E-commerce industry welcomes new draft guidelines as consumer complaints touch record high

In the period from April 2018 to March 2019, e-commerce sector recorded over 1 lakh complains on NCH, and in the overall period from August 2016 to May 2019, the sector registered 18 percent of all complaints, according to data received from sources working with the National Consumer Helpline.

In comparison, sectors such as banking saw 56,000 complaints from April 2018 to March 2019, while DTH (direct-to-home) saw 25,000 and consumer durables saw over 20,000 complaints.

In fact, e-commerce complaints stood higher than even the dockets received under 'general enquiries', wherein consumers reach out with enquiries on brands and products etc.

E-commerce's share in the pie of consumer complaints is only growing. In June 2019, e-commerce accounted for 23 percent of 64,643 complaints received while banking got 10 percent, telecom 7 percent and 'other sectors' cumulatively accounted for 19 percent of the complaints.

While the number of complaints may seem small in comparison to the average 1.2-1.3 million e-commerce shipments that are done on a daily basis by the sector, it highlights the increasing disgruntlement among e-commerce consumers as more people embrace digital technologies and shop online.

It also reflects poor consumer grievance redressal mechanism of e-commerce platforms, which is forcing consumers to approach the National Consumer Helpline.

The common complaints of e-commerce users revolve around counterfeit products, manufacturing defects, late deliveries, payments, product returns etc.

These complaints have triggered the consumer affairs ministry to put out draft guidelines for e-commerce for consumer protection. The draft guidelines were put up on August 5, and the ministry is seeking stakeholder feedback by September 16.

"The top consumer concerns with e-commerce sites raised in the consumer affairs LocalCircles community have been on counterfeit products, seller-influenced reviews and ratings, and lack of information disclosure by the platform," said Sachin Taparia, founder of community platform LocalCircles.

"These inputs have been used to form the consumer protection e-commerce guidelines and once addressed will lead to increased consumer trust in e-commerce sites and the growth of the sector as a whole," Taparia added.

The new guidelines aim to deter unfair trade practices and establish liabilities for marketplaces and sellers while ensuring transparency and safety for consumers.

Some of the important draft guidelines entail that marketplaces will have to display terms of contract with the sellers and will need to provide details about the sellers, including identity of their business, legal name, address, name of website, e-mail address, contact details, etc.

Sellers will also have to display single-figure total and a break up price for the goods or service, that includes all compulsory charges such as delivery, postage, taxes and handling and conveyance charges.

E-commerce entities will also have to ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics.

The guidelines focus on grievance redressal mechanisms and seeks that e-commerce platforms share the name of the grievance officer and their contact details as well as mechanism by which users can notify their complaints about products and services availed through their website.

E-commerce companies will also have to provide a mechanism or system to converge with National Consumer Helpline in the grievance redress process.

Several industry members have asked for a tech integration of their independent consumer complaint database and the National Consumer Helpline in order to maintain one database.

The guidelines also seek to ensure that e-commerce entities do not directly or indirectly influence prices or use unfair trade practices for pushing sales and that they face secondary liability if the company makes an assurance vouching for the authenticity of the goods sold on its market place.

These guidelines would be further strengthened by the Consumer Protection Bill passed in Parliament this week, which will give the consumer affairs ministry powers  to regulate the e-commerce sector. The Bill will also see a central consumer protection authority be set up as regulator for both offline and online consumers.

The e-commerce industry says this is largely a positive move. According to community platforms such as LocalCircles, which has conducted several surveys on the issue of ecommerce complaints, the guidelines would help create consumer trust.

In surveys conducted by the platform, consumers have said that e-commerce companies should respond strongly to issues of counterfeit and blacklist sellers involved and that providing seller details would also help address the problem. Consumers have also been demanding that e-commerce sites have filters to find authorised sellers of products and that the platforms also ensure they publish ratings for products even if they are negative.

Members of leading e-commerce companies said that they welcomed the move to make the consumer more aware and protect their interests, but added that this could lead to increase in compliance and hence also push up costs. The main challenge for e-commerce companies currently is that several government departments are now looking to make regulations for the sector, the executives said.

"Overall, the guidelines will be good for the sector since there will be a structured mechanism for consumer complaints," an executive of an e-commerce firm said, requesting anonymity. "We are still studying what kind of liabilities this will bring on e-commerce companies."

Seller bodies such as the All India Online Vendors Association (AIOVA) welcomed the move to regulate e-commerce to protect consumers.

"These clarifications weed out all the grey area especially on the role of intermediaries," an AIOVA spokesperson said. "There is room for strengthening the guidelines, and we shall also be seeking leniency for e-commerce websites run by MSMEs