Abstract-This research paper explores the overview of consumer protection act and its impact on e-commerce. It defines how the act protects the consumer from online transaction. It also gives the objective and importance of the act. The study also analyzes e- commerce and its growth in India. It gives guidelines on the rules of e-commerce by the government. The study also defines the duties of the business and aims to protect consumer in the digital world.
Keywords– Consumer protection Act 2019, E-commerce, consumer protection, E-commerce rules, consumer education.
1.Introduction
The consumer protection Act 2019 have played a very important role in the protection of rights of the Indian consumer especially in E-commerce sector. This research paper is all about the legal framework surrounding consumer protection, and also its impact on consumer protection act 2019 on E commerce.
Consumer Protection Act was passed in 1986.It was an act passed by the parliament to protect the rights of the consumer. This statute is also known as MAGNA CARTA in consumer protection for checking unfair trade practices, defects in goods, deficiencies in services, product quality. There were many amendments made to this act according to the need of time. But as time changed, the world started moving to internet, digitalization, marketing, advertisements, E-commerce, so there was need of new Act to regulate this change.
The Consumer Protection Act 2019 came into force on 20th July 2020 to adhere the rules which are essentials for the protection of consumers with respect to advancement of technology. The new act intends to reduce the lengthy procedures and to deliver quick and fast justice to the aggrieved party. The Act established the Central Consumer Protection Authority (CCPA). The authority has power to investigate into the issue related to violation of consumer rights, power to declare unsafe goods and services for the protection of consumer. Also the Act intends to regulate E-Commerce activities which are safe for the environment.
Definitions under Consumer protection Act 2019:
Section 2(7) of the Consumer Protection Act, 2019 defines a consumer as any person who buys goods or services in exchange for consideration and utilizes such goods and services for personal use and for the purpose of resale or commercial use.
1.1 Objectives of consumer Protection act 2019
The primary objective of this act is to protect consumers rights and interest and to resolve the dispute. The objectives of this act are:
1.To protects consumer from unfair trade practices
2. To help in prohibiting misleading advertisements.
3.To promote consumer education and awareness to raise their voice about their rights.
4. To establish consumer protection council to protect the rights of the consumer
5. To encourage fair trade practices
6. To promote sustainable products and services to protect the environment.
7. To regulate e- commerce transaction and to protect online consumer.
8. To prescribe penalties for the offences committed under this act.
1.2 Importance of Consumer protection Act
The act plays a significant role for the consumers. The importance are as follows:
1. It gives confidence to the consumer while making online transaction.
2. It Contributes to economic stability by promoting trust among the consumers.
3. It holds the manufacturer and the service provider liable for the defect in the product.
4. It protects the consumer from fraudulent practices of the business practice.
5. It reduces financial loss happening to consumer.
6. It encourages the sellers to give correct information of the product and services to the consumer.
7. It enables consumers to seek redressal in case of breach of data privacy and security of the consumer.
1.3 Rights of the consumers
Section 2(9) of the Consumer Protection Act 2019 provides six consumer rights, which are as follows:
1. Right to safety- Consumers have the right to be protected against the goods and services which are hazardous to health.
2. Right to be informed- Consumer have the right to be informed of the quality, quantity, price, content of the goods and services.
3. Right to choose – customer have the right to choose the product or services he/she wish to purchase at a market price, and access to different brands.
4. Right to be heard- sellers should heard the problems of costumers they are facing with respect to goods and services
5. Right to seek redressal- Consumer have right to seek remedy against the unfair practice. It gives right to seek compensation for the defect product, refund or replacement.
6. Right to consumer awareness- Consumer have their rights about their rights and responsibilities.
Case laws on Rights of consumers :
1. Ambrish Kumar Shukla vs. Ferrous Infrastructure Pvt. Ltd.-In this case, the NCDRC upheld the right to seek redressal by providing compensation to a consumer for deficiency in services. This case highlights the importance of effective grievance redressal mechanisms for consumers to seek remedies against unfair practices or poor quality goods and services.
2. Subodh Kumar vs. State of Bihar- In this case, the Supreme Court emphasized the right to safety by holding manufacturers liable for injuries caused by defective products. This case gives the importance of ensuring product safety and holding manufacturers accountable for hazardous goods.
