Can platforms be penalized for selling unregistered or uncertified products?

E-commerce platforms play a central role in facilitating the sale of various products, from everyday consumer goods to specialized items. However, the rapid growth of online shopping has raised concerns about the sale of unregistered or uncertified products. These products may not meet legal safety standards or consumer protection regulations, leading to potential risks for consumers. Under Indian law, e-commerce platforms are not only responsible for providing accurate information about the products they sell but also ensuring that they comply with regulatory certification and safety standards. If a platform sells uncertified or unregistered products, it can face legal penalties and consumer grievances.

Legal Framework Governing the Sale of Unregistered or Uncertified Products

Consumer Protection Act, 2019

The Consumer Protection Act, 2019 is a key piece of legislation that ensures consumer rights in India. It provides a legal framework for the protection of consumers against unsafe, defective, or substandard products sold by e-commerce platforms, among other entities. The Act stipulates that:

• E-commerce platforms are required to ensure that the products they sell meet safety and quality standards. This includes verifying that products have the necessary certifications (e.g., BIS (Bureau of Indian Standards) certification, FSSAI registration for food items, or BIS Mark for electronics).
• If an e-commerce platform sells uncertified or unregistered products, it can be penalized for violating consumer rights under the Act, including fines and legal action.
• The platform can be held responsible if the product causes harm to consumers, as they are expected to take due diligence before listing products.

The Bureau of Indian Standards (BIS)

The Bureau of Indian Standards (BIS) is responsible for setting quality standards for products sold in India. Many products, such as electronics, food, and building materials, are required by law to carry the BIS certification to ensure safety and quality.

• Uncertified Products: If an e-commerce platform sells products that are required to be BIS-certified (e.g., certain electronic appliances or packaged food items) without the necessary certification, they may face regulatory scrutiny, including penalties and even a ban on the sale of such products.
• Fines and Penalties: Sellers on e-commerce platforms who sell unregistered products without the required BIS certification can be penalized under the BIS Act.

Food Safety and Standards Authority of India (FSSAI)

For food products, the Food Safety and Standards Authority of India (FSSAI) is responsible for regulating and ensuring the safety and certification of food products sold in India. E-commerce platforms selling food items must ensure that these products are FSSAI-licensed and meet the safety standards set by the authority.

• If platforms list uncertified food products without FSSAI approval, they can be penalized under the Food Safety and Standards Act, 2006.
• E-commerce platforms can be held accountable for selling unsafe or unregistered food items, which may lead to fines, business suspensions, and reputational damage.

Drugs and Cosmetics Act, 1940

The Drugs and Cosmetics Act regulates the sale of medicines and cosmetics in India. Under this Act, all medicines and cosmetic products sold in the market must be registered with the Drugs Controller General of India (DCGI).

• If e-commerce platforms sell unregistered medicines or uncertified cosmetics that have not been approved by the DCGI, they can face severe penalties, including heavy fines and imprisonment for sellers, manufacturers, and the platform operators.
• Platforms must ensure that any medical or cosmetic products listed on their sites meet the required certification and licensing standards.

The Legal Metrology Act, 2009

The Legal Metrology Act ensures the accuracy of measurements used in trade and commerce. This Act mandates that products sold in India must comply with proper packaging, labelling, and measurement standards. E-commerce platforms are responsible for ensuring that the products they list comply with these rules.

• Selling uncertified or unregistered products, such as improperly labelled food or goods with misleading weight/measurement, could lead to penalties for non-compliance with this Act.
• The Act also requires that products sold online must bear correct and accurate labels, which helps prevent misleading or fraudulent practices.

The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954

This law regulates advertising for drugs and medicines. It prohibits misleading or unsubstantiated claims about the effectiveness of drugs, including online sales.

• E-commerce platforms selling unapproved drugs or unregistered medical devices can be penalized for violating this Act, especially if they advertise false claims regarding the product’s effectiveness.

Penalties for Non-Compliance

E-commerce platforms found selling uncertified or unregistered products can face several penalties, including:

• Fines: Platforms can be fined based on the severity of the violation. For instance, selling unsafe food products can lead to significant fines under the FSSAI rules, while selling unlicensed drugs could result in much higher penalties under the Drugs and Cosmetics Act.
• Product Bans: In cases where the product violates safety standards or certification requirements, regulators can impose a ban on selling such products on the platform.
• Imprisonment: In extreme cases, if a platform repeatedly sells dangerous or fraudulent products, the platform operators or sellers may face imprisonment, especially under laws like the Drugs and Cosmetics Act.
• Reputational Damage: Platforms selling unregistered or uncertified products may face significant reputational harm, leading to loss of consumer trust and a decline in sales.

Example Scenario

Suppose an e-commerce platform lists a series of electronic appliances (such as water heaters, pressure cookers, etc.) that are required by law to be BIS-certified. However, these products are not BIS-approved and fail to meet the safety standards required by Indian law.

• Consumer complaint: A consumer buys one of these uncertified products, and it causes harm or does not perform as advertised.
• Regulatory action: Authorities may investigate and issue a penalty against the e-commerce platform for selling uncertified goods.
• Penalties imposed: The platform may be fined, required to remove the product listings, and face legal action for violating product safety regulations.
• Consumer compensation: The platform may be ordered to provide compensation to the affected consumer and recall the faulty or unsafe products.

Summary

Yes, e-commerce platforms can be penalized for selling unregistered or uncertified products in India. These platforms are responsible for ensuring that the products they list meet legal requirements such as certifications from BIS, FSSAI, and other regulatory bodies. Selling uncertified or unsafe products can lead to fines, legal action, product recalls, and reputational damage. Platforms must verify the certification status of their products and adhere to consumer protection laws to avoid legal consequences.