TABLE OF CONTENTS

INTRODUCTION...........................................................................................................................2

E-COMMERCE: MEANING..........................................................................................................3

NEED OF PROTECTION OF E – COMMERCE..........................................................................3

1. JURISDICTIONAL CONCERN..........................................................................................4

2. PRIVACY.............................................................................................................................5

3. AUTHENTICATION AND IDENTIFICATION................................................................5

CONSUMER PROTECTION ACT, 1986 (OLD ACT).................................................................5

CONSUMER PROTECTION BILL, 2015.....................................................................................7

CONSUMER PROTECTION ACT, 2019 (NEW ACT)................................................................7

INFORMATION TECHNOLOGY ACT, 2000............................................................................10

ORGANIZATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD)

GUIDELINES................................................................................................................................11

CONCLUSION..............................................................................................................................12

BIBLIOGRAPHY..........................................................................................................................13
INTRODUCTION
Consumers are one of the major components of business system. The consumers are persons who
use the goods and services offered by the business players. The protection of the rights of the
consumers is also important for the betterment of the commercial world. With the advent of the
internet and World Wide Web there was an expansion of traditional commercial activities into
the electronic platform. People are becoming more attracted towards online shopping. The e-
commercial activities has become the most important and happening activities which is taking
place in the cyberspace. Many e-commercial activities take place in the cyberspace. The e-
commerce platform had enabled the Indian consumers to cross the boundaries of states and enjoy
the products of their choice. The increasing number of activities taking place in the e-commerce
alarms about the protection of online consumers and their interests. So when it happens in the
form of Business to Consumer (B2C), the interest of the consumers need to be protected. Like in
the physical commercial activities there also consumers are buying or availing goods or services
for a price. In India the number of consumers engaging in online shopping is increasing as the
number of online shopping websites as well. This alarms us about the protection of consumer’s
interests and their rights in the digital era. But there are many challenges to the protection of the
consumer interests in the online medium. Lack of proper legal provisions is one of the most
important among them. In India we have Consumer Protection Act, 1986 and Information
Technology Act, 2000 which basically deals with consumer protection and electronic commerce.
The consumer can initiate proceedings against the seller or service provider whenever there is a
defect in the goods or deficiency of services. Whether the consumer includes e-consumers and
same remedy is available for them as well. Since the electronic commerce has a wider presence,
is the current law is sufficient enough to deal the various aspects. Though the consumers can file
a complaint under the existing law, proper disposal becomes a difficult task.

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E-COMMERCE: MEANING
Electronic Commerce denotes the commercial transactions of different products and service by
using computer network such as internet. So it basically deals with business transactions taking
place through the electronic medium. The UNCITRAL Model law on E-commerce refers e-
commerce to transactions carried out by means of electronic data interchange and other means of
electronic communication, which involve the use of alternatives to paper-based methods of
communication and storage of information. The WTO Work Programme on Electronic
Commerce defined “electronic commerce” to mean “the production, distribution, marketing,
sale or delivery of goods and services by electronic means”.

The e-commerce platform allows the consumer to transact goods or services without any barriers
of time and distance. There is a tremendous growth in the e-commerce industry not only in India
all over the world. The number of e-consumers is increasing every day and people are finding it a
convenient mode to get involved in shopping.

There are numerous reasons due to which the e-commerce is growing by leaps and bounds. Some
of them are convenience, availability, better bargaining of price, affordability, plenty number of
choices available and speedy and cheaper shopping. The people get a chance to compare and
click for best deal offered for the products across the various e-commerce websites. With the
increasing number of consumers the e-commerce industry requires more safe and secured
system. There are many challenges for the e-commerce industry, such as identity theft, phishing,
spoofing, privacy concerns, unsecured systems and jurisdictional issues are some of them.

There is a need to protect the rights and interests of e-consumers and it is the duty of government
to ensure protection of e-consumers. At the same time as a consumer of e-commerce world we
also have some responsibility and one among them is the caveat emptor which is equally
applicable in the e-consumers as well. Any one before indulging in e-retail therapy has to know
about the reliability of websites and details of products offered by them.