2.1 Introduction to E-commerce
Section 2(16) of the act defines e-commerce as: “e-commerce” means buying or selling of goods or services including digital products over digital or electronic network. Any kind of transaction (money transfer, data ) is considered as E-commerce. It is also known as electronic commerce or internet commerce. These services provided online over the internet network. examples of E-commerce website are Amazon, Ajio, Myntra etc. The business transactions can be done in four ways: Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C), Customer to Business (C2B). The standard definition of E-commerce is a commercial transaction which is happened over the internet.
2.2 Growth of E-commerce in India
Over the past few years, advancements in technology have drastically changed the mindsets of people regarding traditional shopping. E-commerce had played a major role in India. Because of the incredible rise of the electronic gadgets and the launch of 4G internet in the country. Buyers from Small town and cities are also buying goods and services through online mode. According to Internet Live Stats, India has more than 462 million internet users. The country is being transformed into a knowledge economy and a digitally empowered society as part of the ‘Digital India’ initiative.
In today’s India, e-commerce has become a booming industry. It is today’s cutting-edge technology in all fields of business. In research published in 2014, the Internet and Mobile Association of India (IAMAI) projected that almost 1 million large and small retailers use online marketplaces to reach out to their customers. Electronics, books, apparel, accessories, footwear, jewellery, and more categories are represented by these online businesses.
The advent of e-commerce has changed the way India shops, especially after the exponential growth of the internet and online infrastructure of the country. In addition, the shift in consumer shopping behavior since the pandemic and an increasing share of the organized sector within retail markets created a strong foundation needed for the establishment of e-commerce in the market. With a population of more than 1.4 billion and a fast-growing economy, the number of online shoppers is predicted to increase to 427 million by 2027. Consequently, the booming e-commerce industry is estimated to be worth over 350 billion U.S. dollars by 2030. Besides the increase in disposable income, changing lifestyles, and convenience are the primary factors due to which most consumers prefer online shopping. From groceries to other essentials, everything can be delivered with the touch of a button, sometimes even in 10 minutes, particularly for consumers living in urban areas. Zepto, Zomato, and Swiggy are some major domestic quick commerce brands that provide fast and efficient delivery services.
Research Methodology
In this research paper, the method used is content based and descriptive method. The present study is taken from various sources. The primary source includes the academic books and the bare Act of Consumer Protection Act 2019. The secondary sources majorly include journals, articles, research paper and few online websites.
Literature Review
1. Anwesha Panda, the consumer protection act 2019 and its impact on the e-commerce sector in India
This article critically examines the impact of the Consumer Protection Act 2019 and the Consumer Protection (E-Commerce) Rules 2020 on the Indian E-Commerce industry. It also outlines the key provisions and some suggestions for improving protection of consumers. This article concludes by describing the need of digitalization and ensure consumer friendly policies from the government.
2. Adv. Abhinayan Krishna, Critical Analysis: Interplay of E-Commerce and Consumer Protection, in Conformity with International Standards
This article examines the study legislative framework of India with respect to protection of online consumers interest and e-commerce is growing at a booming speed. It also analyses he Consumer Protection Act, 2019 and the Consumer Protection (E-commerce) Rules, 2020, and a literature review of 290 online customers. The study strives for strict laws for online frauds.
3. Dhanya Balasubramanian, e-commerce and consumer protection
This article examines India’s legislative framework for India for online customers concentrating on the e-commerce sector’s impact on consumer preferences. It also gives outline on Consumer Protection Act and Information Technology Act. The study also speaks about the problem faced by consumers in online transactions.
Method
3.The Consumer Protection (E-Commerce) Rules 2020
The Ministry of Consumer Affairs, Food, and Public Distribution in India introduced the Consumer Protection (E-Commerce) Rules 2020 to regulate E-Commerce platforms and protect the rights of consumers engaged in digital transactions. It was created in collaboration with the Consumer Protection Act 2019. The rules include provisions to ensure transparency and fair business practices and address consumer grievances in the E-Commerce sector.
The key aspects are as follow:
1. Disclosure of Information- E-commerce entities are required to provide information regarding, return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism or any other information so that the customer can take proper decisions.
2. Appointment of Grievance Officer: Every e-commerce entity must appoint a grievance officer who shall acknowledge the consumer complaints within 48 hours and resolve them within one month from the date of receipt.
