E- COMMERCE AND CONSUMER LAW
E-Commerce in India
brought a leading change in the life style of Indian consumer with the entry of
on line retailer Amazon and online auctioneer e Bay in late 1990’s.Thereafter
innovative steps were initiated by the business groups to go further with their
business promotion by making use of web for advertising their products .The
scenario further changed with the use of social networking which brought
a remarkable flow of online purchases after the year 2006.The picture as on
date is that number of modes are in operation for on line purchases through out
the country.
WHAT IS E-COMMERCE
Anita Rosen from an
American management association in her book on e-commerce explains e-commerce
as a practice of purchasing and selling products and services over the internet
or other electronic system .Electronic commerce or e commerce refers to on line
business activities. It also pertains to any form of business transactions in which
parties are not physically present and interact electronically. .Digital
information technology is the mode of communication in such business. The World
Trade Organization on September 25th1998 had adopted a broad view of
electronic commerce as ‘the production, distribution, marketing, sale or
delivery of goods and services by electronic means – (By Mitchel Andrew.D)
Individuals connecting
to the web is the first important factor / mode of access for the consumer to
the market which has increased E-Commerce five fold after 1990’s in india.The
new breakthrough in the traditional way of business has completely changed the
traditional business of trading patterns. Broadband and growing use of mobile
devices is another reason facilitating the general public at large to opt for
net marketing. The presence of e –retailer such as Amazon and Bricks and
Mortar, is another important factor influencing e commerce activities.Consumers
are equipped with a powerful tool for searching and buying goods and services.Increased
competition leads to lower price,more choices of products and convenience of
shopping from vendors located around the world.It is an ease and speed
shopping. And now we see consumers are able to shop or conduct their
transactions 24 hours a day and also track the delivery status of their
purchase .Comparing prices is a great benefit .
But now the question before is as to whether existing law concerning consumers
are
adequate for
consumer safety,information option,fair trade rights ,claims and other
rights.
WE may refer here to
The Economic and Social Council of the United Nations, who had set model
guidelines on consumer protection which were adopted by the General Assembly in
1985 recognizing the need for protection of the rights of consumers. With the
change of scenario today United
Nations Conference on Trade and Development has undertaken a revision
of the UNGCP. Consumers
International, an international consumer rights organization has along with
CIS and other groups been trying to represent the voice of consumers. Consumers
International has produced a book titled "Updating
the UN Guidelines for Consumer Protection for Consumers in the Digital Age
In December 2012
there was a news report that the market for online commerce in India is at
roughly USD 14 billion. , Flipkart alone
had a valuation of around USD 800 million. Such huge numbers give a sneak peek
into the size and scope of the Indian e-commerce market place which begs the
question- when there are so many transactions occurring in the online
marketplace and since a large number of those transactions are between
retailers and domestic consumers, are there any specific laws out there
protecting the interests of consumers in the online world.
CAG (Citizen Consumer
and Civic Action Group) also focused on this issue to see if the websites were
consumer friendly and also to see if there were adequate laws and redressal
mechanisms in India to protect consumers shopping online. CAG, took a study,
‘E-commerce and Consumer Protection in India’ in 2002, to look at e-trading websites
and how consumer friendly they were. In 2006, CAG conducted a follow up study
‘Protecting consumer rights in e-commerce transactions’ to look at laws and
redressal mechanisms available to consumers. This study brought to light a
number of issues such as privacy of information, provision of contract terms
such as guarantees/warrantees, refunds, dispute settlement, hidden costs and
misleading information and other problems.
Addressing the audience
at a seminar on ‘E-Commerce And The Consumer Responsibilities and Rights’
organized by the Consumers Association of India, Secretary, Ministry Of
Consumer Affairs Sh. Desurajuhe said it is essential to create a
policy framework and regulatory environment that favours the development of
e-commerce and ensures protection of consumers.
Experts say the
Consumer Protection Act 1986 does not have any specific law to regulate online
transactions. S Gopalakrishnan, Commissioner, Civil Supplies and Consumer
Protection, Government of Tamil Nadu, too reiterated the need to amend the act
suitably so that it takes within its jurisdiction all kinds of consumer
transactions, as each situation needs a different set of tools to handle.He
also highlighted the need to amend the Information Technology Act to prevent
misuse of any personal information, and also to reduce the existing information
irregularity
CEO Akosha, Ankur
Singla, revealed that out of the 11980 complaints received by Akosha for
e-commerce in the first quarter of 2013, almost 58 percent related to
deficiency in delivery (such as delivery of damaged goods, delivery of a
different product or non-delivery of goods, even after the payment has been
made), 29 percent were for refund of money for non-satisfactory products, while
the rest had different concerns.
Hence this is the issue
specifically being considered in forthcoming Amendment to the Consumer
Protection Act.
AVAILABLE LAWS
REGARDING TRANSACTION
ON NET AND ITS RECOGNISION
Information
Technology Act, 2000 has done a big deal in giving recognition to
online purchases. Reserve Bank of India by issuing various circulars
regarding online banking and money transfer activities have made
consumers capable of securing the online space. It’s true that as a
whole, there are no specific laws that seek to protect consumers in the online
space. However, that does not necessarily mean that the consumers are left
without any recourse and in this regard we shall examine whether it is possible
to use the Consumer Protection
Act, 1986 to protect consumer rights in the online environment as
well.
While looking into the
present frame work of Consumer Protection Act, we find enough scope to make use
of this law with the same strength as is done purchases in physical presence
with a little careful dealing.
