Online Shopping Frauds and Consumer Protection

Blog authored by Athulya R. Krishnan, law student from Government Law College Ernakulam Kerala

Online consumer ship is running its most prosperous business now, especially with the advent of Corona. People are buying products more using online sites than offline methods. But the increasing number of online purchases is also proportional to a hike in the number of online frauds. In Lok Sabha, Piyush Goyal, minister of commerce and industry disclosed the number of complaints filed on the National Consumer Helpline (NCH) related to fraud through online shopping websites. The report indicates an increase of 575% in complaints related to online shopping fraud in the last four years.

The Consumer Protection Act 1986 was established to protect the consumers’ interests, which includes consumers in the online sector also. All goods and services and all modes of transactions in e-commerce business are covered under this act. The act provides a three-tier quasi-judicial mechanism, called Consumer Fora, which was established in August 2016. Thus, the consumers can file a complaint regarding unfair trade practices, including those on the e-commerce sector. There is another online portal, http://www.consumerhelpline.gov.in a platform for consumers to register their complaints about redressal. By the year 2017, a total of 977 complaints about online shopping fraud were registered on the portal. And by the Financial Year 2018-19, the number of complaints increased to 4,955 respectively. 

But the consumers can expect a much better online shopping experience with the introduction of new Consumer Protection Rules of 2020 for e-commerce. This is mainly because of the condition that these platforms can’t charge cancellation fees if a consumer opts to cancel an order after confirming the purchase from now on. And this should be taken into consideration, that e-tailers should pay similar charges, if they cancel the purchase order unilaterally for any reason, as per the new guidelines. Another thing is that the sellers should not discontinue services or stop refunds if the products are found to be fake, damaged, delivered late or look different from description and the product should be taken back. The e-tailers can’t bundle up products with pre-ticked checkboxes on certain products without consumer consent according to the new guidelines.

 The minister also mentioned the partnership of NCH with some companies to resolve their customer complaints. This is an alternate grievance redressal method, a completely voluntary initiative for the quick disposal of complaints by setting up branch offices in all regions. The procedures regarding fraudulent transactions are that a consumer should lodge a First Information Report (FIR) or make a police complaint or to Cyber Cell if the company is not traceable at the moment. The facility to file complaints online either on the NCH website or APP is available too. Therefore, according to NCH a person who buys any goods/services for any consideration, which is paid/promised/partly paid and partly promised, or under a deferred payment system that also involves the user with the approval of such goods beneficiary of services. So the papers, documents – bills, warranty card, agreement copy, brochures, working manual are required. And the complaint must be filed within a time limit of two years from the date of fraud, deficiency in service or goods have occurred. 

The notification stipulated by the Ministry of Consumer Affairs, Food, and Public Distribution reframed the consumer protection e-commerce rules by restricting the e-commerce firms from imposing cancellation charges on consumers who cancel the purchased products or services. And it would be charged from the consumers only if similar charges are borne by the e-commerce firm also. The e-commerce firms should ensure that their grievance officers acknowledge consumers’ complaints within 48 hours and redress it within one month. The government-mandated to show the country of origin so that it would be easy for the customers to make an informed decision during the pre-purchase stage. The e-commerce companies are also directed to provide information related to return, refund, modes of payment, delivery and shipment, grievance redressal mechanism, guarantee and warranty and all other relevant information required by consumers to make informed decisions. And the customer care number of the seller will also be mandatory.

 A recent survey conducted by the global cyber-security company McAfee found out the shocking fact that around 56 per cent of Indians have fallen victim to discount scams widely. Almost one in every four Indian was deceived because of phishing emails and phishing texts, revealed by McAfee’s Christmas Scam survey’s reports. The e-commerce executives opined that; this would give consumers well-defined legal power to go to court in case of disputes in online shopping, including counterfeit products. And it is of grave concern that, any of the e-commerce entity that has explicitly or otherwise vouch for the authenticity of the goods/services sold by it. Also, they promise that such services are authentic will bear the respective liability in any action that is arisen related to the authenticity of such services provided.  

And there are new proposals which further said e-tailers should not manipulate product prices. They show the country of origin, and other details like name, address, the contact information of both –marketplace. They sellers-should be listed online for the sake of a safe shopping experience. Most importantly, measures should be taken to strengthen consumer rights, both e-tailer and their sellers by appointing grievance officers to address any complaints.

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