NEED OF PROTECTION OF E – COMMERCE

In India, the government has promoted e – commerce aggressively which is indirectly a
promotion of e - consumer activities, focusing especially on the delivery of services but the legal

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control for the online sale of goods have yet to catch up with those for conventional shopping. In
this part of the paper, we discuss some of the pertinent issues related to the e – commerce
business and protection of e – consumers:

1. JURISDICTIONAL CONCERN
In any dispute, one of the primary issues that a court determines is whether or not the said court
has jurisdiction to try the dispute i.e. the court must have both the jurisdiction over the parties
involved in the dispute and territorial jurisdiction. With the increased use of the internet it
becomes impossible to be restricted in terms of traditional concept of territory and thus the
complications in determining the jurisdiction is a problem. According to the traditional rules of
jurisdiction determination, the courts in a country have jurisdiction over individual who are
within the country and/or to the transactions and events that occur within the natural borders of
the nation. Therefore in e – commerce transactions, if a business derives customs from a
particular country as a result of their website, it may be required to defend any litigation that may
result in the country. Jurisprudence in India with respect to issues relating to jurisdiction and
enforcement issues in ecommerce is still nascent.

There are certain provisions in the laws in India which provide for the long arm jurisdiction:

a. INFORMATION TECHNOLOGY ACT, 200012

Section 1 (2) of the Information Technology (IT) Act read along with section 75 of the IT act
provides that: the Act shall extend to the whole of India, and save as otherwise provided under
the Act, it shall apply also to any or contravention there under committed outside India by any
person and, the Act shall apply to any offence or contravention committed outside India by any
person if the act or conduct constituting the offence or contravention involves a computer,
computer system, or computer network located in India.

b. INDIAN PENAL CODE, 1869

Section 3 of the Indian Penal Code (IPC), 1869 provides that any person who liable, by any
Indian law, to be tried for an offence committed beyond India shall be dealt with according to the
provision of the IPC for any act committed beyond India in the same manner as if such act had
been committed within India.

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 2. PRIVACY
For an e – commerce platform it is almost difficult to complete any online transaction without
collecting some form of personal information of the users such as details about their identity and
financial information. Hence, an important consideration for every e – commerce platform is to
maintain the privacy of its users. Two primary concerns that user of e – commerce platform
would have are:

 Unauthorized access to personal information.

 Misuse of such personal information.

Historically, the concept of privacy and data protection were not addressed in any Indian

Legislation. In the absence of a specific legislation, the Supreme Court of India in Putthaswamy
Case interpreted right to privacy in Article 21.

3. AUTHENTICATION AND IDENTIFICATION

Though the internet eliminates the need of physical contrast, but it does not vanish the fact that
any form of contrast or transaction would have to be authenticated and in certain instances
recorded. Different authentication technologies have been developed over a period of time for
authenticating the documents and also to ensure the authenticity of the parties. Electronic
signatures may be considered as one of the methods used to determine the authority and
legitimacy of the person to authenticate an electric record. The IT Act gives legal recognition to
the authentication of any information by affixing an electronic signature as long as it is in
compliance with the manner as prescribed under the IT Act. Furthermore, the IT Act also
provides the regulatory framework with respect to electronic signatures including issuance of
electronic signature certificates.

CONSUMER PROTECTION ACT, 1986 (OLD ACT)

Initially, the fundamental and principal Act governing the rights of consumers in India was the
Consumer Protection Act, 1986. This Act guarantees the protection of consumer interest when
there is “defect in good”, “deficiency of services” or in the event of “Unfair Trade Practices
(UTP)”. There was no specific provision or specific law to regulate online transaction to protect

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the consumer rights. There was an ambiguity that whether the provisions of Consumer Protect
Act will be applicable for online commercial activities. This ambiguity was resolved by the
Minister of State for Consumer affairs, Food and Public Distribution by making a written reply
in Lok Sabha on 8th July 2014 and announced that online transactions also comes under the
purview of Consumer Protection Act. The Consumer Protection Act provides for a three tier
redressal mechanism for the consumers in District Level, State Level and National Level which
was open for the online consumers as well. This announcement of the government was a great
relief for the online consumers to ensure the protection of their rights. Though the government
had made an open announcement neither it provided neither separate legal provisions nor
separate redressal mechanism for the consumers of online transactions. In fact the provisions of
Consumer Protection Act were made applicable to the online commercial transactions.

