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E-commerce platforms should be held responsible for fake products on website: Parliamentary panel

E-commerce platforms should be held responsible for fake products on website: Parliamentary panel

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By CNBCTV18.com  IST (Published)

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The report titled ‘Promotion and Regulation of E-Commerce in India’, which was tabled in the Rajya Sabha on Thursday, stated that it is not in the interest of consumers to completely remove all liability from the marketplaces when it comes to the issue of fake or defective products being sold online. 

E-commerce platforms have long shirked responsibility for products being sold through their marketplace by claiming that they do not control the inventory. As a result, e-commerce platforms believe that they should not be subject to any dispute between seller and buyer.

However, the parliamentary standing committee on commerce in its latest report suggested that e-commerce platforms need to take responsibility for the fake products present on their marketplaces.

The report titled ‘Promotion and Regulation of E-Commerce in India’, which was tabled in the Rajya Sabha on Thursday, stated that it is not in the interest of consumers to completely remove all liability from the marketplaces when it comes to the issue of fake or defective products being sold online.

The report, however, maintained that removing all liability from these platforms is detrimental for consumers in general. “It will not be in the interest of customers to absolve e-commerce marketplaces of their responsibility in maintaining the quality and standard of goods sold on their platform,” reads the report.

While the government has not taken a final decision on the matter, the draft e-commerce rules did contain “fallback liability" rules wherein platforms would be responsible if the platform failed to deliver the goods “due to negligent conduct, omission or commission of any act by such seller”.

However, unlike the draft rules, the parliamentary committee suggested that the increased liability should only be imposed on entities which cross a certain threshold to prevent any negative effect on the growth of e-commerce in India.

“The committee, therefore, recommends that a calibrated approach be adopted towards regulating e-commerce entities and the additional duties and liabilities sought to be introduced through the draft rules should be made applicable, specifically to only e-commerce entities that qualify a certain threshold, devised particularly to regulate e-commerce giants,” it added.

Other recommendations made by the panel include setting up a grievance redressal mechanism by e-commerce platforms, considering e-commerce platforms as intermediaries, asking for more clarity on the applicability of the prohibition on flash sales, and the prohibition of marketplaces from selling items belonging (wholly/partially) to the marketplace itself.

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