Consumer Protection in E-Commerce

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In this blog post, Subhalagna Choudhury, a student of Department of Law, University of Calcutta, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, provides an in-depth view on consumer protection in e-commerce. 

PICTURE

Introduction

Electronic Commerce or e-commerce involves trade and transactions, the information of which is transferred through the internet. There are three types of e-commerce:

  • B2B {business to business}.
  • B2C {business to commerce}.
  • C2C {commerce to commerce}.

The concept and implementation of e-commerce came to the fore in 1999 when the OECD {organization adopted the first International Instrument for Consumer Protection for economic cooperation and development} Council in the context of electronic commerce. After an initial reviewing of their policies, recommendations were noted as to how the idea of e-commerce could be embraced.

 

Consumer Protection

A report by the Internet and Mobile Association of India has revealed that India’s e-commerce market reached USD 20 billion. The e-commerce has made a huge impact on most of the industries in India, the travel industry in particular. The other notable ones being the telecommunication industry, the online trading industry, etc. The government here has promoted e-commerce extensively, which is, in fact, a promotion of the e-consumer activities, mainly focusing on the delivery of services. However, the legal control still has to catch up with supply.consumer-protection-in-e-commerce

E-commerce being global and domestic in nature, efforts have been thoroughly made to ensure its protection. In India, the Consumer Protection Act 1986 governs the relations between consumers and the provider of services/goods. It should be noted here that no specific act regulates the online transactions. The consumer protection act has been carefully designed to muster the confidence of consumers in law and liability under this act thus arises when there is a deficiency in services or defect in goods or sometimes as the case maybe, unfair trade practices. The Consumer Protection Act specifically excludes from its ambit any service that is free of charge. Depending upon who is selling the actual goods to the consumers, liability triggers. Also, distribution of goods comes within the purview of consumer protection act. Some of the various protections under the consumer protection act on e-commerce can be listed below

  • Removal of defects.
  • Replacement of goods.
  • Return of price in case of discrepancy.
  • Discontinue any form of restrictive trade practice.

 

International Organizations

Many organizations are working for the protection of the consumers. Some of them are— Economic Cooperation and Development, International Chamber of Commerce and International Consumer Protection and Enforcement Network.

Economic Cooperation and Development {OECD}: The guidelines sanctioned after intense negotiation in the context of e-commerce, proved much helpful to the government, consumers, business and became practically feasible. They embraced flexibility in response to the development of age. The guidelines also achieved a benchmark for consumer protection in the online marketplace. They facilitate online trade, thereby not implementing any of the restrictive trade policies. Some of its universal guidelines for consumer protection in e-commerce are as follows.download-3

  • E-commerce should get an equal protection, when shopping online or when buying the same goods from a local store.
  • There should be a complete disclosure about the goods and services rendered. The e- customers should be aware of the transaction, they have consented to. They should be having a complete knowledge of what they are buying and the transaction they are dealing with.
  • The confirmation process for sale should give a fair chance to the consumer for reviewing the products that he intends to buy, in case there is any cancellation.
  • Most importantly, the system of payments must be secure and reliable.
  • In the case of an international transaction, if a dispute arises, it becomes difficult to redress. Thus Alternative Dispute Resolution system is recommended here.

International Chamber of Commerce: It was in 1996, that the organization released ‘guidelines on advertising and marketing on the internet’. The guidelines issued by the ICC were meant to be applied to all promotional activities like marketing and advertising on the internet. They set standards of ethical conduct to be observed by all involved in the above activities. Its specific objectives with respect to consumer protection in the sphere of e-commerce can be checked out at a glance:download

  • Improve and instill the public confidence in advertising and marketing via the new system.
  • To safeguard optimal freedom of expression for advertisers and markers.
  • To minimize the need for governmental legislation or regulation.
  • Meet the consumer privacy expectation.

International Consumer Protection and Enforcement Network: The ICPEAN aims to preserve and protect the interests of the consumers all over the world. It shares information about activities taking place across borders which may be of use to the consumers and promote their welfare to encourage global cooperation among law enforcement agencies.

The Okinawa Charter on Global information society addressed topical issues at length like, making use of digital opportunities, bridging the digital divide, promoting global participation. To achieve its objectives, it has set forth policies and guidelines, thus increasing access and participation in global e-commerce networks.

Following are some general principles that have been recommended and accepted universally, so as to protect the consumers in e-commerce:

  • Consumers who participate in e-commerce should be provided with transparent and effective consumer protection that is affordable for which government and stakeholders might work together.download-2
  • Businesses should in no circumstance engage in making representation or practice anything that’s misleading or works to the right of the consumers.
  • Businesses should never conceal any term or condition that might affect the consumer’s decision regarding the transaction
  • If a contract’s term stipulates the monetary damage to be furnished in the case of consumer’s violation of the contract, it should be ensured that such compensation is in proportion to the damage caused.
  • Businesses should not restrict a consumer’s ability to make negative reviews, dispute charges or file complaints with government and other agencies.
  • Advertising and marketing should be clearly identifiable as such
  • Advertised price must not hide the total cost of a good or a service
  • The payment made for the confirmation of a transaction must be clearly stated and not be ambiguous under any circumstances. Transactions in e-commerce can only process with the informed consent of the consumers.
  • Businesses should enable the consumers to maintain a record of such transaction for future use as evidence or other things, as the case maybe
  • Businesses must manage the digital security risk and implement security measures for reducing or mitigating adverse effects relating to e-commerce.

 

The Consumer Protection Bill, 2015

The Consumer Protection Bill was introduced in the Lok Sabha on August 10, 2015. The bill proposes to replace the Consumer Protection Act 1986, and this shall also incorporate e-commerce. This bill seeks to widen the ambit and modernize the law on consumer protection due to changes in the market. India is experiencing a robust growth in its e-commerce sector which has crossed 15 billion dollars. Ordinarily, any regulation is more likely to introduce complexity in the – business.download-1

It should be noted, that many e-commerce companies in India may be engaging in business malpractices and evading taxes, leading to a substantial loss of government revenue. This bill, therefore, is expected to target those aspects of e-commerce business which are unethical and also misleading to the consumers. The bill incorporates certain stringent penalties for the offenses committed by e-retailer. There is strong support for the passing of this bill and in light of modern circumstances, it seems to be an emergency. The new entrepreneurs, as well as the old ones, must understand the precisions of this bill that focuses well on the consumer protection for the internet age in India.

 

Conclusion

Technology is leaping with unmatched speed, today. As Charles Clark once remarked, ‘the answer to the machine is in the machine.’ Though trade has too lived up to this and thus started off with the idea of e-commerce, however, the review of existing legal framework shows that it has failed to address the e-commerce needs. The consumer protection act 6 does not include any service that is free of charge in its ambit. Thus an online transaction that does not charge the consumers clearly remains unprotected by the consumer protection act. Thus discrepancies and loopholes pose a huge hurdle in protecting the consumers who participate in e-commerce. Here in India, the journey has commenced undoubtedly, but it is indeed a long way to go.



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