Determining that India’s e-commerce rules need to be consumer-centric, CAIT suggested that platforms have a customer care facility, display the search algorithm to consumers, and more.
Transparent operation of e-commerce platforms, eEasy accessibility and appropriate resolution of complaints by e-commerce companies, non-discriminatory access to marketplace platforms for all parties involved and avoidance of conflicts of interest between marketplace platforms, sellers and various service providers on the platform are the four key points that the Bund of All India Traders (CAIT) in their Feedback to the government on the proposed changes to e-commerce rules highlighted as paving the way for a “robust and dynamic regulatory framework”.
The government proposed changes on June 21st that will give the existing consumer protection (e-commerce) rules more teeth in 2020. The proposed changes include, among other things, new rules against the abuse of FDI regulations, the establishment of a complaint procedure, new display and labeling criteria for foreign goods, the ban on flash sales, advertising restrictions, and liability for recidivism. The final day to provide feedback on these proposed changes was July 21st.
Read: Summary of Proposed Changes to Ecommerce Rules, 2020
Why is that important? CAIT has loudly criticized the current e-commerce and FDI regulations. It has been repeatedly alleged that platforms such as Amazon and Flipkart abuse FDI regulations and employ anti-competitive practices such as deep discounts and predatory pricing that harm both offline retailers and smaller sellers on the platform. His comments on the proposed changes not only indicate what the organization thinks of the proposed rules, but could also affect the outcome of the final version.
“The draft rules will destroy some companies’ dreams of becoming a new version of the East India Company and will put an end to the buddy capitalism that exists in India’s current e-commerce landscape.” – CAIT in a press release
Suggestions from CAIT
CAIT stated that India’s e-commerce industry is expected to reach $ 200 billion by 2026 consumer-centric. In addition to building consumer confidence, the government must also motivate smaller retailers and MSMEs to adopt e-commerce, CAIT said. The federal government provided the following four key factors to achieve these two goals:
Transparent operation of e-commerce platforms
- Disclosure of full terms and conditions between the platform and the sellers: Calling transparency the “hallmark of any business activity”, CAIT stated that e-commerce platforms must disclose the full terms and conditions between the platform and the sellers registered on it, including the criteria for any discount.
- Provide complete information to consumers during the pre-purchase phase: CAIT demanded that e-commerce platforms must disclose all information about the sellers and products in the pre-purchase phase to the consumer.
- Disclose search algorithm: CAIT added that platforms need to transparently display the search algorithm to consumers so they can make informed decisions.
The proposed changes cover the points above, but CAIT has proposed that the wording of Sections 6 (3) (a), (b), (f), (g) and 6 (4), 8 (1) (f ) to revise rules to further strengthen them.
Easy accessibility and adequate complaint resolution by e-commerce companies
- Customer care facility: While CAIT stressed that it supports the complaint mechanism proposed in the draft regulation and the mandatory registration with DPIIT, it pointed out that many e-commerce platforms do not have customer care numbers that consumers can call in case they encounter problems such as late deliveries, defective products, Sales service, cancellation, etc. CAIT has proposed changes to Clauses 6 (3) (b) and 8 (1) (f) to address this.
Non-discriminatory access to the marketplace platform for all actors in the value chain
- Sellers must have a choice between logistics and payment providers: Sellers on a marketplace e-commerce platform must have non-discriminatory access to their selection of logistics service providers and payment gateway providers, CAIT suggested.
- Sellers must have non-discriminatory access to customers and vice versa: “Every seller must have non-discriminatory access to every customer and every customer must have such access to every seller on the platform,” explained CAIT.
- The differentiation must be made for compelling reasons: CAIT argued that platforms “must not create discrimination under the guise of differentiation and any differentiation so created must be based on reasonable grounds and not be arbitrary”.
- New rules to prevent preferred sellers, preferred logistics partners and payment gateways: CAIT has proposed new rules that will prevent marketplace entities from creating preferred sellers, preferred logistics partners, and preferred payment gateways. The Confederation said these rules will help prevent practices such as predatory pricing, deep discounts and capital dumping.