Under the Consumer Protection Act 1986, a consumer was a person who buys any good or avails
or hires any service for any consideration, whether paid or otherwise, except for commercial use.
Sale of goods Act, 1930 defined buyer as any person who buys or agrees to buy good. Reading
these definitions makes it clear that a person who pays or agrees to pay a price for particular
goods can be called a consumer. So the consumer protection Act 1986 was impliedly applied to
online transactions and the person who buys goods or avails services for price through the
electronic medium also becomes a consumer. Also section 4(l) of the sale of Goods Act 1930 has
defined contract of sale in such a way that it will cover online transactions also. Therefore these
provisions impliedly provided for the consumers to invoke their right to redressal mechanisms
according to Consumer Protection Act, 1986. But these provisions did not provide for a complete
solution to the consumer disputes in the e-commerce rather there existed many loopholes which
made this system a narrow one.

The consumer Protection Act was applicable only when there was any defect in the goods or
deficiency of service. But in the e-commerce the consumers never gets a chance to physically see
the goods and only after delivery they can see it physically. Here the question of delivery arises
which is one of the major issues in the e-commerce industry. Rather there is anonymity of the
seller. So both these create more chaos for the consumers. Above these unclear laws and
ambiguity over the redressal mechanism and jurisdictional issues has resulted in improper
disposition of complaints made in this regard. The consumer forums in India had not dealt such

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cases in proper way. One such instance was Rajinder Singh Chawla v. makemytrip. com where
the Consumer Court rejected a consumer complaint for lack of jurisdiction. The reason was that
the online transaction was spread across various geographical areas. The Court could not make
out a reason for entertaining the complaint.

CONSUMER PROTECTION BILL, 2015

In the e-commerce industry since the buyer and seller does not come face to face the question of
consumer welfare becomes a big challenge. There are various issues raised in relation to the
protection of consumer rights in the growing electronic commerce era. The Indian cabinet
approved a new consumer Protection bill called Consumer Protection Bill 2015 to replace the 29
yrs. old Consumer Protection Act 1986. But this Bill lapsed because Standing Committee
recommended some addition but government didn’t accept it. But this Bill contained provision
regarding protection of e-consumer.

The Consumer Protection Bill, 2015 provided new definition of consumer, liberalize
jurisdictional issues, product liability and also intended to establish central consumer Protection
Authority (CCPA) an independent agency to take care of the rights of the consumers. In addition
to that, Bill also provided for cooling off period of 30 days. These provisions wee again
introduced in 2019 Bill (discussed later).

CONSUMER PROTECTION ACT, 2019 (NEW ACT)

The Bill was introduced again in 2018 but same lapse due to dissolution of Lok Sabha but the
essence of the same was introduced in 2019 and it Bill received the assent of President. This new
Act replaced 3 decade old Consumer Protection Law. The highlights of the Act are-

 Covers E-Commerce Transactions: The New Act has widened the definition of 'consumer'.
The definition now includes any person who buys any goods, whether through offline or online
transactions, electronic means, teleshopping, direct selling or multi-level marketing. The earlier
Act did not specifically include e-commerce transactions, and this lacuna has been addressed by
the New Act.

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Enhancement of Pecuniary Jurisdiction: Revised pecuniary limits have been fixed under the
New Act. Accordingly, the district forum can now entertain consumer complaints where the
value of goods or services paid does not exceed INR 10,000,000 (Indian Rupees Ten Million).
The State Commission can entertain disputes where such value exceeds INR 10,000,000 (Indian
Rupees Ten Million) but does not exceed INR 100,000,000 (Indian Rupees One Hundred
Million), and the National Commission can exercise jurisdiction where such value exceeds INR
100,000,000 (INR One Hundred Million).

The Consumer Protection Act, 2019 establishes the Central Consumer Protection

Authority (CCPA) whose primary objective will be to promote, protect and enforce the rights of
consumers. It is empowered to:

 Conduct investigations into violations of consumer rights and institute

complaints/prosecution.
 Order recall of unsafe goods and services.
 Order discontinuance of unfair trade practices and misleading advertisements.
 Impose penalties on manufacturers/endorsers/publishers of misleading advertisements.

