What to do when e-commerce websites refuse to pay a refund

March 03, 2021

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This article is written by Gitika Jain pursuing BBA.LLB(Hons) from Amity University, Kolkata. This article deals with the process after e-commerce websites refuse to pay refunds.

Table of Contents

Introduction

Broadly speaking, e-commerce stands for Electronic Commerce which means that the buying and selling of goods or services or any other commercial transactions take place electronically on the internet. The first-ever example of an online sale that took place was on 11th August 1994 where a man sold a CD through his website NetMarket to one of his friends in America. Today E-Commerce has helped millions of sellers to expand their markets by selling their products online at a much larger scale which was next to impossible with the traditional go and buy retail market. Today E-Commerce is an industry worth 27 trillion dollars. Needless to mention, Amazon, Flipkart, Myntra, Shopclues are some of the E-Commerce websites in India.

Types of e-commerce models

In a nutshell, we mention the four main types of e-commerce models and exemplify them below:

Business to a consumer, for example, when you buy a t-shirt from Myntra.
Business to business, for example, a transaction that takes place at the wholesale level.
Consumer to consumer, for example, where you sell your old furniture at Quikr.
Consumer to a business model, for example, an artist makes a logo for a business against a fee.

Laws governing E-Commerce

Consumer Protection Act, 2019.
Information Technology Amendment Act, 2008.
Rules and regulations laid down by regulatory bodies, for example, the Indian Medical Association (IMA) regulates the promotion and advancement of medical Sciences and the improvement of Public Health and the well-being of the community at large.

Refund and cancellation policy

Cancellation means that the customer is returning a product purchased from an e-commerce website. The reasons could be bad quality or defective product items which do not meet the specifications as shown on the website at the time of purchase or it could be even that you got the same product with same quality elsewhere at a cheaper price.

Refund policy means that a customer who is dissatisfied with the good or service purchased can return the product and claim a refund for the amount charged at the time of purchase. In some cases, there is a time limit beyond which the customer cannot return the product, for example, 7 days or 40 days from the date of delivery of the product.

Consumer Protection Act, 2019 and refund policies

Some terminologies as defined in this Act

Consumer means a person who buys any goods for consideration but does not include a person who purchases such goods with the purpose of reselling them.
Consumer goods mean a product which is purchased by the consumer for the purpose of consumption.
Durable goods are the goods that are disposed of after their useful life which is more than 2 years for example refrigerators, laptops, television, etc.
The manufacturer is the person who manufactures goods.
A retailer is a person who sells the goods to two individuals or end-users either in the traditional outlets or online.
Semi-durable goods are goods that are neither durable for a long time nor perishable in a very short period of time for example clothes, furniture, preserved food etc.

The new Consumer Protection Act, 2019 comes up with new rules and regulations. Under this act Central Consumer Protection authority would be established to protect the rights of consumers. Under these rules, the seller cannot say no for taking back defective or late delivered goods or if the goods do not meet the specifications described on the website.

The Act provides:

The right to return any semi-durable or durable goods purchased without any cost within 15 days of the purchase provided that they remain in their original condition without any alterations in its shape or size and shall be returned in its original packing.
The removal of the slogans of no refund or no replacement instilled displaying the right of consumers for free return.
The guarantees to come with the purchase of the goods itself and the supplier cannot clean any extra charges from the consumer for receiving any guarantees.
The consumer has returned defective goods and can send it back to the wholesaler of the manufacturer from whom he had received the goods.
The consumer can seek help from the consumer disputes redressal forum or the state consumer protection council or the Central Consumer Protection Council for the redressal of his grievances.
The Central Consumer Protection Council should be held responsible for implementing the provisions and rules of the Consumer Protection Act.
The Central Consumer Protection Council should maintain our website for tracking the complaints at district, central and state levels including the details of the type of the products and the type of refund as well as the status of the refund.
The burden of establishing authority for the implementation of this act is with the authorities under the Consumer Protection Act and not with the central or state government.

The basic differences or amendments that are put forward in the Consumer Protection Act

Regulator: There was no distinct regulator under the Consumer Protection Act, 1986 whereas CPA, 2019 provides for the Central Consumer Protection Authority to be formed to regulate the matters relating to the return of goods.
Consumer court: The complaint is how to file the case in a court where the defendant sellers office is located but in CPA, 2019 the case has to be filed in a court where the complainant resides.
Product liability: No provision is provided under the CPA, 1986 and consumer had to move to a civil court but could not move to consumer court whereas under CPA, 2019, the consumer can ask for compensation for the harm.
E-Commerce: CPA, 1986 did not cover products sold over the internet that means E-Commerce whereas under CPA, 2019 all the rules of traditional buying and selling apply to e-commerce.

