LAW MANTRATHINK BEYOND OTHERS

(National Monthly Journal, I.S.S.N 2321-6417)

CONSUMER PROTECTION IN ELECTRONIC COMMERCE


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Nakul Nasa, &
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Kshitij Mudgal.
4
th
Year BBA.LLB (H)
Faculty of Law, The ICFAI University Dehradun.


INTRODUCTION
Every individual is a consumer, regardless of occupation, age, gender, cast, creed, religion or
race. Consumer rights and welfare are an integral part of the life of an individual and we all
have made use of them at some or the other point in our daily routine. Consumer is the real
deciding factor for all economic activities. It now universally accepted that the extent of
consumer protection is a true indicator of the level of progress in a nation.
A consumer is a user of goods and services; therefore, every producer is also a consumer.
However, conflicting interests have categorised them, inevitably, into different sectors. The
industrial revolution brought in the concept of standardisation and mass production and over
the years, the type of goods and the nature of services available grew manifold. The doctrine
of Caveat Emptor which came into existence in the middle ages had been replaced by the
principle of Consumer Sovereignty.
Unfair and deceptive practices such as selling of defective or sub-standard goods, charging
exhorbitant prices, misrepresenting the efficacy or usefulness of goods, negligence, as to

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safety standards etc became rampant. It, therefore became necessary to evolve statutory
measures, even in developed countries, to make producers/traders more accountable to
consumers. It also became inevitable for consumers to unite on a common platform to deal
with issues of common concern and having their grievances redressed satisfactorily.

CONSUMER PROTECTION LAW
The need to ensure the basic rights to health, safety, etc of consumers have long been
recognised the world over and various general legislations were enacted in India and abroad
in this direction. In India, the general enactments other than the law of torts which ultimately
aimed at protection of consumers interests are the Indian Contract Act, 1872, the Sales of
Goods Act, 1930, the Dangerous Drugs Act, 1930, the Prevention of Food Adulteration Act,
1954, the Patent Act, 1970 etc.
These legislations contained regulatory provisions and contravention of these provisions
attracted civil liability. This meant that an ordinary consumer had no other remedy but to
initiate action by way of a civil suit which involved lengthy legal process proving to be too
expensive and time consuming for lay consumers. Therefore, it became necessary to evolve
laws directed at protecting the consumers and at the same time, providing for remedies which
are simpler, more accessible, quicker and less expensive.

Consumer Protection Act, 1986
The main objective of Consumer Protection Act, 1986 is to ensure the better protection of
consumers. Unlike existing laws which are preventive in nature, the Act has been amended in
1993 both to extend its coverage and wider its scope and to enhance the powers of redressal
machinery. But after the amendment the disposal of cases was not speedy enough, therefore
further necessary amendments were made in year 2002.
The important features of the Act are
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:
The Act applies to all goods and services unless specifically exempted by the Central
Government.

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LOK SABHA SECRETATRIAT, Reference Note on Consumer Protection.

It covers all the sectors, i.e. private, public and cooperative.


The provisions of the Act are compensatory in nature.

It provides adjudicatory authorities, which are simple, speedy and less expensive.


The consumer protection councils at the National, State and District levels.

The Act, deals with provisions regarding reliefs mentioned under the statute.




BASIC RIGHTS OF CONSUMERS
The basic rights of a consumer are:
The right to be protected against marketing of goods and services which are hazardous to
life and property.

The right to be informed about the quality, quantity, purity, standard and price of goods,
or services so as to protect the consumer against unfair trade practices.

The right to be assured, wherever possible, access to variety of goods and services at
competitive prices.

The right to be heard and to be assured that consumers interests will receive due
consideration at appropriate forums.

The right to consumer education.

The right to seek redressal against unfair trade practices or restrictive trade practices.