E-Filing of Complaints: The New Act provides flexibility to the consumer to file complaints
with the jurisdictional consumer forum located at the place of residence or work of the consumer.
This is unlike the current practice of filing it at the place of purchase or where the seller has its
registered office address. The New Act also contains enabling provisions for consumers to file
complaints electronically and for hearing and/or examining parties through video-conferencing.
This is aimed to provide procedural ease and reduce inconvenience and harassment for the
consumers.

Product Liability & Penal Consequences: The New Act has introduced the concept of product
liability and brings within its scope, the product manufacturer, product service provider and
product seller, for any claim for compensation. “Product liability”. This principle mandated that
if product / services causes personal injuries, death or property damage, the authority will take
action against defaulting manufacturers or service providers. The clause protected the online
consumers who enter into a contract with sellers of online stores to purchase the products
without having any means to sample and test the products and services that they were

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purchasing. The term 'product seller' is defined to include a person who is involved in placing the
product for a commercial purpose and as such would include e-commerce platforms as well. The
defense that e-commerce platforms merely act as 'platforms' or 'aggregators' will not be accepted.
There are increased liability risks for manufacturers as compared to product service providers
and product sellers, considering that under the New Act, manufacturers will be liable in product
liability action even where he proves that he was not negligent or fraudulent in making the
express warranty of a product. Certain exceptions have been provided under the New Act from
liability claims, such as, that the product seller will not be liable where the product has been
misused, altered or modified.

Unfair Trade Practices: The New Act introduces a specific broad definition of Unfair Trade
Practices, which also includes sharing of personal information given by the consumer in
confidence, unless such disclosure is made in accordance with the provisions of any other law.

Penalties for Misleading Advertisement: The CCPA may impose a penalty of up to INR

1,000,000 (Indian Rupees One Million) on a manufacturer or an endorser, for a false or
misleading advertisement. The CCPA may also sentence them to imprisonment for up to 2 (two)
years for the same. In case of a subsequent offence, the fine may extend to INR 5,000,000
(Indian Rupees Five Million) and imprisonment of up to 5 (five) years. The CCPA can also
prohibit the endorser of a misleading advertisement from endorsing that particular product or
service for a period of up to 1 (one) year. For every subsequent offence, the period of prohibition
may extend to 3 (three) years.

Provision for Alternate Dispute Resolution: The New Act provides for mediation as an
Alternate Dispute Resolution mechanism, making the process of dispute adjudication simpler
and quicker. This will help with the speedier resolution of disputes and reduce pressure on
consumer courts, who already have numerous cases pending before them.

Rules on E-commerce and Unfair Trade Practices: The government will notify the Consumer
Protection (E-commerce) Rules, 2020 under the Act whose broad provisions are given below. E-
commerce entities are required to provide information to consumers, relating to return, refund,
exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance
redressal mechanism, payment methods, security of payment methods, charge-back options and

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country of origin. These are necessary for enabling the consumer to make an informed
decision at the pre-purchase stage.

o Sellers cannot refuse to take back goods or withdraw services or refuse refunds, if such
goods or services are defective, deficient, delivered late, or if they do not meet the
description on the platform.

o The rules also prohibit the e-commerce companies from manipulating the price of the
goods or services to gain unreasonable profit through unjustified prices.

INFORMATION TECHNOLOGY ACT, 2000

The main object of the Information technology Act 2000 was to provide legal recognition for e-
governance and e-commerce. The transaction taking place through the various electronic
medium were commonly called as electronic commerce and legal recognition was ensured by the
IT Act 2000. This Act has given legal recognition to electronic records which is considered as
one of the significant characteristic of this Act. This legal recognition is the foundation of all e-
commerce undertaken by customers.

IT Act provides for legal recognition for electronic records and electronic signature. Section 10A
of the Information Technology Ac, 2000 gives validity for electronic contracts. The e- contracts
in India is governed by the basic principles of contract as provided under the Indian Contract
Act, 1872. So this legal recognition ensured under the Information Technology forms the
foundation of all e commerce activities and protects and enforces the rights of consumers. But
there is no provision in the IT Act which covers consumer protection in the e-commerce market.
Basically the IT Act is providing for commercial activities taking place in the business to
government and government to business in a larger environment. A common man in his daily life
never enters into such big transaction through the electronic medium. He enters into e-commerce
basically for online banking, online shopping and other small transactions. Though the IT Act
acts as a platform providing legal recognition for various e-commerce activities there is no
specific provision with respect to protection on small customer’s interest in the e-commerce
industry. With the wide reach of e-commerce industry, the number of people using the e-
commerce services for their daily life is increasing. With the large profit earned by the online

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shopping websites, many more are making their entry into this e-commerce market. It is high
time for the legislature to consider the number of people engaged in e-commerce industry as
household customers rather than being a commercial customer. The protection of the interests of
these consumers is also vital for the progressive development of the e-commerce industry.

