Can marketplaces be penalized for non-compliance with FSSAI or food product regulations?

In India, food safety is regulated by the FSSAI (Food Safety and Standards Authority of India), which sets standards for food products, including packaging, labeling, and hygiene practices. Online marketplaces, which host third-party sellers of food products, are often caught in the regulatory crosshairs when it comes to ensuring compliance with these standards. While the sellers are primarily responsible for ensuring that the food products they sell meet FSSAI standards, marketplaces can be held accountable for failing to enforce these regulations. Non-compliance with FSSAI or other food-related regulations can lead to penalties, fines, or even suspension of the platform’s operations in extreme cases.

Key Points on Marketplace Liability for Food Product Regulations

FSSAI and Food Safety Regulations

Under the FSSAI guidelines, food businesses must comply with several critical regulations related to food quality, safety, and labeling. This includes:

• FSSAI Certification: All food manufacturers, packagers, and sellers are required to obtain an FSSAI license or registration. This license ensures that food products meet hygiene, safety, and labeling standards.
• Food Labeling Requirements: Food products must have clear and accurate labeling, including details such as ingredients, nutritional information, shelf life, and manufacturer details. Misleading or incomplete labels could result in penalties for both sellers and marketplaces.
• Packaging and Hygiene Standards: Food products must be safely packaged and stored to prevent contamination or spoilage. Online marketplaces must ensure that products listed on their platforms adhere to these hygiene and safety standards.

Marketplace Responsibility for Seller Compliance

While food sellers are directly responsible for ensuring the products they list comply with FSSAI standards, online marketplaces also have a duty to ensure that their platform follows due diligence. The marketplace may be held accountable if it fails to:

• Verify Seller Compliance: Marketplaces are expected to verify that food sellers have the necessary FSSAI registration or license. If a seller is offering food products without the proper documentation, the marketplace could be penalized for not taking action to prevent it.
• Monitor Product Listings: Marketplaces are responsible for monitoring the listings on their platform. This includes ensuring that food products have proper labeling, packaging, and certification. If a marketplace is negligent and allows non-compliant products to be sold, it could be held liable.
• Take Prompt Action on Complaints: If a marketplace receives complaints from consumers regarding unsafe or non-compliant food products, they are required to act promptly. Failure to remove such products or suspend non-compliant sellers could expose the platform to legal consequences.

Legal Consequences for Non-Compliance

Failure to ensure FSSAI compliance can result in several legal actions:

• Penalties and Fines: Under the Food Safety and Standards Act, 2006, FSSAI has the authority to impose penalties and fines on both sellers and platforms for violations of food safety regulations. Penalties for selling non-compliant food products can include fines ranging from ₹1 lakh to ₹10 lakh or even imprisonment in extreme cases.
• Suspension or Cancellation of FSSAI Registration: If a marketplace continuously allows the sale of food products that violate FSSAI norms, its registration or license may be suspended or canceled. This can severely disrupt its business and lead to reputational damage.
• Consumer Lawsuits: Consumers who suffer harm from consuming unsafe or mislabeled food products can sue the marketplace for damages. If a consumer is injured or harmed due to a non-compliant product, the platform may be liable for the harm caused.

Marketplace’s Role in Enforcing Compliance

To reduce the risk of legal consequences, marketplaces must implement several practices:

• Pre-Sale Compliance Checks: Marketplaces should verify that sellers are FSSAI registered and that their products meet the necessary safety and labeling standards before allowing them to list food products. This can be done through documentation checks or requiring sellers to provide valid certificates.
• Ongoing Monitoring: It is important for marketplaces to monitor product listings regularly for signs of non-compliance. This could include checking product images, labels, and descriptions to ensure they meet FSSAI standards.
• Creating Clear Policies: Marketplaces should create and communicate clear policies to sellers regarding the sale of food products, detailing the need for FSSAI registration, proper labeling, and safe packaging.
• Takedown Mechanism: If a non-compliant product is identified, the marketplace must have a quick and effective mechanism for removing the product from the platform and notifying the seller about the violation.

Examples of Marketplaces Facing Penalties

In the past, there have been instances where online platforms have been penalized for non-compliance with food safety regulations:

• Amazon India: Amazon faced scrutiny for allowing the sale of non-compliant food products by third-party sellers. Several food products lacked proper FSSAI certification, which led to complaints from consumers. Amazon was urged to enhance its monitoring systems to ensure compliance.
• Flipkart: Flipkart has also been flagged for listing food items without adequate labeling or certifications, including the sale of expired goods. The Food Safety Department had to intervene, and Flipkart was required to improve its seller verification process for food products.
• Snapdeal: Snapdeal faced penalties in the past for selling food items that did not comply with food safety regulations. This included items that were either improperly labeled or lacked FSSAI registration.

Steps Marketplaces Can Take to Avoid Penalties

To avoid penalties for non-compliance with FSSAI regulations, marketplaces should:

• Implement Strict Seller Vetting: Ensure that all food sellers are FSSAI-licensed and meet all required safety and quality standards before listing their products.
• Provide Seller Education: Educate sellers about the importance of FSSAI registration and adherence to food safety laws. This could include training materials or workshops.
• Set Up Automated Systems: Use automated systems to flag food products that are potentially non-compliant with FSSAI guidelines. AI can be used to check product listings for missing certifications or improper labeling.
• Timely Action on Consumer Complaints: Respond promptly to consumer complaints about food product safety and take down any non-compliant products immediately.

Example

Rajesh, a seller on MarketPlaceFood, sells packaged snacks but does not have an FSSAI license. MarketPlaceFood does not verify the FSSAI registration of sellers, allowing Rajesh to list his products. A consumer buys Rajesh’s product and later complains that the label is incomplete and the product lacks an expiration date.

Steps the Consumer Could Take:

• File a Complaint with FSSAI: The consumer can file a complaint with FSSAI, which may investigate the platform and the seller for non-compliance.
• File a Lawsuit: If the consumer suffers harm (e.g., food poisoning), they could file a legal claim against the marketplace for allowing the sale of non-compliant food products.

Steps MarketPlaceFood Should Take:

• Verify Seller’s FSSAI Registration: MarketPlaceFood should implement a process to verify that all food sellers have proper FSSAI certification before allowing them to sell food products.
• Remove Non-Compliant Products: Upon receiving the complaint, the marketplace should immediately remove the product and suspend Rajesh’s seller account until the issue is resolved.