Govt Looking To Make Ecommerce Platforms Like Flipkart, Amazon Liable For Sellers’ Fraud

The consumer affairs ministry is reportedly working on making ecommerce companies such as Amazon and Flipkart liable for fraud committed by sellers on their platforms by attaching “fallback liability” to their role as intermediaries.

The ministry would form the rules after ecommerce companies respond to queries on the issue, sent to them by the Ministry of Electronics and Information Technology (MeitY), an official was cited as saying in an ET report.

“We are in the process of restructuring the ecommerce rules to ensure consumer interests are protected adequately in this emerging digital economy. We plan to make marketplaces liable if goods sold on their platforms are found to be faulty,” the official said.

MeitY sent a note to ecommerce firms last week, asking them to clarify their role as an intermediary. The note was prompted by questions from the Department of Consumer Affairs, which is part of the Ministry of Consumer Affairs, Food and Public Distribution. 

MeitY reportedly mentioned in the note that it has received communications from the Department of Consumer Affairs regarding the challenges being faced by customers in grievance redressal while shopping online.

It also noted that ecommerce platforms currently refuse to acknowledge any liability or responsibility or provide appropriate remedy to consumers, by referring to Section 79 of the Information Technology Act, 2000.

It must be noted that ecommerce platforms such as Amazon and Flipkart are described as intermediaries connecting buyers and sellers and are protected by the safe harbour provisions as prescribed in Section 79 of the Information Technology Act, 2000.

Under the upcoming ecommerce norms, the government might attach more responsibility to their role as intermediaries rather than entirely taking away the safe harbour provisions.

The development comes months after the Central Consumer Protection Authority (CCPA), under the consumer affairs ministry, fined several ecommerce platforms for selling substandard pressure cookers and toys.

The latest development also comes at a time when the Centre is tightening its regulations around the digital space, including ecommerce platforms. Last month, Consumer Affairs Secretary Rohit Kumar Singh said that the government has made it clear to Amazon that it is not fair if its private labels appear at the top in search results on the platform.

Besides, the proposed Digital India Bill, the revamped digital competition law, among others, will also put additional responsibilities on ecommerce firms. The government has also launched the Open Network for Digital Commerce to democratise ecommerce and help small retailers take on giants like Flipkart and Amazon.