Govt will not seek disclosure of flash sale from e-commerce companies

While discount sales will continue to benefit consumers, 'fraudulent' and 'back-to-back' flash sales can't take place, as they limit fair competition and make small businesses uncompetitive

The government will not regulate or seek disclosure related to flash sales organised by e-commerce companies on their platforms, a senior government official said on Tuesday.

While discount sales will continue to benefit consumers, however, ‘fraudulent’ and ‘back-to-back’ flash sales cannot take place, as they limit fair competition in trade and make small businesses uncompetitive, Nidhi Khare, additional secretary, consumer affairs ministry said in a virtual press briefing.

The comments came in the backdrop of the consumer affairs ministry proposing a slew of amendments under the Consumer Protection (E-Commerce) Rules, 2020 to protect the interests of consumers as well as tighten the regulatory regime.

According to the proposed rules, e-commerce companies will not be allowed to organise a flash sale that allows sale of goods or services at significantly reduced prices and high discounts.

“Flash sale is not a normal discounted sale, but refers to a specific sale. The customer gets a very limited choice. So, ideally, its name should be a back-to-back flash sale or sales within a very short period of time. These select sellers which are controlled by the marketplace entity and are actually making or taking advantage of...We are not going to seek disclosure of flash sales. If someone wants to complain, there should at least be a provision,” Khare said, adding that often shell companies are formed just to conduct flash sales.

“We will take action on fraudulent flash sales if we receive any complaints or CCPA (Central Consumer Protection Authority) can take suo moto cognizance,” she added.

According to the proposed rules, the consumer affairs ministry is planning fresh guidelines for e-commerce companies, including appointment of a chief compliance officer, giving preference to the sale of locally produced goods, mandatory registration of e-tailers with the Department for Promotion of Industry and Internal Trade (DPIIT), among others.

The provision of mandatory registration for etailers with DPIIT is being proposed to encourage genuine entities to do business and weed out fly-by-night operators.

Khare further said that the consumer affairs ministry is looking at safeguarding consumer interests pertaining to e-commerce. “Now, this includes the right to be protected against unfair trade practice and also against misleading advertising. So there are provisions in the Consumer Protection Act, and very detailed punitive action as well for ensuring that these rights are not violated,” she said.