Sharing information with the government, banning “specific” flash sales: tightening e-commerce standards


THE MINISTRY of Consumption, Food and Public Distribution initiated sweeping changes to consumer protection rules (e-commerce), 2020, imposing new registration requirements for online retailers and a ban on sales flash “specific” – and making it mandatory to share information with government agencies.

The draft rules released on Monday are broadly in line with the IT intermediary rules announced for social media companies earlier this year. Representatives of local traders and vendors described the proposed standards as a step to “cleanse” the country’s e-commerce landscape.

According to the new provisions, e-commerce enterprises should register with the Department for the Promotion of Industry and Domestic Trade (DPIIT). They should also share information with “the government agency, which is legally authorized to conduct investigative or protective or cybersecurity activities, for identity verification purposes or for prevention, detection, investigation or prosecution of offenses under any law currently in force, or for cybersecurity incidents ”.

They suggest that the information requested by the government agency should be produced by the e-commerce company “within 72 hours of receiving an order from said authority.”

In line with IT intermediation rules, the Ministry of Consumer Affairs has proposed to mandate e-commerce companies to appoint a grievance manager, a compliance officer and a nodal contact person “for 24-hour coordination and 7 days a week with the police ”.

In February, the Center released a set of rules requiring social media companies to appoint managers and setting requirements such as traceability of content creators. These interim rules were challenged in Delhi High Court by messaging platform WhatsApp, which said they violated user privacy.

The government had notified consumer protection (e-commerce) rules on July 23, 2020, for online retailers registered in India or abroad but offering goods and services to Indian consumers. Any violation of these rules results in criminal prosecution under the Consumer Protection Act, 2019.

While the rules of origin focused on aspects such as transparency of product information to help consumers make informed decisions, the changes aim to limit circumvention of other laws. The ministry is seeking stakeholder comments and opinions on the proposed changes by July 6.

The rules apply to all goods and services bought or sold over digital or electronic networks, including digital products. They are valid for all e-commerce models, including marketplace and inventory models, including single-brand, multi-channel retailers and single-brand retailers.

In addition, to tighten existing standards for electronic commerce, the ministry seeks to ensure that these companies do not use the data collected in the course of their activity for an “unfair advantage” and to prevent any link. any they might have with traders selling goods and services on their platforms. On this front, the government has called for a ban on “specific flash sales” on e-commerce platforms.

In a statement, the Ministry of Consumer Affairs said, “Conventional e-commerce flash sales are not prohibited. Only specific flash sales or back-to-back sales that limit customer choice, raise prices, and prevent a level playing field are not allowed. “

A “flash sale” is defined as a sale organized by an e-commerce entity at significantly reduced prices, high discounts or any other attractive promotion or offer for a predetermined period of time.

In addition, the proposed rules also seek to strengthen the Centre’s push for domestic products. They suggest that e-commerce companies mention the name and contact details of any importer from whom they have purchased such goods or services. These companies will also have to provide alternative suggestions to customers before making a purchase “to ensure fair opportunities for domestic products”.

The Confederation of All Indian Traders, an organization representing local traders and sellers who oppose the practices of large e-commerce companies like Amazon and Flipkart, said in a statement, “The new project is a cornerstone to purify the e-commerce landscape. of the country, which has been greatly tainted by various global e-commerce companies… ”.

In December 2018, the Department of Industry released changes to its foreign direct investment policy for e-commerce to address loopholes exploited by online marketplaces in previous policies announced by the Center. These included preventing markets from exercising control over stocks and restricting the relationship between the marketplace and sellers on its platform.

In the proposed changes to e-commerce standards, the government seeks to strengthen these aspects by requiring that no logistics service provider of a marketplace e-commerce entity provide differential treatment between sellers of the same category.


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