3. Compliance with Indian Laws: E-commerce entities must comply with all relevant Indian laws and ensure that goods and services offered for sale comply with mandatory Indian standards.
4. Liability for Counterfeit Products: E-commerce entities are liable for any sale of counterfeit products on their platforms and must take necessary steps to prevent such sales.
5. Protection of Intellectual Property Rights (IPR): E-commerce entities must promptly remove listings of counterfeit or pirated goods upon notification by rights holders, and they must not knowingly list or sell goods that infringe upon others’ intellectual property rights.
3.1Applicability of The Consumer Protection (E-Commerce) Rules 2020
These Rules are applicable to two models namely e-commerce entity and inventory e-commerce entity. Basically, these Rules apply to all goods and services bought or sold over digital or electronic network including digital products, all models of e-commerce, including marketplace and inventory models of e-commerce, all e-commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats. However, these rules don’t apply to regular people doing personal things online, like selling their used stuff occasionally. But it’s important to consider this exception carefully because the rules put a lot of responsibilities on e-commerce businesses.
4. Impact of E-commerce on consumer protection act
The rise of e-commerce has changed the outlook of the traditional shopping. Online shopping has become convenient to the consumer. Consumer can have access to any product or services by home. They can browse through a vast variety of products, compare prices, and make purchases with just a few clicks. The change from traditional shopping to online shopping has transformed many things such as consumer behavioural pattern, additions of various scam by online business etc.
To regulate this the Consumer Protection Act (CPA) in 2019 plays an important role as it is beneficial to business entities as well as consumers. It prescribes the duties to the seller at marketplace and e-commerce entities, regulates misleading advertisement made by the seller to attract the consumer which leads to unfair practices. Additionally, the act introduces provisions to address emerging issues in e-commerce, such as data privacy and cybersecurity.
4.1 Duties of Seller on Marketplace
The duties of the seller on the market place as per Rule 6 of the E-Commerce Rules 2020 are:
1. Providing accurate information-sellers must provide accurate and correct information about the product or services.
2. Preventing of misleading advertisements-sellers should refrain from engaging in misleading advertisement as it will mislead the consumer.
3. Offering fair prices- Sellers should offer fair and competitive prices for their products or services, ensuring that consumers are not subjected to unfair pricing practices
4. Providing Product Information in Local Languages- Sellers should provide product information and descriptions in local languages, ensuring that consumers from diverse linguistic backgrounds can understand the details of the products they are purchasing.
5. Offering Flexible Payment Options- Sellers should offer a variety of payment options to consumer and let them choose preferences and needs, including cash on delivery, credit/debit card payments, digital wallets, and other convenient payment methods.
6. Educating Consumers: Sellers should educate consumers about the features, benefits, and usage of their products or services, providing guidance and assistance to help consumers make informed purchasing decisions.
7. Promoting Sustainable Practices: Sellers should promote sustainable and eco-friendly practices in their business operations, including the use of environmentally friendly packaging materials, reducing carbon emissions, and minimizing waste generation.
8. Supporting Local Communities: Sellers should contribute to the economic development and well-being of local communities by sourcing locally produced goods, supporting local artisans and businesses, and participating in community development initiatives.
9. Maintaining Ethical Standards: Sellers should conduct their business in an ethical and responsible manner, treating consumers with fairness, honesty, and respect, and refraining from engaging in any unethical or unlawful practices that could harm consumers’ interests.
4.2 Duties of E-commerce Entities
The duties of the E-Commerce entities as per Rule 4 of the E-Commerce Rules 2020 are:
1. Incorporation Requirement: Every E-Commerce entity must fall under the purview of the Companies Act, 1956 or the Companies Act, 2013. It includes foreign companies under Section 2(42) of the Companies Act, 2013, or offices, branches, or agencies outside India controlled by a resident person in India, as stipulated in Section 2(v)(iii) of the Foreign Exchange Management Act, 1999. Further, to ensure adherence to the law and related rules, these entities must designate a nodal person of contact or an alternate senior designated functionary who resides in India. Also, engaging in unfair trade practices or malicious activities on the platform or elsewhere in business is strictly prohibited for E-Commerce entities.
2. Grievance Redressal: E-Commerce entities must institute effective grievance redressal mechanisms by appointing a grievance officer. The grievance officer is responsible for promptly acknowledging consumer complaints within 48 hours. The company must then address and resolve the complaint within one month from the date of its receipt
3. National Consumer Helpline: Every E-Commerce entity is encouraged to actively collaborate with the National Consumer Helpline initiated by the Central Government.