· VALIDITY
OF E-CONTRACTS –Electronic contracts are governed by the basic principles
provided in the Indian Contract Act, 1872 ("ICA"), Section 10A of the
Information Technology Act, 2000 ("IT Act") provides validity to e-contracts
The Supreme Court in Trimex International FZE Ltd. Dubai v. Vedanta
Aluminum Ltd. has held that e-mails exchanges between parties regarding
mutual obligations constitute a contract.
· JURISDICTION
POINT The other crucial issue is the consent and the way offers
are accepted in an online environment. In a click wrap and shrink wrap
contract, the customers do not have any opportunity to negotiate the terms and
conditions and they simply have to accept the contract as is offered to them
before commencing to purchase. Section 16(3) of the ICA provides that where a
person proposes certain terms to the other and other part accepts the same by
clicking on it, is bound by all the terms so proposed by the proposer. It is
said and argued by some groups that under these online environments, party
offering is in a position to dominate the will of another, and the transaction
appears on the face of it to be unconscionable. Hence this is a disadvantageous
position of a person who accepts. But we must not forget that the basic
principal of contract act is that acceptance should be unconditional even if
both the parties are present face to face. So it hardly makes any difference as
far as acceptance of proposal is concerned. One can always avoid clicking if
not satisfied. The only point while dealing the matter under Consumer
Protection Act shall have to be decided is the jurisdiction of the court
keeping in view the question –where the cause of action arises. In net
purchasing, since proposal and acceptances are made on computer sitting at
their places, jurisdiction at both the places has been considered by the forums
/commissions under Consumer Protection Act as practiced by now and supported by
various judgments too. Hence consumers can easily reach to consumer forums in
cases of default on the part of seller or service provider.
· DATA
PROTECTION: Security of the information provided during the online
transaction is a major concern. Under section 43A of the Information Technology
(Intermediaries Guidelines) Rules, 2011, the intermediaries have the
obligation to publish the rules and regulations, privacy policy and user
agreement for access or usage of the intermediary's computer resource by any
person. Such rules and regulations must inform the users of computer, display,
upload, modify, publish, transmit, update or share information. Also, the
intermediary must not knowingly host or publish any prohibited information and
if done, should remove them within 36 hours of its knowledge. In Consim
Info Pvt. Ltd v. Google India Pvt. Ltd, the Delhi Court Google had
extended the argument that being search engine, they cannot control the fact
whether some website, any advertisement given on their site is genuine or
fraud. The court then observed that though the intermediary, Google, cannot be
made liable for infringement arising out of a third party's actions since it is
not possible to always check every advertisement posted online; however, it was
said that as per section 3(4) of the aforesaid Intermediaries Guidelines,
Google had to act upon it within 36 hours of receipt of such complaint, failing
which it may be held liable.
This issue is also in no way different from the issues time and again raised by
the public at large in other than e-commerce when their phone numbers are given
by banks etc. for tale marketing and other unwanted calls and SMS from business
groups. This issue can very well be handled alleging the wrong doer for
deficiency in services and unfair trade practices under Consumer Protection
Act.
· STAMPING
OF CONTRACTS is yet another issue. An instrument that is not
appropriately stamped may not be admissible as evidence unless the
necessary stamp duty along with the penalty has been paid. However, as the
payment of stamp duty has gone online and e-stamp papers are available, it can
become a possibility that stamp duty might be asked on e-contracts as well
· ADVERTISING: Advertising
is an important and legitimate means for a seller to awaken interest in his
products. Absence of a single comprehensive legislation in terms of a proper
code to follow by the industry and the authority to regulate or guide the
pattern of advertising is till date a problem. In 1985, the Advertising
Standards Council of India ("ASCI"), a non statutory body, was
established that created a self regulatory mechanism of ensuring ethical
advertising practices. ASCI entertained and disposed of complaints based on its
Code of Advertising Practice ("ASCI Code").But this does not have
authority to punish anyone .Amendment in the consumer protection act 2002 had
added a clause unfair trade practice which is specifically meant for misleading
ads and works well on e-commerce purchases also .
While Consumer
Protection Act 1986 is already on way to be amended suitably after
earlier three amendments, Consumer is also bound to take adequate care while
dealing with net and making purchases on line in his own interest .
DUTY OF A
CONSUMER WHILE DEALING ON WITH E COMMERCE
1. TO
GET INFORMATIONABOUT THE COMPANY: What kind of business it is and what it
sells. Where the company is located, including the country. How the
company can be contacted.
2. FIND
OUT WHAT THE E-MERCHANT'S PRIVACY POLICY is Use your credit card rather than
your debit card to make your e-transaction. Find out what the e-merchant
return and refund policies, before placing any orders.
3. KEEP
YOUR PERSONAL INFORMATION PRIVATE. Do not disclose your address, telephone
number, social security number, or your e-mail address unless you know who is
collecting the information and how it will be used.
4. SHOP
ONLY WITH KNOWN E-MERCHANTS and always use a secure browser. Make sure that
your browser complies with the industry security standards; anyone can set
up a Web site offering something for sale. If you are not familiar with the
e-merchant, ask that you be sent a paper catalog or brochure to get a better
idea of the type of merchandise the company offers.
5. REVIEW
YOUR MONTHLY BANK AND CREDIT CARD statement promptly and thoroughly in order to
find and billing errors, or unauthorized charges or withdrawals
Dr Prem Lata
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