Information Technology Amendment Act, 2008 and e-commerce

E-Commerce helps to eliminate the use of pen and paper and pave the way for Digital transactions. Thus, writing and signatures can no longer serve as legal recognition. In such a situation there is a need for legal changes to be introduced in e-commerce. This act has a vast influence on the legal infrastructure and the rules and regulations for the smooth functioning of the E-Commerce industry. With a view to protecting the privacy and security concerns of the consumers, the establishment of such an act was necessary. This act provides for the collection storage and sharing of the personal data of the visitors of an E-commerce website.

Objectives of the Act

Providing legal recognition for online transactions In the E-Commerce business, in place of the pen paper-based methods, facilitating digital signatures for the verification of any information:

To whom is the feeling of documents in the government departments.
To facilitate the storage of data in electronic form.
To facilitate the transfer of funds between banks and other financial institutions securely and fastly.
To facilitate the maintenance and storage of the books of accounts in electronic format.

Why have a policy

The following three legal agreements must be present in every commerce business.

Return/cancellation and refund policy

This agreement is necessary for a customer to inform him about the return and refund policies following the purchase of a good.

Terms and conditions

This agreement lays down the guidelines for a customer using the website to make a purchase. The terms of services are binding on the parties involved.

Privacy policy

The privacy policies include the type of information that the company collects from the customers, the purpose of collecting such data and the rules regarding the sharing of such information. This agreement is mandatory to be provided by the business under the technology and Amendment Act 2008 and Information Technology Rules, 2011.

Contents of a return and cancellation policy

Typically a return and refund policy should include the following key points:

Whether the return of a product or its replacement is allowed or the information relating to the guarantee or warranty of the product.
The time period before with the customer has to place the request for it on or exchange of the product.
The list of all the products that are exempted from returns or exchanges. Generally this happens for some products that are sold at offers or discounts. Clearly state the requirement that the customers need to meet for being eligible for initiating the request of refund or replacement.
In some cases, the shipping charges at the time of return have to be borne by the customer if this is so that the details regarding the same should be put into the exchange policy.
The form of money in which the company will refund the cost of the product to the customer for example cache or the value is stored in a shell created for the customer which can be used for purchasing other products and also the time frame for which the money in the Shell can be used.

Examples of refund and cancellation policy adopted by various e-commerce business websites

Amazon: Amazon manages a dashboard for its customers where they can see the returns, refunds and exchange status of the products purchased or returned by them. Some office products can be returned by raising the ticket while some cannot be returned and some products can be exchanged for other products.

Flipkart: Flipkart allows its customers to return damaged products that do not match the specifications asked by the customers. A time frame of 10 to 30 days is provided within which the customer can replace the product. The responsibility of taking the product away from the customer is taken up by Flipkart but the cost has to be borne by the customer.

Jabong: Jabong has a return and replacement policy where the refund is initiated within 7 days of the cancellation based on the condition of the returned goods. If any customer wants to cancel an order of product all together, then he has to do so before the selling of the item. Some items like CD’s, books, and cosmetics cannot be returned and the customer has no right to claim a refund on goods.

Myntra: Myntra allows for return and cancellation of its products provided the product is returned in its original form in regard to the packing tags and bills and the said item has to be exchanged within a period of 30 days after the receipt of the goods. The amount is put into the wallet of the customer associated with the Myntra account he holds which we can use to make purchases later on.

What if the E-Commerce platform refuses to refund

If you have paid for the online purchase via credit card and the time frame for the refund has not yet elapsed then you can ask the credit card company to take your money back on your behalf. This is known as chargeback.
You can write emails rather than calling the providers of the product as the written document is considered more authentic and can easily be used to file a case against the supplier in the consumer court.
If you don’t get your grievances resolved the last option is to move to the consumer forum or the consumer court and file a case against the supplier.
Decide upon whether it is the E-Commerce company or the supplier that is at fault and take the actions appropriately. In case of a damaged product, it eventually becomes the liability of the supplier to give you your money back.

References

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