Top Five Legal Challenges Faced by Online Courier and E-Commerce Shipping Aggregators in India: Lawyers Advice
Online Courier services as well as E-commerce shipping aggregators have over the years become favorites amongst the consumers and sellers. These are some of the few businesses that have benefitted from the ongoing pandemic due to their ease of use and need for social distancing due to which people prefer not to move out of the house. They have also received a massive boost due to the increased level of internet penetration, accessibility to smart phones as well as the digitization of services. However, like any industry, this industry too faces certain challenges and they are as follows:
- Lack of Clarity: The lack of clarity and regulations for online courier services or e-commerce online aggregators, causes various internal and managerial issues for such aggregators. For instance, taxi aggregators are not governed by the regular transportation laws and due to the lack of a central policy, every state decided to bring about different regulations which did not have a good result for anyone. Later, even though amendments were made by the Motor Vehicle (Amendment) Bill, 2016, it was unable to create a clear distinction between taxis and online aggregators, therefore leading to further regulatory issues. For online aggregators in the food business, an e-commerce food business operator license is required from the Food and Safety Standards Authority of India as well as comply with the rules for the listing as well as delisting of food business operators on the platform, provide the expiry dates of the foods on sale and other relevant information as well. While these requirements seem reasonable, the definition of an e-commerce food business operator includes other parties such as standalone last-mile delivery service providers, who do not have the ability to ensure compliance with various regulations. This causes an issue for online aggregators with limited funds.
- Validity of E-contracts: Whenever a person accesses a website in order to utilize its services, there is a contract that is entered into. These contracts may be known as click-wrap, shrink-wrap and browse-wrap contracts. The type of contract will depend upon the website, however, in cases of e-commerce aggregators it will mostly be a shrink-wrap agreement, wherein the terms and conditions are visible once the purchase has been made. In order for such contracts to be valid, it is necessary that they adhere to requirements of a valid contract as under the Indian Contracts Act, 1872. The major issue however, arises in determining how these requirements are to be fulfilled with regards to e-contracts where there is no face to face discussion over the terms of the contract nor is there the usual paper contract. In order to examine how such requirements are to be met, it is important to consider the provisions of the Information Technology Act, 2000 which provides for the fortification of the validity of e-contracts. E-contracts are enforceable unless prohibited under any other statute, however it is essential to ensure that all the terms and conditions of the contract meet the requirements under the Indian Contracts Act, 1872. Another major issue is that there is no way to determine whether the person entering into an e-contract with online aggregators is a major. According to the Indian Contracts Act, 1872 a minor is not competent to contract and such contracts are not enforceable against the minor. This may pose a major threat to aggregators. Another major issue with respect to the validity of such contracts is whether standard-form online contracts are unconscionable. Given that there is little to no scope for negotiations to be held between e-commerce platforms and customers regarding the terms of the online contracts. Therefore, the question that arises is whether such standard form contracts are to be considered unconscionable and whether they may be struck down by the courts. While there is a lack of exhaustive laws on this question, the Indian courts have dealt with matters wherein one party had the ability to dominate the other and the Indian Contracts Act, 1872 provides recourse is such cases under the provisions of Section 16 (3) which talks about instances of undue influence. In the case of LIC v. Consumer Education and Research Centre [1995 AIR 1811], the court held that “In dotted line contracts there would be no occasion for a weaker party to bargain as to assume to have equal bargaining power. He has either to accept or leave the service or goods in terms of the dotted line contract. His option would be either to accept the unreasonable or unfair terms or forgo the service forever.”, therefore certain terms of the contract were rendered void. This is an issue that may be faced by several online courier services as well as e-commerce aggregators.
- Data Privacy: When a person uses the services offered by an online courier service or e-commerce aggregators, in most instances the completion of a transaction is inevitable without the consumer providing personal information such as information related to their identity and financial details. In certain cases, online platforms may also be able to collect secondary data of the user such as their search history. In the landmark judgements of Kharak Singh v. State of UP [AIR 1963 SC 1295] and People’s Union of Civil Liberties v. the Union of India [AIR 1997 SC 568], recognized the right to privacy as a part of Article 21 of the Constitution of India, which provides for the right to life and personal liberty. The issue however, is that such right can only be exercised against government action and therefore non-state actions for such violation of privacy may be dealt with in a different manner, which may prove more harmful for the aggregators as there is no exhaustive regulation for the same. Additionally, while Section 72 A of the Information Technology Act, 2000 does provide for disclosure of such information without consent, it is still a restricted view of the same. The lack of laws or judgements results in a problem for e-commerce aggregators.’
- Technicalities of Intellectual Properties: For online courier services and e-commerce aggregators, protection of their intellectual property, such as the interface of their website. While laws relating to intellectual property in India provide for protection in the physical world, the use of such laws in e-commerce is not as easy. A major issue for e-commerce companies is that of ‘framing’, ‘meta tagging’ and ‘hyperlinking’. Technical concepts like these are rarely spoken about with major stress being laid only on the broader concepts of trademark, copyrights and patents. While the courts of the United States of America and the United Kingdom have looked into such cases, the Indian courts have not dealt with them in detail. This makes it extremely difficult for the aggregators to determine what they may put on their website and what they may not, as adding an unauthorized link may lead to not infringement of intellectual property on behalf of the aggregator. The lack of a specific provision on the same is problematic. It is essential to define the abovementioned terms as they are often used by website designers in order to promote or provide references, especially for e-commerce shipping regulators as they have to use the names and images of the products or services being offered or sold by them.
- Lack of Provisions: Last but not least, e-commerce shipping aggregators and online courier services are unable to tap their full potential due to the dominating effect of big Companies. Since, these companies have secured large investments, they do not have to worry about the costs of logistics and even though their primary service is delivery of goods, they are able to diversify and turn into an “online marketplace”. It is not possible for every company to emulate this business model. The costs of logistics due to the poor infrastructure, lack of grants and subsidies provided under laws and policies as well as the digital regulations are some of the main issues faced by e-commerce shipping aggregators. As per the Draft National E-commerce Policy of 2019, several manufacturers are based throughout the country but shipments sent through courier for e-commerce exports are accepted by airports in Delhi, Mumbai and Chennai only, therefore it is tough for online courier services to fulfill their deliveries in time, thereby reducing their popularity and hindering their potential.
While the Government has acknowledged the importance of a regulatory statute for e-commerce in India, there still is a long way to go. A major part of the potential of the e-commerce market remains untapped due to dominance by market giants, however with the increase in clarity of implementation and regulation laws in this sector will lead to a more organized sector with reduced overhead and unnecessary costs, thereby permitting an increased growth rate.
Authored By: Adv. Anant Sharma & Suvigya Buch