Flash Sales Ban And Other Proposed Changes To E-Commerce Rules

The government has said it has received several complaints on the e-commerce front.

The government of India on Monday proposed several tweaks to the country's e-commerce rules to curb widespread cheating and unfair trade practices in the ecosystem. Among the changes proposed are a ban on certain kinds of flash sales and punitive action against the platform if sellers don't deliver, according to a statement issued by the Food and Consumer Affairs Ministry on Monday.

The proposed amendments to the rules aim to bring transparency, strengthen the regulatory regime, protect consumers' interests, and encourage free and fair competition, the statement said.

The government has sought views and suggestions on these amendments to the Consumer Protection (E-commerce) Rules, 2020, within 15 days (by July 6, 2021).

"Certain e-commerce entities are engaging in limiting consumer choice...wherein one seller selling on platform does not carry any inventory or order fulfillment capability but merely places a 'flash or back-to-back' order with another seller controlled by platform," the Ministry said, proposing a ban on certain kinds of flash sales.

"This prevents a level playing field and ultimately limits customer choice and increases prices."

The government's statement clarified that conventional flash sales by third party sellers are not banned on e-commerce platform.

Another change recommended is the appointment of Chief Compliance Officers, nodal contact persons for 24x7 coordination with law enforcement agencies, to ensure compliance of the Consumer Protection Act, 2019.

This would, according to the statement, strengthen the grievance redressal mechanism.

Further, a framework for registration of every e-commerce entity has been proposed. The allotted registration number shall be displayed prominently on the website as well as the invoice of every order, it says.

This "would help create a database of genuine entities and ensure that consumers are able to verify its genuineness before transacting".

"Mis-selling has been prohibited. That is, selling goods and services...by deliberate misrepresentation of information..." the Ministry said in the statement.

To ensure that consumers are not affected when a seller fails to deliver goods or services due to negligent conduct, provisions of fall-back liability for every marketplace e-commerce entity have been provided.

The rules were notified with effect from July 23 last year for the purposes of preventing unfair trade practices in e-commerce.

"However, since the notification, the Government has received several representations from aggrieved consumers, traders, and associations, complaining against widespread cheating and unfair trade practices being observed in the e-commerce ecosystem," the statement said.

"Prevalence of such unfortunate incidents has negatively impacted the consumer and business sentiment in the market, causing immense distress and anguish to many," it said.

The proposed amendments are available on the website of Department of Consumer Affairs. Comments and suggestions may be sent to js-ca@nic.in July 6, 2021.