Consumer Affairs Ministry Tightens Rules In Problem For Amazon, Flipkart
A customer shops for online- only brands of grooming products. (Source: BloombergQuint) 

Consumer Affairs Ministry Tightens Rules In Problem For Amazon, Flipkart

The Consumer Affairs Ministry is proposing a series of amendments to consumer protection rules that forbid e-commerce firms like Walmart Inc.-owned Flipkart and Inc. from flash sales, and increase their liabilities for unfulfilled orders.

The rules are part of a 14-page draft consumer protection amendments published on the Department of Consumer Affairs website late on Monday evening. The department has invited feedback till July 6.

With the proposed amendments, the government said it aims to bring transparency in e-commerce platforms and further strengthen the regulatory regime to curb prevalent unfair trade practices.

Among the key guidelines are that no e-commerce entity shall organise a flash sale as they limit consumer choice.

Related Parties

The rules also try to put an end to related party sellers, and have asked e-commerce firms to ensure none of its related parties are listed as sellers for sale to consumers directly.

The ministry said companies will be termed related parties if they have 10% or more common ultimate beneficial ownership. “Enterprises will also be considered related to each other through a common chain of directors or managing partners, shareholders, where such shareholders hold not less than 5% of the shareholding in the related enterprises,” the draft said.

E-commerce firms that cross-sell goods and services are also obliged to provide adequate disclosures to the users.

The e-commerce entities are also asked to ensure appointment of chief compliance officer, and a nodal contact person for 24*7 coordination with the law enforcement agencies. Besides the e-commerce firms will also appoint officers to ensure compliance of the orders and a resident grievance officer for redressing grievances of consumers on the e-commerce platform.

Other Amendments

  • A marketplace e-commerce entity shall be subject to a fall-back liability when a seller registered on its platform fails to deliver the goods or services ordered by a consumer due to negligent conduct which causes loss to the consumer.
  • No marketplace e-commerce entity shall advertise a body of sellers for the purpose of subsidising a sale on its platform.
  • E-commerce firms to ensure consumers are aware about the expiry date of the products and all inventory e-commerce entities to provide best before or use before date to enable consumers to make an informed purchase decision.
  • To ensure domestic manufacturers and suppliers get a fair and equal treatment on the e-commerce platform, e-commerce firms to incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives to ensure fair opportunity to domestic goods.
  • E-commerce firms operating in India will also have to register under the Department for Promotion of Industry and Internal Trade.
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