New Consumer Protection Act may help you sue online retailers from your city

Sunday, 2 November 2014

New Consumer Protection Act may help you sue online retailers from your city

Unhappy with your online purchase and want to take legal action against the seller? You will soon be able to do it from your home city, rather than go where the seller is based.

To help customers, the government is planning to revamp the Consumer Protection Act in the forthcoming winter session of Parliament to allow 'territoryfree' legal action against any goods or service provider.

Under the current rules, a consumer can initiate legal action against a seller only in the place where transaction takes place.

"The current restriction of jurisdiction cannot work in an e-commerce environment. We are looking at changes in the consumer protection act to ensure it addresses these issues," a senior government official privy to the deliberations on the issue told ET.

The ministry of consumer affairs is working on this revamp to safeguard interest of consumers in a world where shopping is not constrained by geography. The existing law, which came into being in 1986, cannot effectively deal with challenges posed by new economic, business and technological developments.

"Technology has erased geographic boundaries... For effective consumer protection it is essential that new law addresses these challenges," the official said. The new provisions will cover both goods and service providers but only those that operate physically from the Indian soil.

The new law would cover not just vendors in online space but also marketplace providers such as Amazon and Flipkart. A significant chunk of India's $10 billion and rapidly growing e-commerce business comes from outside the big cities. Snapdeal says 60% of its business comes from outside the top 15 cities and Flipkart gets half its orders from nonmetros. The government aims to ensure the new law empowers consumers to take on errant etailers.

A significant chunk of India's $10 billion and rapidly growing e-commerce business comes from outside the big cities. Snapdeal says 60% of its business comes from outside the top 15 cities and Flipkart gets half its orders from nonmetros. The government aims to ensure the new law empowers consumers to take on errant etailers.

But etailers fear it may be abused. "Online shoppers are already a pampered lot," a senior executive at a top ecommerce firm said. "Most complaints are in any case settled in the customer's favour. Such rules are prone to get misused."

"This is a welcome order for consumers, as they can file for damages or a compensatory suit in their local jurisdiction saving time and money," says Sanjay Ashar, Senior Partner of Crawford Bailey & Co.

"However it will be difficult for ecommerce companies to fight at several courts. When a company has many cases related to similar products or services, it can go to High Court and transfer those cases to one place. Also, if two courts in different places pass contradicting orders, it will be difficult for the company to know which one to follow, until they get clarity from higher courts. This will certainly increase the legal cost of the e-commerce industry."

Once the revamped law is in place, consumers will be able to approach their local consumer court against a service or a goods provider who may be situated anywhere in the country.

Any "unfair trade practices" including a false claim could be challenged under the new law. The department of industrial policy and promotion (DIPP) had taken up the issue of regulation of ecommerce retailers with consumer affairs ministry. Brick-and mortar retailers associations had represented to the DIPP after leading online sellers including Flipkart and Amazon offered deep discounts to promote sales.
A new inter-ministerial group has also been formed by the government chaired by consumer affairs secretary to deal with new issues in the consumer space.

Source: http://economictimes.indiatimes.com/