The legal framework governing e-commerce websites

To implement the Model Law on E-Commerce (MLE) that the United Nations Commission on International Trade and Law (UNCITRAL) had adopted, India created the Information Technology Act, 2000 (IT Act). India has ratified MLE. The IT Act stipulates penalties for violations, a structure for regulating internet firms, a method for authenticating digital information, a digital signature, and guidelines for certifying bodies to follow. The method of decision-making for the crime of data theft and the appeals process has been laid forth. It outlines the penalties and further defines cybercrime. However, there are no safeguards in the IT Act that would protect the interests of customers who might have complaints about goods or services they have purchased online.

The only recourse a purchaser or consumer had was the Consumer Protection Act of 1986 (CP Act, 1986). In the lack of specific legislation governing transactions performed on e-commerce websites, the Consumer Protection Act of 1986 (CP Act, 1986) was the sole recourse that a buyer or consumer could use for any type of complaint regarding online transactions. However, the CP Act of 1986 was antiquated and outdated. The CP Act of 1986 has to be amended in light of the rise in e-commerce websites and consumer online transaction volume. The Central Government revised the CP Act 1986 with the Consumer Protection Act 2019 (CP Act,2019), which gained presidential assent, to address the gaps in the 1986 law that did not address the needs of the digital age on 09.08.2019. The Department of Consumer Affairs of the Ministry of Consumer Affairs, Food & Public Distribution has not yet been informed of the draught regulations. Any provision of the CP Act 2019 that is to take effect after July 20, 2020, will do so according to a deadline set by the central government.

Key features of the Consumer Protection Act 2019

Expanded the definition of consumer

Even consumers who shop online fall under the broad definition of the term “consumer” that has been adopted. According to the CP Act of 2019, a consumer is someone who purchases products or services for a consideration that is paid, partially paid, or promised to be paid; however, this definition excludes purchases made for resale or any other business endeavor. The CP Act 2019 makes it extremely explicit in its explanation that the terms “buy any goods” or “hires or avails any services” would include even electronic transactions done over the internet or through telemarketing and teleshopping. If a customer purchases anything through teleshopping and is dissatisfied with it, they can complain to the consumer forum.

Wide scope of the term “deficiency”

The CP Act of 2019 has expanded the definition of “deficiency” to include any act of negligence, omission, or commission that causes the consumer to suffer loss or harm. It further states that any conduct that deprives the customer of pertinent information now qualifies as a deficiency. This definitional enlargement is particularly pertinent now that many consumers purchase online, as the consumer’s choice would be impacted if the manufacturer, the vendor, or the e-commerce website concealed any pertinent information. Consider the scenario where a customer buys an electrical device online and the e-commerce site neglects to disclose the nation of origin of the said product. The consumer needs information about the country of origin, so if the information is suppressed and hidden by the e-portal, the consumer may be able to complain about the deficiency by withholding important information about the country of origin.

Includes e-commerce

The term “e-commerce” is further defined in the CP Act 2019 as the exchange of goods or services, including digital items, over a digital or electronic network. The CP Act, 2019, introduces the idea of e-commerce websites by defining an “electronic service provider” as a person who offers technologies or procedures to enable a product seller to engage in marketing or selling goods or services to a consumer. This definition includes any online marketplace or an online auction site. With the acceptance of the idea of online customers, it is a tremendous comfort for those who engage in digital transactions to have a platform to air their complaints in the event of any shortcomings in service or goods.

Defines endorsement

The CP Act 2019’s definition of “endorsement” in Section 2(18) states the following:

The message, declaration made orally, demonstration,
the representation of a person’s name, signature, likeness, or other distinctive features,
depicting a company’s name or institution’s seal in a way that gives the buyer the impression that it represents the opinions, convictions, and life experiences of the person endorsing it.

This clause might be applied to websites that utilize deceptive and misleading advertising to promote the sale of goods or services. Companies who make exaggerated claims about achieving slender figures quickly or making clothing white like snow or changing skin tone from dark to fair should be on the lookout. Celebrities frequently endorse items or services in television commercials, newspaper ads, and social media advertisements; as a result, these celebrities will now need to be more cautious when making recommendations. Since they could also be included as a party to the complaint, the e-commerce platforms need to exercise caution when listing and endorsing their websites.

