Online Shopping: Charged Over MRP? You Might Have A Remedy

Charging over MRP by e-commerce sites amounts to deficiency in service, says consumer court.

<div class="paragraphs"><p>The Flipkart logo is pictured on its headquarters in Bengaluru. (Photo: Reuters) </p></div>
The Flipkart logo is pictured on its headquarters in Bengaluru. (Photo: Reuters)

A consumer dispute redressal commission in Telangana recently held Flipkart Internet Pvt. liable for charging a customer an amount above the maximum retail price. The e-commerce major, along with the seller, was directed to pay a compensation amounting to Rs 50,000 along with costs.

The consumer had purchased Freedom Refined Sunflower Oil on Flipkart. and was charged above MRP by Rs 140. The original MRP of the product was smudged and illegible, basis which the aggrieved consumer initiated the complaint.

Flipkart argued that it's a mere intermediary in the transaction and the sale was undertaken by an independent seller. There is no contract between Flipkart and the buyer, and that the transaction was between the seller and the buyer. The liability of an e-commerce platform ends at the display of required details; ensuring its accuracy is the duty of the seller, the e-commerce platform argued.

According to Flipkart, it was never in possession of the goods, and cannot be held responsible for tampering with the product. Moreover, it said, it's the seller who is the ultimate beneficiary of the excess amount.

The consumer commission didn't buy these arguments.

It said that under the Legal Metrology (packed goods) Rules, e-commerce platforms are liable to provide information such as MRP on their website. They have a responsibility not to manipulate the goods or not make any unreasonable profit out of it. A failure to meet these stipulations amounts to a deficiency in service under consumer protection law.

Deficiency refers to any imperfection or inadequacy in the product or service and includes any negligence that causes loss or injury to the consumer.

Economic loss and mental agony being the harm in the instant case, said Rajesh Vellakkat, partner at Fox Mandal, Solicitors and Advocates. "Flipkart was rightly penalised."

The law around intermediaries has evolved with the evolution of intermediary from a mere spectator to an active participant. They cannot be allowed to exonerate themselves of all liability relying on the safe harbour rules meant for a pre-internet era.
Rajesh Vellakkat, Partner, Fox Mandal Solicitors and Advocates

The limited liability of an intermediary under the Information Technology Act, 2000 cannot be extended to consumer protection laws, where the user makes purchases based on the credibility of the e-commerce site rather than the seller himself, Vellakkat added.

The court also pointed to the e-commerce rules to say that they bar platforms from charging excess price unless justified. What is a justified price would depend on the circumstances under which the service is provided, it said.

"There is tripartite contract between the seller, service provider, and the consumer. As such, the seller and service provider are liable for any defect, deficiency of service and unfair trade practice on the services provided or good/product sold by them." - District Consumer Court, Nalgonda

A contract is unfair, when there is a significant change in the rights of the consumer as in this case. A Rs 140 increase in price was considered excessive by the court.

A straitjacket approach is undesirable in all cases, said Ashwini Vittalachar, partner at Samvad Partners.

Misselling is common to brick-and-mortar sellers as well as online sellers on marketplaces. In an online marketplace, the liability of an intermediary must depend upon the extent of involvement of such marketplace in misselling, Vittalachar pointed out. "In an instance, there could be an outright violation of labelling regulations or other requirements stipulated by the law. In yet another scenario the marketplace may have no role to play besides providing an access for the seller."

When the scenario is different, outcome too must differ. Having a straitjacket approach in every scenario would only result in taking the concept of intermediary back in time by at least 10-15 years, as against the modern law and understanding
Ashwini Vittalachar, Partner, Samvad Partners

The e-commerce rules are relatively recent compared to the retail sale business—both offline and offline. The future of e-commerce-consumer litigation is going to depend upon the approach of various consumer redressal forums in addressing the extent of liability of intermediaries, she said.