Explained: New draft e-commerce guidelines
The Central Government has rolled out draft guidelines for e-commerce platforms to make them more accountable. The draft guidelines, titled ‘E-commerce—Principles and Guidelines for Self Governance’, have been prepared taking into consideration the interests of not only the consumer but also other stakeholders involved in the e-commerce business. The framework introduces three-phase principles covering pre-transaction, contract formation and post-transaction stages for e-commerce operations.
KYC procedures for business partners
The draft guidelines states that under the pre-transaction requirements, e-commerce platforms must carry out comprehensive Know Your Customer (KYC) procedures for their business partners. To start selling products online, sellers must create an account to sign into a central repository, containing seller details, inventory, sales and product listing.
Listing products
The guidelines also mandate that listing a new product will require the seller to put in detailed information such as product title, seller contact information, identification number and supporting images. These measures are designed to help consumers better assess the utility and features of products, fostering greater transparency and trust in the online shopping process. The idea behind is that every e-commerce entity must ensure the authenticity of all sellers, service providers and products on the platform because a consumer transacts as he/she trusts the platform and not the seller or service provider.
In case of imported goods
For imported goods, platforms must prominently display importer, packer and seller details. Also, platforms must record consumer consent, enable transaction review, and maintain transparent policies for cancellation, returns and refunds.
Maintain complete transaction record
The guidelines also require that complete transaction records be maintained and made accessible to consumers. E-commerce platforms should strive to offer a variety of payment methods that are accessible to all users, including credit/debit cards, mobile payments, e-wallets, and bank transfers. The guidelines emphasise the need for full disclosure of any processing charges, ensuring that consumers are fully informed about the costs involved in their transactions. This will enhance transparency and consumer confidence in the e-commerce ecosystem.
Implement secure payment system
Platforms must implement secure payment systems with encryption and two-factor authentication. The draft rules require a clear disclosure of duration, intervals, and amounts for recurring payments, along with simple opt-out procedures.
Clear timelines for refunds
The guidelines also require e-commerce players to process Cash-On-Delivery (COD) refunds according to the consumer’s preferred method. The post-transaction guidelines specify clear timelines for refunds, replacements and exchanges, with additional provisions addressing counterfeit products. E-commerce platforms are also required to ensure timely delivery notifications, regardless of whether the delivery is handled internally or by third-party providers. These measures are designed to improve customer satisfaction and ensure that consumers have a seamless post-purchase experience.
Recurring charges and subscriptions
Any payment option or transaction involving a specified recurring charge, automated repeat purchases, transaction renewals or a subscription contract ‘Recurring Obligations’, shall carry a full disclosure on the specific duration, intervals and exact amount in relation to the Recurring Obligations, as well as information, and a clear, accessible process to opt-out of or cancel such Recurring Obligations.
Prohibit sale of banned products
The draft guidelines prohibit the sale of banned products and mandate that platforms establish monitoring mechanisms and conduct thorough background checks on sellers. Additionally, a readymade list of banned products must be provided during the seller onboarding process. The guidelines also require platforms to implement consumer reporting mechanisms, enabling users to report violations effectively.