed to js-ca@nic.in by July 6, 2021.

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