E-Commerce Principles for Self-Governance in the Works

To promote transparent operations and protect consumers, principles and guidelines for e-commerce self-governance are currently in the works. Public comments on the draft released by the Bureau of Indian Standards (BIS) are sought by February 20.

This draft lays down principles specific to the transaction stage (pre-transaction, contract formation, and post-transaction) as well as general principles of self-governance.

The pre-transaction stage starts from the moment when a customer begins to browse through a website or an online store. During this stage, e-commerce entities have to ensure that a process for diligent and vigorous KYC of all business partners, especially third-party sellers and service providers is in place. They also have to ensure that sellers provide the necessary details, and that the products listed on the platform have detailed information to enable the consumer to assess the product’s utility, features and cost. The guidelines emphasise the importance of disclosure of relevant information including return or refund policies, safety warnings, customer reviews and ratings, terms of delivery, etc. on the website or app.

In terms of contract formation, the guidelines stress the need for explicit consumer consent for the purchase of goods or services. E-commerce platforms are required to ensure that consumers can review transaction details, including total costs and additional charges, at the “confirmation point” before final payment. A transparent process for cancellations, returns, replacements and refunds is envisaged. This process is to be published on the website for ease of access. Also, refunds in relation to cash-on-delivery transactions must be handled in accordance with customer preferences.

Once a transaction has been completed, the post-transaction principles focus on safeguarding consumer rights through clear timelines for refunds, replacements, and exchanges, with additional provisions for counterfeit products. E-commerce platforms are required to ensure that the redressal of consumer grievances or disputes is in accordance with the procedure provided under the Consumer Protection Act, 2019, and related rules. Platforms must also implement timely delivery notifications, even if the delivery is being facilitated by a third-party delivery service provider.

The general principles of self-governance are as follows:

1. Prohibition on sale of banned products – E-commerce platforms must ensure that sellers do not sell banned goods. Platforms must conduct thorough KYC checks and actively monitor product listings. Clear reporting procedures should be in place for violations of these rules.
2. Compliance with data protection laws – Platforms must ensure that personal data is used only for transaction-related purposes and they must take measures to prevent the misuse of customer data.
3. Express consent for non-transactional communication – All non-transactional communications (e.g. marketing messages) must have categorical consumer consent, with options to opt out of such communications.
4. Treat all sellers equally and adopt fair business practices – Preferential treatment cannot be extended to a seller or service provider. E-commerce marketplace platforms cannot classify sellers or buyers into categories unless there is a reasonable, transparent and non-arbitrary parameter for it.
5. Adopt measures to prevent counterfeiting– Platforms should provide mechanisms for rights owners and consumers to report counterfeit products and they must have systems in place to investigate such violations.
6. Avoid making misleading claims– Platforms should avoid making misleading claims about product quality and disclose their relationship with sellers when advertising products.
7. Adopt fair and transparent practices – Platforms must not coerce consumers into transactions or bundle unrelated services, ensuring consumer choice remains paramount.
8. Clear advertisements – Advertisements must be clearly marked and distinguishable from other content to prevent consumer confusion.
9. Fair and correct representations – Sellers must provide accurate descriptions and content for their products, with e-commerce platforms regularly reviewing compliance.
10. Authenticity of consumer reviews and ratings – Platforms should uphold standards to ensure that consumer reviews and ratings are authentic and reliable.