What obligations do platforms have under new draft self‑governance guidelines?

In response to the rapid growth of e-commerce and the increasing role of online platforms in the digital marketplace, various regulatory bodies have proposed new self-governance guidelines aimed at ensuring fair practices, consumer protection, and transparency in the digital space. These guidelines are designed to hold platforms accountable for the content they host, the products they sell, and the services they provide to consumers. As e-commerce and social media platforms continue to grow, regulators are pushing for more stringent measures to prevent fraud, unethical behavior, and the spread of harmful content, all while maintaining a balanced and fair marketplace.

Key Obligations Under the New Draft Self-Governance Guidelines

• Transparency in Business Practices

Platforms must ensure complete transparency about their business practices. This includes:

• Clear Terms and Conditions: Platforms must clearly define their terms of service, return policies, and product descriptions so that consumers can make informed decisions.
• Disclosure of Sponsored Content: E-commerce and social media platforms are required to clearly identify and disclose paid advertisements or sponsored content to prevent misleading consumers about the nature of the content they are engaging with.

• Grievance Redressal Mechanism

One of the central tenets of the new guidelines is the establishment of an efficient grievance redressal system.

• Dedicated Complaints Officer: Platforms must appoint a grievance officer responsible for resolving consumer complaints within a stipulated time frame, typically 30 days.
• Clear Escalation Process: A transparent escalation process must be available for consumers who are dissatisfied with the initial resolution of their complaints. Consumers must have easy access to contact information for grievances and escalation.

• Accountability for Content Moderation

Under the new guidelines, platforms are also held responsible for monitoring and moderating the content hosted on their platforms:

• Proactive Monitoring: Platforms are expected to have systems in place to detect and remove harmful or illegal content such as hate speech, fake reviews, or defamatory content. This includes content related to fraud, child sexual abuse material (CSAM), and counterfeit products.
• Algorithm Transparency: Platforms must disclose how algorithms are used to recommend content, products, or services, and ensure that these algorithms do not promote harmful or misleading content.

• Protection of Consumer Data

Consumer data privacy is a growing concern, and under the new guidelines, platforms are required to:

• Data Security: Ensure that personal data collected from users is secure and stored according to the applicable data protection laws, such as India’s Personal Data Protection Bill.
• Informed Consent: Platforms must obtain informed consent from users before collecting their personal data and must allow users to control how their data is used.
• Right to Be Forgotten: Platforms are expected to provide consumers with the ability to delete their data and deactivate their accounts, ensuring consumers' right to be forgotten.

• Prohibition of Misleading Advertising and Fake Reviews

To combat misleading advertising and fraudulent reviews, the guidelines state:

• Accuracy in Advertising: All advertisements must be truthful and must not mislead consumers. This applies to product claims, pricing, and availability.
• Fake Reviews: Platforms must take proactive steps to detect and prevent the posting of fake reviews, which are often used to inflate the perceived quality of products or services.
• Seller Transparency: E-commerce platforms must ensure that the identities of sellers are clearly displayed, with clear details about the authenticity and background of the product and seller.

• Compliance with Local Laws and Consumer Protection Standards

Platforms are required to:

• Adhere to National Regulations: E-commerce platforms must comply with all relevant national laws, including consumer protection laws and product safety regulations. This includes ensuring that all products sold meet quality and safety standards.
• Dispute Resolution: Platforms must provide a mechanism for alternative dispute resolution (ADR), where consumers and sellers can resolve disputes without going through lengthy litigation.

• Prevention of Unfair Trade Practices

The guidelines also mandate that platforms take action against unfair trade practices, such as:

• Price Gouging: Platforms must prevent instances of price manipulation, such as when sellers increase prices artificially during periods of high demand (e.g., during emergencies or festivals).
• Bait-and-Switch Tactics: Platforms must prohibit the practice of advertising a product at a low price and then substituting it with a different or higher-priced item once the consumer attempts to purchase.

• Promoting Ethical Business Conduct

The guidelines emphasize the promotion of ethical business conduct, where platforms are expected to:

• Prevent Exploitative Practices: Ensure that vendors or third-party sellers on the platform are not engaging in exploitative practices, such as unfair pricing, child labor, or environmentally harmful production methods.
• Encourage Fair Competition: Platforms should avoid engaging in practices that unduly favor certain sellers, such as prioritizing them in search results without justification, or preventing other sellers from accessing their services.

Example

Scenario: An e-commerce platform ShopFast is listed with various third-party sellers. One of the sellers is using images of popular influencers to promote their products without permission, and consumers are complaining about misleading advertising and poor-quality products. Additionally, some products on the platform are being sold with fake reviews.

Steps that could happen:

• Grievance Redressal: Consumers file complaints with ShopFast’s grievance officer, but the issue remains unresolved within 30 days.
• Action Taken: According to the new self-governance guidelines, ShopFast is required to act quickly. They issue a notice to the seller using unauthorized images and remove the fake reviews. The company is also required to establish better content monitoring systems.
• Transparency: ShopFast is required to disclose how they moderate content and algorithms that prioritize seller listings.
• Fine or Penalty: If ShopFast fails to address the grievances and uphold the transparency and data protection principles outlined in the guidelines, regulatory authorities may fine the platform and impose corrective measures.
• Seller Accountability: The platform may also impose restrictions or delist the seller involved in misleading advertising and unethical practices.

Conclusion

The new draft self-governance guidelines for e-commerce platforms impose a significant responsibility on online businesses to act in a manner that prioritizes consumer protection, transparency, and ethical conduct. These guidelines are designed to address some of the key challenges in the digital marketplace, such as fake reviews, misleading advertising, and data privacy concerns. E-commerce platforms must ensure they have the right mechanisms in place to handle grievances, monitor content, protect consumer data, and comply with relevant laws to build a fair and trustworthy online environment.