Are E-Commerce Websites Liable for Their Sins in India? Not Quite So.

By: Swapnil Tripathi

Digital marketing or as commonly known as e-commerce has become a common phenomenon today. E-commerce today caters to every need of a consumer by using technology, wherein the consumer can place an order, pay online using his debit or credit card and just sit back, relax and receive his order in a couple of days. However, as much as technology aids these e-commerce websites, it causes certain problems too as the boon of technology also brings with it the bane of technological glitches. Numerous complaints are registered every day with the customer care departments of e-commerce companies by consumers on grounds of non-placement of orders despite the amount being debited. The state of the law covering the scope of such online transactions, however, remains deficient to deal with the liability of such e-commerce websites:

E-commerce websites are not liable under the Consumer Protection Act, 1986

It is pertinent to know that the Consumer Protection Act [hereinafter ‘CPA’][1] is of no avail to consumers purchasing goods online. E-commerce websites do not sell the goods themselves but merely provide consumers with a platform to purchase goods from multiple retailers, thereby providing a service as an intermediary rather than selling goods as a supplier. Under the present Law, an intermediary providing services is exempted from the ambit of CPA,[2] thereby absolving him from any claim that may arise out of deficient services.

E-commerce websites are not liable for technological glitches

The CPA defines deficiency of services as an imperfection or a shortcoming in the manner of performance.[3] The burden of proof lies on the person alleging it and is high.[4] The claims against e-commerce websites against the cancellation of order despite the payment being debited is an outcome of a technological snag. Such glitches have been accepted as a common practice[5] which are bound to occur, no matter how fool-proof the setup is.[6] Even the RBI in one of its papers recognized their occurrence despite the existence of fool-proof mechanisms.[7] Also, the e-consumers tend to forget that even if the money gets deducted from their account by virtue of any such glitch it is refunded back after due verification.[8]

Another important aspect of online purchasing that consumers often ignore is the undertaking they sign when they place an order. It is a settled business practice that e-commerce websites exempt themselves from any liability including payment issues[9] by virtue of an agreement between them and the buyer.[10] Therefore, approaching consumer forums for seeking any claim is a futile exercise as e-commerce websites stand exempted under the CPA. Here, the consumers need to be made aware of their rights under the Ombudsman Scheme, 2006 which grants them a bona fide claim against the banks.

The present CPA, therefore, is clearly inept to deal with the e-commerce boom that exists in India today. Even the Consumer Protection Bill, 2015 barely mentions any amendments to accommodate the same.

[1] Consumer Protection Act 1986, s 2(d).

[2] Flowil International Lighting Holding v Digital Gadgets (2014) 142 DRJ 29 (India).

[3] Consumer Protection Act 1986, s 2(g).

[4] Ravneet Singh Bagga v KLM Royal Dutch (2000) 1 SCC 66 (India).

[5] General Manager Telecom v Consumer Disputes Redressal AIR 2000 Ker 205 (India).

[6] Deepak Verma v Clues Network Pvt Ltd Case No 34 of 2016 (CCI).

[7] Master Circular – Mobile Banking transactions in India – Operative Guidelines for Banks, RBI/2016-17/17

[8] For example, see the Indian Railway Catering and Tourism Corporation (IRCTC) notification

[9] ibid.

[10] For example, see the Flipkart Terms of Use

(Swapnil is a student at National Law University, Jodhpur.)