E-commerce/ online aggregators: Implications under the new (Indian) Consumer Protection Act, 2019

The Indian consumer protection framework received a much-needed overhaul with the Consumer Protection Act, 2019 (“COPRA”) receiving the presidential assent on August 9, 2019. The new COPRA will set up a new consumer grievance redressal body known as the Central Consumer Protection Authority, invested with wide-ranging powers, including search, seizures and summons and seems a step towards aligning Indian consumer protection laws with the global developments in this space.

Whilst hitherto e-commerce platforms/ online aggregators had the “intermediaries” defence, a key change has been to include such intermediaries under COPRA!

Even though COPRA broadly retains the definition of who is a ‘consumer’ (from the 1986 Consumer Protection Act), it has introduced a new ‘explanation’ providing that when a consumer ‘buys any good’ and ‘hires or avails of any service’ this includes “online transactions through electronic means…”, potentially bringing e-commerce platforms/ aggregators within the new COPRA.

‘E-commerce’ is defined as “buying and selling of goods/ services, including digital products over the digital/ electronic network” and an ‘electronic service provider’ means “a person who provides technologies/ processes to enable a product seller to engage in advertising/ selling goods/ services to customer and includes online market place.”

Hence, potentially not just online marketplaces, but other digital aggregators may also come within the purview of the new COPRA going forward. Absent a carve-out for online aggregators, this is likely to raise multiple interpretations as regards the applicability of the new COPRA for the digital industry and is one more step towards “tech-regulation” by the Indian Government. Potential issues could range from the applicability of COPRA to offshore online aggregators available to consumers in India, extra-territorial application, enforcement issues and a potential “nudge” in future towards “onshoring” of operations/ entities, as has happened with the new Indian IT Intermediaries Regulations, proposed e-commerce policy (framed by DPIIT earlier this year), RBI OPGSP Guidelines, etc.

COPRA has also introduced the concept of ‘product liability’, defined as “responsibility of a product manufacturer/ seller (including electronic service providers), of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in service”. It would be interesting to assess the implications of the above on e-commerce platforms, adding another layer of compliance for them.

COPRA also requires electronic service providers to provide the District Consumer Disputes Redressal Commissions with documents, information or records in relation to any complaint received regarding any goods or services, including unfair trade practices (which covers sharing of personal information given by the consumer in confidence) alleged by consumers.

All notices under COPRA maybe served on an electronic service provider at the address provided by it on an electronic platform from where the services are provided. It is the duty of an electronic service provider to designate a nodal officer to accept and process the notices received under COPRA. Though there is no requirement for such “nodal officer” to be physically located in India, similar to what’s prescribed under the IT (Intermediaries Guidelines) Rules, this issue is likely to come up in future.

Under the new COPRA, the Central Government can introduce rules/ notifications to prevent unfair trade practices in ‘e-commerce’ space, i.e. retaining flexibility to issue “bespoke” rules in future aimed at e-commerce platforms/ aggregators (covering both goods and services) from a consumer protection standpoint.

Though the new consumer law in India is a positive step and in line with the needs of the “digital consumer”, certain aspects there open the Government to allegations of over-legislating, especially in the tech/ e-commerce space, and retaining “broad-brush” powers for issuing delegated legislation (i.e. rules/ notifications) in future in the name of “consumer protection” and it would be interesting to see how the new law is applied in the digital and emerging-tech space.

Authors:

Anu Tiwari, Partner
Aditya Alok, Senior Associate

Date: August 19, 2019