Introduces product liability

Websites that employ deceptive and misleading advertising to encourage the sale of goods or services may be subject to this section. Be wary of companies who make inflated claims like swiftly reaching slender bodies, making garments white like snow, or altering skin tone from dark to fair. Celebrities routinely give their endorsements for products or services in television commercials, newspaper ads, and social media advertisements; as a result, these celebrities will now need to exercise greater caution when giving advice. E-commerce platforms should use caution when listing and supporting these websites because they can also be named as parties to the complaint.

For instance, if a customer orders a chandelier believing it to be large as shown online, but upon receiving the product discovers that it is too small and that the measurements were also given incorrectly, the idea of product liability enters the picture and the customer may file claims against both the manufacturer and the e-commerce website for providing the defective product.

Addresses misleading advertisement

The term “misleading advertisement” has been defined in the CP Act, 2019 as advertisements related to a product or service that gives a false description, false guarantee to nature, substance, quality, or quantity, and conveys an express or implied representation that, if made by the manufacturer, seller, or service provider, would constitute an unfair trade practice. This is done in recognition of the issue of advertisements making bogus and fictitious claims and misleading innocent consumers. The Act lays out penalties for deceptive and false advertising. Manufacturers and makers of items may need to be cautious about the information and claims stated in their marketing as a result of legal action taken against such promotions.

Central Consumer Protection Authority (CCPA)

The Central Consumer Protection Authority (CCPA), which was established to operate as a regulatory authority and is in charge of protecting consumer rights as a class, has added a new authority to the CP operate 2019. The Central Government is responsible for creating the CCPA. This body has the jurisdiction to enforce consumer rights collectively and to promote, defend, and hold people accountable for violating laws that are harmful to the interests of the public and consumers. Within 30 days of the date the order was received, a petition for review of the CCPA’s decision on this matter may be filed with the National Commission.

To conduct inquiries or investigations under this Act, as may be authorized by the CCPA, the CCPA shall have an investigative wing headed by a Director-General. The CCPA could utilize its authority to order all e-commerce platforms to list the country of origin for each product on each of their pages. If websites are not already doing so, the CCPA could further request that all e-commerce platforms make the grievance procedure accessible to customers online and show the name, title, and contact information of the grievances officer.

Alternate dispute mechanism

To speed up the resolution of conflicts and provide the parties an opportunity to communicate and bargain without going to the Commissions, the CP Act of 2019 included “Mediation” as an alternative dispute resolution method. The Act specifically specifies the types of disputes that cannot be resolved by mediation, including those involving medical malpractice that results in fatalities or serious injuries. The rise in complaints may be impacted by the increasing number of internet shoppers. The mediation process would save consumers money, time, and effort. All types of consumers might save time by employing mediation to resolve their disputes.

Jurisdiction

As opposed to filing in the jurisdiction where the other side actually or voluntarily resides, conducts business, has a branch office, or personally works for gain, the amended CP Act 1986 specifically indicates that the district commission under the local borders of whose jurisdiction the complainant resides or personally works for gain may now also be used to file the complaint. Since individuals can do so no matter where they live, work, or conduct business, this feature is a bonus for internet shoppers. This idea is undoubtedly consumer-friendly and beneficial to all different types of customers.

The District, State, and National Commissions’ financial jurisdictions have been expanded. The District Commission has the authority to investigate complaints of substandard goods or services for which the consumer has paid up to Rs. 1 crore in consideration. The State Commission may evaluate complaints whose costs total more than one crore but less than ten crores. For issues involving goods or services valued at more than 10 crores, you might turn to the National Commission.

Other changes in the Consumer

The appeal deadline is extended from 30 days to 45 days if someone files a complaint with the State Consumer Commission against a District Commission order that they disagree with.

The State Commission and the National Commission, respectively, are empowered to declare any contract conditions that are unfair to any consumers under Sections 49(2) and 59(2) of the Consumer Protection Act of 2019.

There is still time to make a second appeal to the National Commission (NCDRC).

With the restrictions outlined in Section 71 of the CP Act 2019, powers of execution are granted as per Order XXI of the Civil Procedure Code of 1908.