Online Shopping and Consumer Protection in India

Eira Mishra

Recent years have seen an exponential growth in the domain of online shopping in India. Several etailers have made available a magnanimous array of products at your mouse click. Consumers have increasingly taken to this trend as is evident from the growth this sector has witnessed. Comparing products and prices was never this convenient. This brings forth the query whether customers of online shopping are adequately protected under Indian law. A new medium brings with it new risks which need to be accounted for and addressed in national laws.

Misusing information for marketing purposes, fraudulent activities, information theft are only a few examples of the threats that consumers face every time they decide to go shopping online. Apart from these, there are several reported instances where the online retailer delivered damaged goods, wrong product or no product at all.

In 2014, the Government of India took notice1of the growing instances of fraud/cheating in e-commerce and initiated the process of amending the Consumer Protection Act, 1986 to incorporate provisions addressing the issue. They rejected the possibility of enacting a separate statute to deal with the problem and instead decided on amending the act itself. The new law was envisioned to include within its ambit not only vendors selling products online but also online marketplace providers such as Flipkart, Amazon or Jabong2.

Jurisdictional Concerns

A court needs to have jurisdiction over the parties involved in the dispute, and also territorial jurisdiction over the matter. The determination of territorial jurisdiction becomes a tricky affair in case of online shopping due to the ubiquitous nature of the technological space in which it operates.

Under the current Act, a consumer can initiate legal action against a seller only at the place where the transaction was carried out. However, to account for online shopping, the government has proposed an amendment whereby ‘territory free’ legal action can be initiated against any etailer or online marketplace provider. This has been proposed by addition of explanation 2 to the definition of consumer under Section 2(1)[d]3of the act which includes shopping through electronic means and teleshopping under its ambit.

Introduction of Mediation

The process of mediation has been proposed to be incorporated in the Consumer Protection Act, 1986 by insertion of Section 2(1)[ja]4. A mediator may be appointed by the National, State or District Forum to mediate the complaint or appeal between the parties as provided under Chapter IV of the Consumer Protection Act, particularly through:

  • Facilitation of discussion between parties directly or by communicating with each other through the mediator,
  • assisting parties in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise, generating options in an attempt to solve the dispute; and emphasizing that it is the parties’ own responsibility for making decisions which affect them.

Exemption to Electronic Intermediary

The proposed amendment further introduces Section 2(1)(r) to the Act which states that an electronic intermediary shall not be said to have engaged in ‘unfair trade practice’ if it facilitates, and to the extent it facilitates, the manufacturer, trader or other persons who uses such electronic intermediary for advertising, selling or providing of goods or services. Thus, mere facilitation of trade online does not impose liability on an e-marketplace provider in case the trader indulges in unfair trade practises.

Conclusion

The online shopping business is only set to expand in the future. According to a recent report5, India will account for one of the world’s largest middle class consumer market by 2017, an estimated aggregated consumer expenditure of US$60 billion. The proposed amendments aim to bring India’s consumer protection regime more in consonance with technological advancements occurring in the shopping space. These would reinforce consumers’ belief in the protection awarded and remove discrepancies when one wishes to initiate action against malpractices by online traders.

The proposed amendments can be accessed at the Official Website of Department of Consumer Affairs under the Ministry of Consumer Affairs, Food & Public Distribution

  1. Government to Amend Laws to Protect Online Shoppers, NDTV, December 12, 2014, available at http://www.ndtv.com/india-news/government-to-amend-laws-to-protect-online-shoppers-712140. []
  2. Deepshikha Sikarwar, Consumer Protection Act may get more teeth; new law may help you sue online retailers from your city, ET Bureau Oct 31, 2014, available at http://articles.economictimes.indiatimes.com/2014-10-31/news/55631261_1_new-law-flipkart-consumer-protection-act. []
  3. Explanation 2: For the purposes of this clause buying of goods, hiring/availing of services is inclusive of the transaction made through any mode, inclusive of but not limited to offline, online through electronic means, teleshopping, direct selling etc. []
  4. 2(1)(ja)mediation’ means the process by which a mediator appointed by the National Forum or a State Forum or a District Forum, as the case may be, mediates the dispute between the parties to the complaint/ appeal by the application of the provisions of Chapter IV of the Consumer Protection Act, and in particular, by facilitating discussion between parties directly or by communicating with each other through the mediator, by assisting parties in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise, generating options in an attempt to solve the dispute and emphasizing that it is the parties’ own responsibility for making decisions which affect them. []
  5. Available at http://www2.deloitte.com/content/dam/Deloitte/in/Documents/consumer-business/in-cb-online-retail-in-india-clicking-towards-growth-noexp.pdf []

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