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Online marketplace in India and Consumer Protection

-Ipsita Mishra

Recently the e-commerce market has been trending with the rise of Digital India.These marketplaces are mainly a mixture of B2C – business to consumer and C2C – consumer to consumer type of business model. It is convenient and efficient for consumers to buy products at the snap of a finger. All the prices, stocks, varieties are available at one go. This saves time and prevents the hassles of going to stores and purchasing products. There are also third-party vendors. These online market places are a blessing in disguise.

There are times when old and fake stocks are sold to lure customers with heavy discounts. With the e-commerce sites grabbing the marketplace, the normal trade business and shops are being affected.The consumer affairs department has seen ecommerce emerge as the sector with the highest number of consumer complaints on its National Consumer Helpline.

Current status regarding E commerce platforms

Online marketplaces are not defined anywhere. The Consumer Protection Act 1986 or Indian Contract Act 1872 is silent on it. The IT Act of 2000 categorizes the marketplaces as intermediaries. The sale and purchase which extends through this medium is not covered under this. Since there is no clear classification, all the online marketplaces make use of this as “mere medium of communication” and all access uniform liability no matter if the nature of risk and liability differs. They camouflage under the immunity provisions under section 79 of the Act and the corresponding Information Technology (Intermediary Guidelines) Rules, 2011. Also under the garb of being agents, they do not register since Payment and Settlement Act 2007 gives exemption of registration to the agents. Payment and Settlement Regulation 2018 solely holds the bank liable even though the selling and purchases takes place through these online platforms.

2018 Bill

Recently the Lok Sabha and Rajya Sabha passed Consumer protection Bill 2018 which replaced the archaic Consumer Protection act of 1986. All the complaints of the consumer will be regulated now at the national level. However, regulation of e-commerce platforms is missing in the bill which is a great lacuna.

The current bill has for the very first-time defined E-Commerce activity as: “buying or selling of goods or services including digital products over digital or electronic network”.

Even through it has been defined; no where duties and liabilities of online market places has been discussed. The government has been thrusted the responsibility to take appropriate measures if the consumers face problems sunder section 94 of the bill. They are also excluded from product seller under section 86. The IT Act states that network service providers are intermediaries, while the DIPP’s FDI guidelines refer to online marketplaces as providers of technology platforms to act as facilitators between buyers and sellers.The Bill proposes Central Consumer Protection Authority which can intervene in case of unfair trade practices. The Bill introduces a new concept of class action, which means the liability of manufacturers and service providers towards all consumers. Consumer mediation cells will be attached. Consumers can file a complaint electronically or in the consumer court at his place of residence. E-commerce firms would have to disclose their business details and seller agreements, apart from also disclosing how they use consumer data. To discourage frivolous complaints, the Bill proposes a penalty from Rs 10,000 to Rs 50,000.

Way forward

There should be proper distinction about the type of intermediaries, be it active or passive. Since Artificial intelligence, deep learning techniques, customer feedback, discount coupons, home delivery, adding in wish list etc everything is done by the online marketplaces, they are not “mere channels of communication” and much more of that.  All India Online Vendors Association has already raised fingers on Amazon India, alleging that the platform is being used for selling fake products. Recent case ofFermat Education v. Sorting Hat Technologies P. Ltd. and Kent RO Systems Limited v Amit Kotak Kent RO Shows that they should be service providers instead of just intermediaries. Transparency and accountability is of utmost importance in the digital era.