Consumer Protection in Electronic Commerce.
Today E-Commerce has become an integral part of everyday life. Accessibility to e-
commerce platform is not a privilege but rather a necessity for most people particularly in
urban areas. E-Commerce, one of the fastest emerging trends in shopping is an
unconventional method; this is a very recent development in India and poses a lot of
problems to consumers shopping online.
E-Commerce is defined as
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the use of electronic transmission medium to engage in
exchange including buying and selling of products and services requiring transportation
either physically or digitally from one location to another. In other sense, it is a means of
conducting business/trading/marketing online.
The internet has provided consumers with a powerful tool for searching for and buying goods
and services. Benefits have included increased competition and lower prices, wider choice in
products and services from vendors, convenience of shopping from any part of the world at
any time.
The E-Commerce has also given rise to the challenge of protecting customers against
unsolicited goods and communication, illegal or harmful goods, services and content, dangers
resulting from the ease and convenience of buying online, insufficient information about
goods or about their suppliers, the buyers not being in a position to inspect the goods, cyber
fraud. All these have added up to the problems of buying the goods and services online.
In general the rights of a consumer are provided under section 6 of the Consumer Protection
Act, 1986. The applicability of these rights also extends to electronic consumers as no special
provisions have been laid for the e-transactions. But due to difference in nature and place of
business, non-availability of common dispute resolution system, cross border transactions etc
no special measures are provided in existing consumer legislations.


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Greenstein Marilyn and Todd M. Feinman. E-commerce, risk management and control. USA.
Reasons for the growth of e-commerce transaction in consumer market.

Affordability
Usually shifting from one part of activity to another is a very lengthy and difficult task, it also
involves high cost. But in case of e-commerce it is completely opposite, the consumers are
highly dependent on e-commerce transactions which add up to the growth of the consumer
market.

Convenience
The main source of e-commerce transactions is internet; internet is available everywhere in
the world. Therefore the e-commerce transactions can be made from any part of the world
which adds up to the growth in the consumer market.

Availability.
E-commerce transactions can be made at any time, there are no such time limits or
geographical restrictions. Therefore consumers can avail the services offered by the vendors
at any time from any geographical location.

Wider choice.
In the era of e-commerce the consumers have wide choice of goods and services to choose
from. Earlier consumers use to go from one shop to another for the search of the desired
product. But with such a technological revolution consumers can visit any site and order the
desired product.

Better bargain.
In e-commerce the consumers have the opportunity to avail discount offers, as many sites
provide such discounts which are affordable by the consumers. In India sites such as
snapdeal, myntra, filpkart offer such discounts and packages.
All above mentioned reasons add up to the growth of e-commerce transactions in consumer
market.

Need for consumer protection in e-commerce transactions
The numbers of e-commerce transactions have been steadily increased in India, almost every
individual who can use internet make use of such services from different sources. But on the
other hand there are many risk factors involved while using internet for e-shopping and can
be dangerous in next few years if no regulations are setup. Although internet transactions
have increased efficiency in transactions and increased accessibility for consumers, there
exist many pitfalls that have not yet been satisfactorily dealt with. It is important that
consumer groups in India take this problem seriously and show their concern towards it so
that shopping on the internet can be a safe experience.
Some of the problems faced by using e-transactions are:
Phishing
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Phishing is the act of attempting to acquire sensitive information such as usernames,
passwords and credit card details by masquerading as a trust worthy entity in an electronic
communication. Phishing is a continual threat to the cyber world that is increasing day by day
the risk grows lager in social media sites such as facebook.com. There is a framework of
legal regulations designed to provide protection as a consumer in physical or traditional
modes means shopping from a local shop, but at present there is no such legal framework
which protects consumers from e-commerce transactions.
Risk of security
Another concern in the e-commerce transactions is the risk of security, it is important to
realize that all the computer systems cannot be 100% secured and safe. To overcome this risk

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Wikipedia.org
there should be proper regulation and user-friendly laws which not only provide security to
the consumers but also protect the interest of the consumers.
Online jurisdiction
This problem includes that e-commerce transactions are made from any part of the world
where the vendor works. Therefore in India no such regulations have been made which
protect the interest of the consumers who are in India and making transactions outside India.
The first thing the consumer needs to be ensured that all the parties involved in the
transaction should be from India, this limits the scope of transactions.

Measures to be adopted for the protection of consumers in e-commerce.

