Government to revise Consumer Protection Act; Warning for sellers?

Sellers, you may want to pull up your socks and stay out of trouble. The government has plans of revamping the Consumer Protection Act this winter session so that consumers may take legal action against a goods or services provider from anywhere, territory-free.

What does this mean

So if you are listed as working from Karnataka, and your angry customer is in West Bengal, it is a hassle for him to sue you since the matter would fall under the jurisdiction of Karnataka. This has been the law since 1986, and appears redundant in a world where geographical boundaries are getting blurred thanks to technology.

Vendors as well as marketplaces such as Amazon, Flipkart, Snapdeal would fall under the purview of the new law. Considering a large chunk of business (in the case of Snapdeal, it is 60%) for marketplaces comes from cities besides the top 15 major cities in India, the revised law would empower customers who are physically located far and away from where the marketplaces carry out operations.

What else does this mean

But every good thing comes with its flipside. Customers, who are already treated as kings, could twist this revision to their advantage. While filing for compensation, customers would save time, effort and money since it would be in their local jurisdiction, but the sellers and marketplaces would have to increase their legal costs since all the cases filed against them would need to be settled in different courts. The cost of operations in ecommerce industry is already debatably high – what with heavy promotions and marketing campaigns. This move would increase the costs further.

What may have led to this decision though are the astonishing discounts that marketplaces such as Flipkart and Amazon offer.  The Department of Industrial Policy and Promotion (DIPP) had recently taken up the issue of regulation of ecommerce retailers with consumer affairs ministry. This was as a consequence to  offline retailers associations taking up the issue with DIPP of leading online sellers including Flipkart and Amazon offering massive discounts to promote sales.

Who else is unhappy with you

Another group feeling slightly hostile towards online sellers is the All India Mobile Retailers Association. “Online retailers engage in unethical practices by offering far lower prices than offline trade, and these practices are going on unchecked,” said Dheeraj Malik, the association’s secretary general. He expressed that the fear isn’t limited to just small retailers, or to only mobile phone sellers, but it exists even with large sellers and among apparel, home and kitchenware sellers. AIMRA demands that a regulatory authority be formed to take care of the $500-billion Indian retail industry. Malik believes that despite the fact that offline retailers offer occasional heavy discounts as well, they would never be able to compete with the large scale and flashy sales that online marketplaces offer.

Well, the good news is that when people are against you is when you know you’re making the most progress. Happy selling!