Business News

The government intends to hold online retail giants like Amazon and Flipkart accountable for vendors’ fraud.

The consumer affairs ministry is working on tightening ecommerce rules to make online retail platforms liable for fraud committed by sellers and attaching “fallback liability” to their role as intermediaries, said a senior official.

Rules will be formulated after the platforms respond to queries related to the issue, sent to them by the ministry of electronics and information technology (MeitY), said the consumer ministry official.

MeitY’s note was prompted by questions from the Department of Consumer Affairs, which is part of the consumer ministry. Sent last week, it asked ecommerce firms to clarify their role “as an intermediary.”

Ecommerce platforms — or marketplaces such as AmazonFlipkart and Snapdeal — are intermediaries that connect buyers and sellers and are protected by safe harbour provisions in Section 79 of the Information Technology Act, 2000. However, under the proposed rule changes, the government plans to change that and attach more responsibility to their role as intermediary.

“We are in the process of restructuring the ecommerce rules to ensure consumer interests are protected adequately in this emerging digital economy. We plan to make marketplaces liable if goods sold on their platforms are found to be faulty,” the official said.

Safe Harbour Provisions

Last year, the Central Consumer Protection Authority (CCPA) under the consumer affairs ministry imposed a penalty on several ecommerce firms for selling pressure cookers — among other products — that did not adhere to quality standards such as the mandatory ISI mark. However, some ecommerce companies argued at that time that they were only intermediaries and that the liability lay with the sellers.

“Communications received from the Department of Consumer Affairs regarding the various challenges being faced by consumers in redressal of grievances while shopping online, particularly in case of grievances raised by consumers concerning a purchase, (where) ecommerce entity refuses to acknowledge any liability or responsibility or provide appropriate remedy to consumers, by making a reference to Section 79 of the Information Technology Act, 2000,” MeitY said in the letter to ecommerce platforms cited above.

A Flipkart spokesperson said it has a well-defined and continuously improving programme to help customers and address their grievances. The company’s consumer grievance redressal system is integrated with that of the government, the person said.

A spokesperson for Amazon said the company has robust grievance redressal mechanisms, apart from which it is also a convergence partner for the National Consumer Helpline (NCH). “Amazon endeavours to resolve all complaints received via NCH within five days, a fraction of the permissible 45-day window,” the spokesperson said.

The ecommerce rules were first put in the public domain in July 2020, when the government notified the Consumer Protection (Ecommerce) Rules, 2020, under Section 101 of the Consumer Protection Act, 2019, proposing to bar affiliated entities from selling on online platforms, as well as restricting flash sales.

However, the rules did not find favour with top ecommerce companies. Government entities such as the corporate affairs ministry and policy think tank Niti Aayog were also opposed to the proposal.



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