In January 2025, the Bureau of Indian Standards (BIS) issued draft guidelines on E-Commerce - Principles and Guidelines for Self-Governance (BIS Guidelines) with respect to the self-governance of e-commerce operations in the best interests of consumers and other stakeholders.
The BIS Guidelines apply to an e-commerce entity that operates an electronic commerce platform. Such an e-commerce entity may be a marketplace entity or an inventory-based entity.
The BIS Guidelines seek to (a) divide the e-commerce transaction principle into three phases (pre-transaction, contract formation, and post-transaction stages) and (b) provide general principles for the governance of transactions. In this article, we have briefly discussed the key provisions of BIS Guidelines and their impact on the e-commerce sector.
- Three phases of E-commerce transaction principles
- Pre-Transaction Principle
The pre-transaction principle governs the preliminary stages of an e-commerce transaction, starting when a customer begins to browse through a website or an online store, and includes provisions with respect to registration, listing products, disclosure of relevant information, display of product/service information, placement of disclosures by e-commerce entity, and identification of e-commerce entity.
The BIS Guidelines introduced several new provisions that were not present in the Consumer Protection (E-Commerce) Rules, 2020 (E-Commerce Rules), including, without limitation to the following:
- E-commerce platforms must ensure that the seller's information is available on the platform, eliminating the need for consumers to request the information from the e-commerce marketplace in writing;
- E-commerce platforms are expected to ensure diligent and vigorous Know Your Customer (KYC) of all business partners (especially third-party sellers and service providers) and publish KYC procedures on the platform; and
- The BIS Guidelines set out requirements for additional disclosures such as safety warnings, material composition, buyer protection policies, environmental impact, and search functionality. The disclosures should be prominently published on the platform, website, or app in a clear, legible, and accessible format.
- Contract Formation Principles
The contract formation principles govern the process of creating a binding agreement between the buyer and the seller and include provisions such as express informed consent, policies for cancellations, returns, etc., and maintaining transaction records. The BIS Guidelines has introduced several new aspects that were not provided in the E-Commerce Rules including:
- Transaction Review: The e-commerce entities shall allow the consumers to review information (such as transaction-related, personal, and goods-related information) at the confirmation point (the exact stage of the transaction process at which the customer is asked to confirm the purchase) and consumers should be allowed to edit or modify any necessary details or cancel the transaction, review details of all charges, returns policy, etc.
- Transaction Confirmation: After reviewing the transaction details, the consumer shall be prompted to confirm the accuracy of the details and whether the consumer is ready to make the payment. A receipt or order confirmation summarizing the order details must be provided after payment.
- Payment Principles: E-commerce platforms must ensure the security of payment transactions by implementing encryption, two-factor authentication, and other measures to protect the consumer against fraud. They must comply with relevant laws and regulations related to payment processing including data protection and anti-money laundering regulations.
- Platform Hosted Payment Instruments: Platforms hosting payment options must ensure that they comply with the applicable laws and provide transparency regarding any additional charges, lock-in terms, or forfeitures. The relationship between the platform and payment providers should be clearly displayed to facilitate informed consumer decisions.
- Recurring Charges and Subscriptions: For payment options involving recurring charges, automated repeat purchases, or subscriptions, platforms must disclose the duration, intervals, and amounts involved. A clear process for opting out or cancelling must be provided, and any changes in terms, including price or service conditions, must be communicated to consumers and thereafter continue with their consent.
- Refund in Case of Cash on Delivery: E-commerce platforms offering cash-on-delivery payment must process refunds in the manner as chosen by the consumers.
- Post-Transaction Principles
Once a transaction has been completed, the post-transaction principles focus on safeguarding the consumer's rights. The concept of "merchantability" is emphasized, requiring platforms to facilitate easy returns, exchanges, and refunds if goods do not match their stated purpose. In cases involving counterfeit goods, the platform must provide an extended timeline for replacement, exchange, or refund.
In November 2024, Flipkart was fined INR 10,000 (Indian Rupees ten thousand) by the District Consumer Redressal Forum for refusing to take back a nutrition supplement from a consumer, who alleged that the product was a counterfeit. The forum held that Flipkart's "no return policy" was an unfair trade practice and a deficiency in service. The provision with respect to merchantability is in line with the consumer court ruling as it may ensure consumer protection and hold e-commerce platforms accountable for the quality and authenticity of the goods and services provided on the platform.
Additionally, e-commerce entities shall ensure that the redressal of consumer grievances and/or disputes is in accordance with the Consumer Protection Act, 2019 and related rules. Further, the e-commerce entities should also notify delivery of the goods and provide tracking information through multiple channels such as SMS and e-mail.
- General principles
The BIS Guidelines introduce several general principles including, prohibiting the sale of banned products, compliance with data protection laws, unsolicited commercial communications (express consent for non-transactional communication), treating all sellers equally, adopting fair business practices, and implementing anti-counterfeiting measures.
As per the general principles, the consumers must be free to choose between bundled services (packages of different or unrelated services or products that are sold together as a single unit or subscription plan) or individual products, with clear, transparent pricing. The pricing of bundled services must not prevent consumers from selecting the products or services they actually want. This provision is also in line with the Guidelines for Prevention and Regulation of Dark Patterns, 2023 issued by the Indian government in 2023.
Our Comments
In 2019, the Department of Consumer Affairs issued the Draft of Consumer Protection (E-Commerce) Guidelines, 2018 (Draft E-Commerce Guidelines) for public consultation before the final E-Commerce Rules came into force. Draft E-Commerce Guidelines stated that an e-commerce entity shall be held guilty of "contributory or secondary liability" if the e-commerce entity makes an assurance vouching for the authenticity of the goods sold on its marketplace and it turns out to be a counterfeit good. However, this provision was not included in the final E-Commerce Rules.
However, the BIS has retained a similar concept, using the term "appropriate liability" in the context of the entity's responsibility in cases involving the authenticity of such goods or services. Therefore, a thorough assessment of this provision is necessary to evaluate its potential impact on the e-commerce sector.
Additionally, the Draft E-Commerce Guidelines sought to impose liabilities directly on the sellers listed on the e-commerce entities. Whereas BIS has proposed to impose the liabilities on the e-commerce entities as e-commerce entities have to ensure that the sellers listed on the e-commerce entities provide the required details (i.e. disclosures, entity name, entity details, etc). This change reflects a more stringent accountability placed on e-commerce entities to oversee the actions of the sellers. BIS has mandated compliance with the applicable law (i.e. Telecom Commercial Communications Customer Preference Regulations, 2018) for unsolicited commercial communications.
The BIS Guidelines introduce additional obligations that overlap with the existing regulations, such as the E-Commerce Rules. Consequently, it is imperative for the e-commerce industry to carefully assess the provisions of the BIS Guidelines to evaluate their potential impact on business operations. The e-commerce entities are currently required to comply with various laws in India including the Consumer Protection Act, 2019, E-Commerce Rules and Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. By issuing the BIS Guidelines, the government authorities appear to be focused on strengthening regulatory oversight of sellers through e-commerce platforms, underscoring the necessity for businesses to align with evolving compliance requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
