Flash sales banned on E-commerce websites: New rules in India

New Delhi : In order to end cheating and unfair trade practices in the ecosystem, the government of India has banned flash sales. Food and Consumer Affairs Ministry also suggested strict action against the platform is a seller does not deliver.

The proposed amendments to the rules aim to bring transparency, strengthen the regulatory regime, protect consumers' interests, and encourage free and fair competition, the statement said.

"Certain e-commerce entities are engaging in limiting consumer choice...wherein one seller selling on platform does not carry any inventory or order fulfillment capability but merely places a 'flash or back-to-back' order with another seller controlled by platform," the Ministry said, proposing a ban on certain kinds of flash sales.

"This prevents a level playing field and ultimately limits customer choice and increases prices."

However, third party sellers are not banned from the conventional flash sales on the e-commerce platform.

In accordance to the new rules, the appointment of Chief Compliance Officers, nodal contact persons for 24x7 coordination with law enforcement agencies, to ensure compliance of the Consumer Protection Act, 2019. With this grievance can be addressed in a fast manner.

Further, a framework for registration of every e-commerce entity has been proposed. The allotted registration number shall be displayed prominently on the website as well as the invoice of every order, it says.

This "would help create a database of genuine entities and ensure that consumers are able to verify its genuineness before transacting".

"Mis-selling has been prohibited. That is, selling goods and services...by deliberate misrepresentation of information..." the Ministry said in the statement.

The rules have also proposed strict action against the e-commerce entity if it fails to deliver the product.

The rules were notified with effect from July 23 last year for the purposes of preventing unfair trade practices in e-commerce.

"However, since the notification, the Government has received several representations from aggrieved consumers, traders, and associations, complaining against widespread cheating and unfair trade practices being observed in the e-commerce ecosystem," the statement said.

"Prevalence of such unfortunate incidents has negatively impacted the consumer and business sentiment in the market, causing immense distress and anguish to many," it said.

The proposed amendments are available on the website of Department of Consumer Affairs. Comments and suggestions may be sent to js-ca@nic.in July 6, 2021.