- Sellers in the same category must receive the same treatment: CAIT has suggested that sellers of the same category have the same terms and conditions, fees, discounts, etc. marketplace entity. ”CAIT has also urged that no e-commerce company should be given preferential treatment and that all e-commerce platforms make information such as seller fees public must disclose on the platform so that sellers can make informed decisions. CAIT has proposed to amend rule 6 (4) to take these suggestions into account.
- Marketplace platforms should not be allowed to offer third-party services: CAIT suggested that e-commerce platforms in the marketplace should not be allowed to offer third-party services such as logistics (delivery, storage) and payments. According to CAIT, if affiliated parties of the e-commerce platforms offer these services, they should publish transparently on the platform:
- the terms and conditions for such services
- the shipping costs, storage fees, fees for payment services, etc.
- all other commercial terms.
- Enable smooth third-party integration: CAIT argued that e-commerce platforms “should allow easy and smooth registration of all warehouse service providers, logistics service providers and payment service providers through a transparent and non-discriminatory agreement and publish the APIs for quick integration into the platform so that sellers can use theirs on the platform Select service providers transparently. ”CAIT has proposed to enact a new rule along with an amendment to rule 6 (5) to make this possible.
- No service provider should be rejected: E-commerce platforms may not refuse a service provider to register for the provision of services.
“These changes will put an end to subsidizing controlled sellers by offering them huge discounts in a differentiated way. Similarly, the use of affiliate payment service providers to lure and influence consumers to buy from these controlled trading companies by offering discounts on payment service fees would come to an end. ”- CAIT
Avoidance of conflicts of interest between the marketplace platform, sellers and service providers on the platform
- Marketplace-based platforms shouldn’t sell, inventory-based platforms shouldn’t register third-party vendors: CAIT argued that a marketplace-based e-commerce platform and its affiliates should not be allowed to sell on the platform and that an inventory-based e-commerce platform should be the only seller on the platform and not register any third party vendors. While the proposed rules address the former, the latter is a new proposal from CAIT. The federal government has proposed to amend rules 3 (1) (i) and 3 (1) (j) to take account of this change.
- Introduce broader rules to prevent platforms from selling to controlled sellers: CAIT alleged that ecommerce platforms are abusing loopholes in FDI regulation to control a group of sellers on their platform and preferring those sellers in terms of ranking, fees, free shipping, etc. Darshini Mobile to its point of view to illustrate. To prevent this from happening, CAIT suggested that “the platform owner or any of its related parties or affiliates or affiliates should not be directly or indirectly involved in the sale of any product”. CAIT added that “the definition of ‘indirect’ should be all-encompassing and all-encompassing so that there is no loophole.” CAIT also suggested changing the definition of an e-commerce entity on a marketplace to capture this.
- Package fees should not be allowed: CAIT argued that a new rule should be added to prevent e-commerce companies from collecting bundled fees “for services related to the e-commerce platform and any other service that the company provides to consumers, like videos and films, delivery etc. ”“ This will prevent cross-subsidies and create a level playing field for all sellers on the platform, ”explained CAIT. This seems to be targeting Amazon’s Prime subscription, which offers a variety of services for a single monthly payment.
- The same brand name should be used for marketplace-based and inventor-based platforms: “If the same company or its related parties / affiliates operates an e-commerce marketplace platform as well as an inventory-based e-commerce platform, the two platforms cannot use the same or similar brand name or branding. This is important so that the consumer is not confused or misled between the marketplace platform and the e-commerce shop, ”said CAIT.
- Further improvement of the definitions of related parties and associated companies: In order to avoid conflicts of interest between e-commerce companies and sellers on the platform, CAIT proposed to further improve the definitions of related parties and affiliates in order to close any loopholes. It proposed that affiliates be included in the definition of associates and that the threshold for joint ultimate beneficial ownership be changed from 10 percent to 5 percent.
Establishment of a monitoring mechanism
- In a separate press release, CAIT, which refrains from the above, also called for a mechanism for monitoring compliance by e-commerce platforms with the rules. He added that this mechanism must have the power to take action in the event of a breach. It is not known whether this proposal was made to the government.