Govt Will Ban ‘Flash Sales’ On Amazon, Flipkart; Ranking Of All Products Sold Online?

Every e-commerce entity looking forward to operating in the Indian space will need to register with the Department for Promotion of Industry and Internal Trade
Every e-commerce entity looking forward to operating in the Indian space will need to register with the Department for Promotion of Industry and Internal Trade

After introducing major changes in the IT Rules for social media platforms operating in India, the Union Government has now proposed sweeping changes to the E-commerce rules in the country, namely India’s Consumer Protection (E-Commerce) Rules, 2020.

Some of these proposed changes include appointment of grievance and compliance officers, complete transparency and disclosure of imported data to the customers, and a fairground for advertisement and promotion of domestic and international goods/services, among others.

A feedback on all the proposed changes/rules implied is looked upon from the public by the Department of Consumer Affairs, by July 6.


What are the Changes/Rules Proposed in E-Comm Space?

Registration & Data Transparency

  • Every e-commerce entity looking forward to operating in the Indian space will need to register with the Department for Promotion of Industry and Internal Trade (DPIIT).
  • They will have to ensure that the registration number generated in addition to the invoices of everyday orders must be displayed prominently on the platform, in a manner that users can coherently access them.
  • E-comm entities will not be allowed to display/promote any advertisement which could mislead the audience.

FairGround for Competition & No Flash Sales

  • E-comm entities will need to rank the goods on their platform so that the ‘ranking parameters’ do not discriminate against domestic goods and sellers.
  • The rule for no misleading/mis-selling activities to promote select goods/services on these platforms, will be given high priority.
  • In case of cross-selling (or selling an additional product/service to an existing customer to increase revenue/sale of any product), the platform will have to provide ample amount of data regarding this entity/product.
  • Entities will strictly prohibit form the act of manipulating search results/search indexes.

“It cannot allow the usage of the name of the brand associated with that of the marketplace e-commerce entity for promotion or offer for sale of goods or services on its platform in a manner so as to suggest that such goods or services are associated with the marketplace e-commerce entity”, read the statement.

  • While listing imported goods, entities will have to disclose/list the name and details of the importer, country of origin, provide an added filter for such products, and add a notification panel for the availability of such goods at the pre-purchase stage.
  • Additionally, the companies will also have to suggest alternatives for these products, to offer a fair opportunity for domestic goods.
  • E-commerce platforms will no longer be allowed to organise flash sales of goods/services so that no one gets a dominant position over the other.
  • Instead, platforms will need to provide clearly mentioned sponsored listings.

Grievance Redressal System

  • E-commerce entities will have to put into place an ‘adequate grievance redressal mechanism’ to address all such issues.
  • Appointment of a grievance officer and their details must be added on the e-comm entity’s website.
  • Similarly, appointment of a compliance officer to be looked upon, to ensure proper compliance with the said rules. 
  • The officer ‘shall be liable in any proceedings relating to any relevant third-party information, data or communication link made available or hosted by that e-commerce entity where he fails to ensure that such entity observes due diligence while discharging its duties under the Act and rules made there under’.

Who Can be Appointed as the Chief Compliance Officer?

As per the rules, the said Chief Compliance Officer will have to be appointed from a senior official who is a resident of India. 

Besides, a nodal officer will also have to be appointed, who will be responsible for 24×7 coordination with law enforcement agencies and officers, to ensure smooth compliance of the law.

No liability under the Act or rules will be imposed without the e-commerce entity being given a chance to be heard.

Liability for Incomplete Orders and More

  • In case of an unsuccessful delivery made by a seller under the clause of ‘negligent conduct or omission’, the e-commerce entity will be liable.
  • Entities will not be allowed to make use of the collected information for unfair advantage of related parties and associated enterprises. 
  • Additionally, related parties and associated enterprises will not be allowed to be listed as sellers to sell directly.
  • A related entity is an enterprise/seller with at least 10% stake in the company.
  • E-commerce entities cannot sell goods to those registered as a seller on the platform, and cannot “advertise a body of sellers for the purpose of subsidizing a sale on its platform”.

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