Creating a Safer E-Commerce Market for Online Customers in India

The physical restrictions imposed by the COVID-19 pandemic have resulted in an exponential growth in the Indian e-commerce industry. An increase in online transactions and people’s reliance on e-commerce has highlighted the need for a robust regulation to protect consumer rights in this sector.

Recently, the Ministry of Consumer Affairs, Food and Public Distribution notified the Consumer Protection (E-Commerce) Rules, 2020 (Rules) to regulate e-commerce in India. To make e-commerce safer for consumers, the Rules lay down the following two requirements: one, that every e-commerce entity incorporates adequate grievance redressal mechanisms; and two, that they participate in the central government’s National Consumer Helpline initiative. The first is a mandatory requirement, while the second has been kept voluntary.

Though the Rules came into effect on July 24, 2020, the e-commerce industry is still in the process of incorporating these compliances. In August, the Federation of Indian Chambers of Commerce & Industry (FCCI) and the Confederation of Indian Industries (CII) wrote to the ministry seeking more time to comply with the Rules.

As the government moves towards creating a safer e-commerce market, the use of Information and Communication Technology (ICT) should be leveraged to make consumer grievance redressal accessible, efficient, and cost-effective. Overall, ICT will enable easy compliance of the Rules.

This is where Online Dispute Resolution (ODR) can come into play. ODR can help create platforms for e-commerce companies to identify consumer grievances and resolve them at an early stage. In recent times, ODR techniques and platforms have come to be the most recommended mode of grievance redressal in several countries, especially for e-commerce platforms.

This blog recommends that the e-commerce entities use the opportunity provided under the Rules to embark upon their ODR journey which will, in the long run, benefit not just the consumers, but businesses as well.

As the government moves towards creating a safer e-commerce market, the use of technology (Online Dispute Resolution) should be leveraged to make consumer grievance redressal accessible, efficient, and cost-effective.

Why ODR is the future of e-commerce dispute redressal

The ongoing pandemic has forced us to recognise the limitations of the traditional dispute resolution mechanism and look for alternatives. ODR is widely being recognised for providing efficient and cost-effective dispute resolution. A recent study by Vidhi Centre for Legal Policy explores the integration of ODR into the dispute resolution ecosystem and identifies its suitability, particularly for consumer disputes. The nature of the industry, where buyer and seller are often residing in different jurisdictions, and the high frequency of low-value online transactions make e-commerce one of the most favourable sectors for successful implementation of ODR.

ODR has its foundation in Alternate Dispute Resolution (ADR) mechanisms, i.e. negotiation, mediation, arbitration – and introduces technology in the process to facilitate dispute resolution. The additional component in ODR when compared to ADR is technology. Technology is, in fact, touted as the fourth partner in ODR besides the disputing parties and the dispute resolution professional.

ODR, in its nascent stage, uses basic technology such as SMS, e-mails and video conferencing tools to enable easy and flexible communication between the parties, without the need for their physical presence. At its more advanced stage, ODR can evolve to mitigate disputes through Artificial Intelligence/ Machine Learning tools which help parties strategise their course of action better.

Online Dispute Resolution (ODR) can help create platforms for e-commerce companies to identify consumer grievances and resolve them at an early stage.

Integrating ODR in the mandatory grievance redressal mechanism – learning from global jurisdictions

The Rules mandate every e-commerce entity to establish an adequate grievance redressal mechanism and appoint a grievance officer. As per the provisions, the grievance officer appointed by an e-commerce entity should acknowledge the receipt of a complaint within 48 hours and redress the complaint within a month from the date of receipt. Although the provision does not specify details of what such a grievance redressal system should entail, it opens an opportunity for integration of ODR.

E-commerce platforms across the globe have pioneered the use of ODR tools for efficient grievance redressal. The ODR platform developed by eBay for consumer grievance redressal settles more than 60 million disputes every year. In the last decade, jurisdictions such as Europe and Brazil have made ODR mandatory for e-commerce grievance redressal. 

As a next step towards creating a safer and fairer online market for goods and services, the government should consider establishing an ODR platform for e-commerce. Such a platform may be designed on the lines of the European ODR Platform under which all e-commerce entities in the European Union are required to provide an easily accessible link to the platform on their website.

The platform offers consumers an option to resolve their grievance directly against the seller or to file a complaint with ODR bodies listed on the platform. In case parties fail to settle their dispute through ODR, the consumer is guided to file the grievance before traditional dispute resolution bodies to obtain redress.

ODR and the National Consumer Helpline

The Rules take an ambitious step towards strengthening the grievance redressal system by encouraging e-commerce entities to become partners in the National Consumer Helpline initiative on a best-efforts basis.

Launched in 2005, the National Consumer Helpline functions as an aggregator of grievances and enquiries regarding products and services to guide and empower the consumers.  In August 2016, the Department of Consumer Affairs launched the Integrated Consumer Grievance Redressal Mechanism (INGRAM) initiative to strengthen the National Consumer Helpline, developing a portal to create awareness and redress consumer grievances online.

Promoting the helpline – which has grown exponentially since launch – in partnership with private e-commerce entities opens up multiple possibilities. On one hand, the convergence of e-commerce entities in the initiative will provide a common platform for consumers and sellers to settle grievances, while on the other, the government could potentially consider further strengthening the portal by integrating ODR services, like online mediation in it.

As more and more sellers voluntarily become partners of the National Consumer Helpline and the INGRAM initiative, these services can be scaled up to provide a comprehensive platform for resolving all types of consumer disputes replete with negotiation and mediation facilities. The Consumer Mediation Cells, established under the Consumer Protection Act, 2019, and the capacity developed by private ODR centres can be further leveraged for this purpose.

A comprehensive framework governing the ODR platforms for e-commerce related issues will help protect the rights of consumers in this fast-growing digital marketplace.

Views are personal.

About the Authors

Aditya Ranjan

Aditya was a Research Fellow working in the area of Judicial Reforms. He graduated from the Institute of Law, Nirma University, in 2018. Prior to Vidhi, he worked in Jharkhand as a Policy Consultant for a regional political party, where he tackled issues pertaining to environmental law, forest rights, election laws and local self-government. He has previously interned with Newslaundry, Childline India Foundation, the Rethink Aadhaar Campaign and with Adv. Nitya Ramakrishnan. While working in Jharkhand he has authored a critique on the implementation of District Mineral Fund in the state. He enjoys collecting stamps and expressing himself through slam poetry.