Centre Proposes To Ban Fraudulent Flash Sales, Mis-selling On E-commerce Sites. Check Details Here

The ministry has been clarified that conventional flash sales are not banned, and specific flash sales or back-to-back sales which limit customer choice, increase prices and prevent a level playing field are not allowed.

Representational Picture (AFP)

New Delhi: In a bid to tighten the operations of e-commerce marketplaces, the Centre on Monday proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020 and sought public comments on banning fraudulent flash sales and mis-selling of goods and services on e-commerce platforms besides making registration of these entities mandatory with DPIIT.                

In a draft note prepared by the Consumer Affairs Ministry, the government has tightened the rope on e-commerce platforms on various aspects.

What are the proposed amendments?
Mis-selling: Under the amendments, mis-selling of goods and services offered on e-commerce platforms will be banned. Those sellers engaging in ''cross-selling'' will have to provide adequate disclosures to users displayed prominently.          

Flash sales: Moreover the popular ''flash sales'' on e-commerce platforms will be banned "if such sales are organised by fraudulently intercepting the ordinary course of business using technological means with an intent to enable only a specified seller or group of sellers managed by such entity to sell goods or services on the platform."          
Although it has been clarified that conventional flash sales are not banned, and specific flash sales or back-to-back sales which limit customer choice, increase prices and prevent a level playing field are not allowed.     "...certain e-commerce entities are engaging in limiting consumer choice by indulging in ''back to back'' or ''flash'' sales wherein one seller selling on platform does not carry any inventory or order fulfilment capability but merely places a ''flash or back to back'' order with another seller controlled by platform," it said.          
It will forbid such sales as it prevents a level playing field and ultimately limits customer choice and increases prices, the ministry added.
The proposed amendment defines ''flash sale'' as that organised by an e-commerce entity at significantly reduced prices, high discounts or any other such promotional offers for a predetermined period of time.   The amendment is aimed to curb the dominance of e-commerce companies to abuse its position.
Registration: On registration of entities, the government has proposed that every e-commerce entity which intends to operate in India has to register itself with the Department for Promotion of Industry and Internal Trade (DPIIT) within such a period as prescribed by DPIIT for allotment of a registration number. Currently, e-commerce entities are registered under the Companies Act, Indian Partnership Act or Limited Liability Partnership Act and not separately with DPIIT.
It has proposed that such registration numbers and the invoice of orders are displayed prominently to its users in a clear and accessible manner on its platform.
Misleading adverstisements: It has also proposed a ban on display and promotion of misleading advertisements. E-commerce entities offering imported goods/services will also have to mention the name and details of the importers and the ''country of origin''.              
Besides, it has proposed ''ranking'' for goods and services offered on the platforms while ensuring that the ranking parameters do not discriminate against domestic goods and sellers.              
Expiry of products: In order to make sure that consumers are aware about the expiry date of the products they are buying on the e-commerce platform, all sellers will have to mention ''best before or use before date'' to enable consumers to make an informed purchase decision.             
Manipulation of searches: The government aims to curb practice of misleading users by manipulating search results, and proposes the appointment of chief compliance officer and resident grievance officer are some of the other amendments being proposed.
E-commerce entities are also required to provide information not later than 72 hours of the receipt of an order from a government agency for prevention, detection and investigation and prosecution of offences under any law, as per the proposed amendments.          
Domestic manufacturer: To ensure that the domestic manufacturers and suppliers get a fair and equal treatment on the e-commerce platform, it has been proposed that where an e-commerce entity offers imported goods or services, it shall incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives.        
The government has also proposed ''fall-back liability'' for every marketplace e-commerce entity in order to ensure that consumers are not adversely affected in the event where a seller fails to deliver the goods or services due to negligent conduct by such seller in fulfilling the duties in the manner as prescribed by the marketplace e-commerce entity.      
According to the ministry, the proposed amendments aim to bring transparency in e-commerce platforms and further strengthen the regulatory regime. 

(With inputs from PTI)