Govt may soon ask e-commerce firms to refund all customers duped with fakes

Such a move may signal govt's foray into regularising e-marketplace

Aiming to stop the massive spread of counterfeit products being sold online, the government may soon ask e-commerce firms to provide full refunds to customers who have been duped.

The move by the Department of Industrial Policy and Promotion (DIPP) with regards to setting clear norms for customer redressal when they receive counterfeit products may, however, remain toothless as the directive wouldn't be mandatory for e-commerce players.

A scheme may be developed along the lines of the chargeback scheme provided by credit card companies globally, a senior DIPP official said, also indicating that the government may have to step in to rein in the scourge. The DIPP has started stakeholder consultations and is organizing a national meet on online counterfeiting and the role of enforcement agencies in collaboration with European Union (EU), he said.

Currently, major players such as Flipkart, Snapdeal and Amazon, among others, commit to refund or replace a product within a maximum period of 30 days subject to various conditions. But on all these platforms, a significant number of products continue to remain outside the ambit of such refund policies while refund itself may not be allowed in certain cases. Also, refunds are released after the customer is able to prove it is a fake.
 

• Number of complaints lodged on govt portal regarding counterfeit products being sold online have risen over the past few months.
• Govt planning to create a system along the lines of chargeback scheme provided by credit card companies.
• Duplicate registration by fake sellers an issue
• E-commerce players say while checks against fake products are in place, the process is not airtight as number of registered sellers high.

As a result, most e-commerce firms questioned the need of any such policy move, given that existing company policies already address the issue in a similar manner. "As a responsible online marketplace, we always travel the extra mile to weed out counterfeit products from our platform. Any government's initiative to protect consumer rights is a welcome move. Shopclues' policy around Protection of Intellectual Property has a mechanism to report counterfeit products. We look forward to further consultation in this regard with the stakeholders," said Ambar Deep, VP of ShopClues. 

"While we are yet to conduct a conclusive study on the subject, cases of counterfeit products being sold through e-commerce platforms have risen according to industry estimates," a senior DIPP official who did not want to be identified said. "Initial estimates from the Department of Consumer Affairs' complaints portal also show a rise in allegations of counterfeiting in online transactions," another DIPP official said while seeking anonymity.

He indicated that the latest move may be a stepping stone for more stringent product selling norms to be imposed by the government on the e-commerce sector.

Last year, US-based athletic footwear brand Skechers had filed cases with the Delhi High Court against Flipkart and four other sellers for selling fake products. The second largest such brand in the US, Sketchers managed to get the court to raid multiple warehouses owned by registered sellers on the platform and discovered thousands of fake shoes.

However, Flipkart had later denied the allegations saying that robust checks were in place within the selling process and was backed up by other firms. However, the same firms have told the government that conducting background checks on every retailer is not possible as their numbers ran into lakhs.