4. Imported Goods: If an E-Commerce entity sells imported goods or services, it should provide the name and details of the importer from whom it acquired such goods or services or who may act as a seller on its platform.
5. Compliance with Legal Requirements: E-commerce entities must comply with all relevant laws and regulations governing their business operations, including tax laws, consumer protection laws, and intellectual property rights.
4.3 Offences and penalties under Consumer Protection Act, 2019
The offences and penalties listed under this Act are mentioned as follows.
1. Misleading Advertisement-According to section 80 of the act, any seller make misleading
In the case of Havells India Ltd. v. Amritanshu Khaitan & Ors., (2015), the Delhi High Court laid down two essential elements to ascertain whether an advertisement is misleading or not. The Court emphasized that for an advertisement to be considered misleading, it must deceive its intended audience. It should have the potential to influence consumer behavior or cause harm to competitors due to its deceptive nature.
These elements are crucial in determining the legality and ethicality of advertisement
2. Penalty for non-compliance with the direction of Central Authority: Whoever fails to comply with any direction of the Central Authority under sections 20 and 21 shall be punished with imprisonment for a term which may extend to six months or with a fine which may extend to twenty lakh rupees, or with both as per Section 88 of the Consumer Protection Act 2019.
Horlicks Ltd. v. Zydus Wellness Products Ltd. (2020)
In this case, both parties are manufacturers of nutritional drinks, however, Zydus advertised a television commercial trivializing the products of Horlicks Ltd. The commercial was being telecasted in various languages including English, Tamil and Bengali. Therefore, the Delhi High Court relied on various judgments on misleading advertisements, disparagement and law governing the publication of advertisements on television and held that the advertisement is disparaging as it does not provide any concrete proof regarding the quality of the product. Further, electronic media leaves an impression on the minds of the viewers thus, these types of advertisements would not only be detrimental to the consumers but also the complainant would suffer irreparable damage. A famous judgement relied on by Delhi High Court while deciding this case is Pepsi Co. Inc. v. Hindustan Coca Cola Ltd., 2003 where the Delhi High Court held that there are certain important factors that are to be kept in mind in case of disparagement which are; manner of the commercial, intent of the commercial and storyline of the commercial.
Suggestions
To strengthen the laws related to consumer protection , several factors needs to be taken into consideration because as there are laws related to online transaction but there are certain points where consumer protection act should be made more stringent like the issues such as hacking, illegal activities, data privacy, fraudulent activities etc. These rules would ensure that e commerce website must follow for the protection of consumer. Secondly strong laws need to be made for cyber crimes for unauthorized access to consumers data. Thirdly, educating consumers about their rights is crucial. It can be done through social media as India is the country of youth which is good in using technology and social media. Also adding chapter of consumer protection and its right in secondary schools would also be also useful. Additionally, using technology like AI to detect fraud, leak of data privacy would help in protecting consumer.
Conclusion
The Consumer Protection Act 2019 and the Consumer Protection (E-Commerce) Rules 2020 have brought about significant changes in the E-Commerce sector in India. These regulations have been vital in addressing issues like false and misleading advertisements, unfair trade practices, and product liability while fostering transparency and accountability from E-Commerce entities. The Act aims to ensure fairness and transparency to online transaction. Furthermore, the Act and the E-Commerce Rules have prompted positive changes in the E-Commerce sector by compelling businesses to reassess their practices to meet regulatory standards. The stringent provisions of the Act function as a deterrent against unfair trade practices, leading to a more ethical and responsible E-Commerce ecosystem. In conclusion, the Consumer Protection Act 2019 and the Consumer Protection (E-Commerce) Rules 2020 have marked a significant shift towards consumer empowerment and ethical business conduct in India’s E-Commerce industry. The Act’s stringent provisions have contributed to a more ethical and responsible E-Commerce ecosystem, and it is crucial to continue working towards a sustainable and consumer-centric E-Commerce environment by keeping pace with the rapid changes in the digital economy.
NAME- VEDANTI BHUSHAN HATE
COLLEGE NAME- M.K.E.S COLLLEGE OF LAW, MUMBAI, MAHARASHTRA