Information regarding the e-vendor
The internet is the source of medium used by the people engaged in fraud of online shopping,
they make a fraud website which is used by the customers and such an offence is committed,
these websites can be created for a couple of hours and can be easily moved or removed.
Consumers need information regarding e-vendor so that they can be relied on them and can
make transactions safely.
Information about the product
The most basic information regarding the product i.e. price of product, quality, colour etc is
mentioned by the vendors but they should also mention the complete specification regarding
the product, the taxes applicable if order online, shipment charges, service and maintenance
of the product etc.
Information regarding terms of contract
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As per a survey it was observed that many customers while doing online shopping dont read
the terms and conditions as provided by the vendor and they just click on it. The customers
before making an order should read the terms and conditions of the contract so that they dont
involve into any problem or issue.

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GATT- The Enforceability of Click-Wrap Agreement.
Dispute resolution process
Only few customers avail the option of dispute resolution process which a clause made under
the contract so that if any dispute arises in future how it can be dealt with. There are many
methods of dispute resolution (arbitration, negotiation, mediation). If any matter arises and is
exposed to general public, the public image of vendor is affected; therefore such clauses are
made in the contract.
Confirmation of the transaction
After the order is placed by the customers the vendors should communicate the confirmation
of the placed order to the customer at that moment only, the details regarding the placed
order, delivery date all such necessary things should be communicated. The vendors also
have the option of generating an online receipt and mailing it to the customers.
Adequate regulation of product quality
Consumer protection regulation must ensure that the product desired by the customer should
be according to the safety norms and quality of the product should be as desired by the
customer. The product should also match the description as provided by the customer at the
time of placing the order.
Regulation regarding return and exchange policies
The vendors should have the policy of exchanging or returning the product when the product
is not as per the needs and desires of the customer. This builds a good attitude of the vendor
towards the customers.

Conclusion and Suggestions

Conclusion
Consumer protection in e-commerce industry is one of the contemporary issue which has
been observed by different organisations working in this sector. This issue have gained
attention of both academicians and policy makers. The government and other non-
governmental organisations are now dealing with this issue so that the interest of the
consumers can be protected.
Despite this attention, a review of existing legal framework shows that they have failed e-
commerce needs because the existing legal framework does not provide the provisions
regarding protection of consumers in e-commerce transactions.
As mentioned in the article, there is a need for a legal framework and regulatory authority so
that the interest of consumers while making e-commerce transactions can be protected and
they feel secured.
This article also includes the possible measures that can be implemented so that the interest
of the consumers can be protected. The Consumer Protection Act, 1986 protects the interest
of the consumers at a large but in case of e-commerce transactions the government should
amend the relevant provisions.


Suggestions
From the initial years when internet was a new phenomenon to recent times where internet
has become a basic necessity for every household in most of metropolitan cities the e-
commerce has come a long way. The e-transactions under the present legal system are not
secure and are uncertain because of improper legal mechanism. The existing consumer
protection laws are not under the ambit of e-commerce transaction, so while making such
transactions the consumer should be cautious and careful. The legal system has constantly
tried to catch up especially with the enactment of various laws under the Information and
Technology Act, 2000 to deal with the issues emerging from the field of internet.
The following suggestions help the consumers to be protected while performing the e-
commerce transactions:
Consumers while making an e-transaction should use a credit card while making the
payment as they are more secured as compared to the debit cards; credit card companies
now issue separate security numbers so that the e-transactions can be protected. This
helps in protecting the consumer from fraudulent transactions.

While purchasing the goods online the consumer should purchase it within India, as cross
border transactions include export and import duty charges, and goods can be defective as
well. If the vendor does not provide any information regarding the duty charges and VAT
charges, the consumer should avoid such transactions.

The consumers should not give any credit or debit card details through e-mails or upload
it on a website, as such sources can be fraud.

The consumer should keep the details of the vendor and the source of advertisement
through which the consumer was influenced for purchasing the product. This needs to be
done so that if later consumer files a complaint, these details will act as a proof.

Specific laws should be made for this particular field so that the interest of the consumers
can be protected and this will also help in reduction of cyber law cases.