For Consumer, a bad bargain

Source: Indian Express  

Synopsis:

Drafted in the name of consumer interest, the proposed e-commerce rules shield vested interests. The rules are marred with multiple issues which may do more harm than good. They seem to create an adverse environment for the inflow of capital in the country, which is in dire need of capital.

Background:
  • The government has proposed changes to the e-commerce rules under the Consumer Protection Act. The objective is to ensure greater compliance and protect the interests of consumers.
  • However, as per some experts, the rules have not given due respect to augment and strengthen consumer welfare.
  • The rules are driven more by the desire to shield the traditional brick-and-mortar stores, and handicap e-commerce firms, especially the foreign ones. They seek to deepen, not paper over, existing fault lines. 

About the Draft Consumer Protection (E-Commerce) Rules, 2020

Issues associated with rules:
  • First, the imposition of the fall-back liability clause on foreign players is unjust. FDI is permitted only in the marketplace model and not the inventory model. 
    • Under this framework, e-commerce platforms don’t hold inventory, but simply connect buyers and sellers.
  • Second, the rules mandate that none of the platform’s related parties can sell directly to the consumer through the platform and also forbid flash sales. However, both of these, adversely impact consumer choice and price.
  • Third, the country of origin filter and suggestion of domestic alternatives is a push towards Make in India. However, the interests of consumers, not domestic manufacturers, should be at the core of the consumer protection framework.
  • Fourth, there are issues of overlapping/competing jurisdictions. 
    • The rules restrain e-commerce firms from making “available any information pertaining to the consumer, to any person, without the consumer’s consent.
    • Therefore, the rules give a competing jurisdiction to the Consumer protection authority for the protection of personal data. However, this domain should be ideally dealt with by the data protection authority.
    • Similarly, the rules also state that e-commerce entities are prohibited from abusing their dominant positions in the market. 
    • For this purpose, the “abuse of dominant position” has been given the same meaning as that prescribed under Section 4 of the Competition Act, 2002.
    • This may induce consumer protection authority to intervene in the jurisdiction of the Competition Commission of India.
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