ORGANIZATION FOR ECONOMIC CO-OPERATION AND

DEVELOPMENT (OECD) GUIDELINES
At the end of 1999, the OECD completed and adopted Guidelines for consumer Protection in the
context of e – commerce.

 E – Commerce should be no less protected when shopping online than when they buy
from their local store or order from a catalogue.
 Disclosure should include complete and accurate information about the business, about
the goods or services for sale and about how the transaction is made. What this means is
that e–customers should know which business they are really dealing with. They should
have a complete description of what they are buying and they should have enough
information about the transaction process to be able to make an informed decision.
 The confirmation process for a sale should give the consumer a chance to see what he has
agreed to buy and to change his mind if he wants before the purchase is completed.
 Payment systems need to be secure and easy to use.
 In an international transaction, redress is one of the most difficult areas to address, and
the OECD recommendations recognize that further work is needed. The use of alternative
dispute resolution is strongly recommended.
 The OECD has been at the forefront of international privacy work for decades. More than
20 years ago, the OECD developed Guidelines Governing the Protection of Privacy in e –
commerce. Even today, the OECD Privacy Guidelines are considered to be a “flagship”
OECD document and shall still serve member countries as the basis for current
international work on privacy in the online environment.

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CONCLUSION
Technology develops faster than law and it will continue to be one step ahead of law. To cope up
with the technological advancement we have to take the help of technology, as Charles Clark
once remarked, “the answer to the machine is in the machine”. In other words, the perfect
solution to the technical abuses is the application of technical innovation.

Consumer protection issues in the context of e – commerce have gained a considerable amount
of attention both from academics and policy-makers. Furthermore, governments as well as inter
– governmental organization have discussed the issues involved and developed various
frameworks. The Consumer Protection Act, 1986 specifically excluded from its ambit the
rendering of any service that is free of charge. If online platform is not charging the users, the
Consumer Protection act may not apply. The legal system has constantly tried to catch up with
the enactment of the various rules under the IT Act to deal with a host of issues emerging from
the use of internet. But still it was far away from the goal.

The attempt was made in 2015 to change the 29 years old law so that the grievances of e-
consumer could be addressed but the Bill lapsed. Based on similar provisions 2018 Bill was
introduced, but lapsed due to dissolution of Lok-Sabha. The Bill of 2019 got the assent of
President. The Act has been made to highlight the issue faced by e-consumers and mechanism
has been provided for it’s readressal. Lacunas which existed under 1986 Act has been removed.

The 2019 Act is problematic in the sense that it contains provisions regarding jail term.
Considering the nature of dispute in all cases penal provisions should not be introduced. Because
when a consumer buys any stuff online then he enters into a contract. And if the advertisement
about the product is false then it amount to fraud or misrepresentation and in contact remedy of it
lies in vitiation of contract and compensation and not in awarding imprisonment.

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BIBLIOGRAPHY
Articles

 Consumer Protection in the E-Commerce Era by Dhanya K A

 E-CONSUMER PROTECTION IN INDIA: TRENDS AND CHALLENGES by Prof. (Dr.)
Ashok R.PATIL Dr. Pratima NARAYAN
 E – Commerce and the Rights of E–Consumers by Hina Kausar

Other Web Sources

 https://www.drishtiias.com/daily-updates/daily-news-analysis/consumer-protection-act-2019
 https://www.mondaq.com/india/dodd-frank-consumer-protection-act/838108/consumer-
protection-act-2019-key-highlights
 http://www.legalservicesindia.com/article/1573/Consumer-Protection-in-the-age-of-E-
Commerce.html
 https://www.prsindia.org/billtrack/consumer-protection-bill-2019
 https://www.prsindia.org/billtrack/consumer-protection-bill-2015
 http://egazette.nic.in/WriteReadData/2019/210422.pdf

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