SUMMARY
The ‘fallback liability’ proposed under the draft ecommerce rules holds ecommerce entities liable for any mis-selling by third party sellers
The ecommerce players have argued that since inventory is not controlled by them, they should not be liable for any dispute with sellers
The committee has also observed the distinction between conventional flash sales and other specific flash sales being unclear
While ecommerce players have always maintained that they should not be held responsible for any disputes related to products sold by third party sellers, the Parliamentary Standing Committee on Commerce has dismissed the argument that they have no control over the items sold on their platforms, according to a Business Standard Report.
As fake or counterfeit products have been a great concern for the ecommerce industry, the department of consumer affairs introduced ‘fallback liability’ in the draft e-commerce rules released last year which holds ecommerce entities liable for any mis-selling by third party sellers.
The ‘fallback liability’ clause makes the ecommerce companies liable in case a seller on their platform fails to deliver goods or services due to negligent conduct, which causes loss to the customer.
Regarding this clause, the government and ecommerce players have been at loggerheads.The ecommerce players have urged the government to remove this clause. They said that since inventory is not controlled by them, they should not be liable for any dispute with sellers. The players were also urged to include sellers in the liability clause.
“The committee feels that it will not be in the interest of customers to absolve e-commerce marketplaces of their responsibility in maintaining the quality and standard of goods sold on their platforms,” the committee said in its ‘Promotion and Regulation of E-Commerce in India’ report tabled in the Rajya Sabha on Thursday.
The committee has recommended that ecommerce marketplaces should be held responsible for issues related to the delivery of sub-standard counterfeit products and services on their platforms and play an active role in the resolution of such issues. Moreover, the committee has recommended that ecommerce players should act as the intermediary between the customers and sellers.
In the draft rule released last year, the consumer affairs ministry proposed to limit flash sales by ecommerce platforms. However, it clarified that conventional ecommerce flash sales are not banned but specific flash sales or back to back sales which limit customer choice, increase prices and prevent a level playing field, will not be allowed.
The committee has also observed the distinction between conventional flash sales and other specific flash sales is not clear. It also added that ambiguity in policy can have an adverse impact on the enforcement of the rules and eventually lead to confusion among stakeholders. Hence, it has recommended that the clarity on the precise scope and applicability of the prohibition on flash sales needs to be provided in the draft rules.
India’s ecommerce market that is currently valued at $100 Bn, is expected to surpass $400 Bn market size by 2030, growing at a compound annual growth rate of 19% during 2022-2030, as per an Inc42 report.
