According to the Consumer Protection (E-commerce) Rules, 2020, which was notified by the Department of Consumer Affairs on July 23, it applies to all “goods and services bought or sold over digital or electronic network” and specifies the duties and liabilities of marketplace and inventory models of online commerce.
The rules were only believed to be regulating large e-commerce marketplaces such as Flipkart, Amazon, Snapdeal and single-brand e-commerce portals such as those of H&M, Patanjali and Ikea. However, its implications on online services, either through marketplaces or inventory-led models, had been little understood.
“The rules very clearly state that this is applicable to all forms of digital transactions involving the buying or selling of goods and services,” said a senior government official. “It would be wrong to think that this is only applicable for marketplace and inventory models where there is sale of physical goods.”
While the model of online services could be a little more complicated than the ubiquitous e-retail model, the applicability of rules remains the same, the official added.
The applicability of rules on such services means ride hailing platforms such as Uber and Ola will no longer be able to charge consumers a cancellation fee even after a ride is confirmed, unless these platforms bear a similar charge in case they cancel the service on their own.
It also means that online services such as MakeMyTrip, Oyo and even online ticketing services from airlines such as IndiGo, Vistara and SpiceJet will need to establish an adequate grievance redressal mechanism.
They will also have to appoint a grievance officer, who will have to acknowledge the receipt of a consumer complaint within 48 hours and redress that within one month of receiving the complaint.
Ola, MakeMyTrip, IndiGo, Vistara and SpiceJet did not respond to ET’s email seeking comment till press time on Tuesday. Netflix and Uber declined to comment.
An Oyo spokesperson said, “We are reviewing the regulations like other hospitality chains to understand the implications on the sector.”
Atul Pandey, Partner at Khaitan & Co said the rules “are in line with what has been provided under the Press Note of 2018 which basically is the mother legislation so far as e-commerce legislation is concerned from a foreign investment perspective. This legislation by the Ministry of Corporate Affairs primarily covers everyone, and it’s applicable on both goods and services.”
In the case of online food ordering services, the individual restaurant would be considered the seller and the food as the product. In the case of ride hailing, the platforms are the e-commerce entities, while the driver is the seller or service provider offering a trip to the customer.
“We are glad that the scope has been expanded to cover all products and services sold over digital or electronic networks and hope that all digital platforms and their sellers will soon comply with them,” said Sachin Taparia, founder and chairman of LocalCircles, which hosts online communities on consumer issues in association with the consumer affairs department.
LocalCircles receives many consumer complaints beyond the e-commerce product marketplaces, especially related to online travel services, accommodation services, e-pharmacies, and other social commerce marketplaces, Taparia added.
According to the rules, e-commerce entities will need to be incorporated in India, or appoint a nodal person of contact who is resident in the country. This means platforms such as Bangood, Wish or the multitude of other overseas e-commerce firms that ship products to India will also be regulated by the new regulations.