E-commerce platforms make profits but eschew responsibility

This year, just like the last, the online marketplace Daraz had its 11.11 sale, which was touted across various platforms as the “biggest sale event of the year”. But this year too, customers had numerous issues with their orders. Many took to social media to complain about receiving the wrong orders while others said that the prices were marked up and then discounted just for the sale. Their common refrain was that Daraz, as the marketplace where the items were sold, should take responsibility for defective items and false pricing.

In response to the backlash, Daraz updated its terms and conditions. But instead of acknowledging the mistakes; it eschewed all responsibility.

“You [the customer] hereby expressly release Daraz as owned by Daraz Singapore Private Limited and/or its affiliates and/or any of its officers and representatives from any cost, damage, liability or other consequence of any of the actions/inactions of the sellers,” a section of the terms and conditions on the website reads, “or other service providers and specifically waiver any claims or demands that you may have in this behalf under any statute, contract or otherwise.”

Daraz is attempting to fight a battle that many online retailers continue to fight across the world. Even Amazon, the world’s most valuable company, fought for decades to abdicate any responsibility for the products that other parties sold on its site. Numerous courts had ruled that Amazon is not liable but recently, in July, a US federal appeals court ruled that Amazon can be held liable for third-party sellers. But across the border, online marketplaces like Amazon India and Flipkart too are not responsible for the actions of private sellers.

Despite the negative press that Daraz received last year and this year from botched sales, the marketplace has continued to deny responsibility, something that almost all other online retailers follow.

Daraz reiterates its absolution of all responsibility multiple times throughout its updated terms and conditions. Under the ‘Third party business’ section, it says it is not responsible for examining or evaluating contents sold by businesses on their platform.

“And we do not warrant or endorse the offerings of any of these businesses or individuals, or the content of their websites. We do not assume any responsibility or liability for the actions, products, and content of any of these and any other third parties,” the section reads. “You can tell when a third-party is involved in your transactions by reviewing your transaction carefully, and we may share customer information related to those transactions with that third-party.”

The Post reached out to Daraz for comment multiple times but did not hear back by press time.

Amun Thapa, the founder of Sastodeal, another popular e-commerce platform, says he also believes that an online marketplace cannot shoulder any liability if there are problems between the sellers and buyers.

“We are concerned about trust issues between buyers and sellers but then, being a marketplace, we cannot take all the responsibility for what arises between them,” Thapa told the Post.

However, according to the Consumer Protection Act 2018, service-oriented companies need to take responsibility for their products and services, say consumer rights activists.

“When a company works as a mediator by providing services, they need to take responsibility for the quality, price and quantity, which is in the law,” said Prem Lal Maharjan, president of the National Consumers’ Forum, an advocacy group for consumer rights.

A lack of specific provisions in the law to address the roles and responsibilities of online marketplaces has meant that these companies are not accountable to anyone, despite making money as middle-men, say consumer rights activists. Sellers too are using the lack of governing laws to cheat customers through false advertising and price markups, they say.

“If the company says that they only work as a mediator between buyers and sellers and does not take any responsibility, then it means that the company is working just as a middleman, which is not allowed by the Competition Promotion and Market Promotion Act 2007,” said Maharjan.

It is time for the government to take legal action against such platforms that violate consumer rights for quality goods at reasonable prices, said Maharjan.

Officials at the Department of Commerce, Supply and Consumer Protection Management said that they’ve been studying Daraz for the past six months after consumer complaints against the company, but there aren’t any results yet.

Nokh Bahadur Bashyal, director of the department, said that they take action if any company is found guilty, but he admitted that complaints of fraud against numerous online shopping outlets have been growing on social media.

The National E-commerce Strategy 2019, which was approved by the Cabinet in June, has given the Ministry of Industry, Commerce and Supplies a year to draft guidelines and regulations for the e-commerce sector. According to the strategy, provisions will be drafted to take legal action against e-commerce platforms that indulge in false advertising, sell low-quality goods, do not deliver on time, charge exorbitant rates, and lack policies for returns and refunds, according to officials from the consumer protection department.

It is precisely because issues arise between buyers and sellers that eSewapasal, another e-commerce website, acts more like an online retailer than a marketplace.(Disclaimer: The owners of The Kathmandu Post have a stake in F1Soft, which owns and operates eSewapasal).

Unique Pudasaini, business development executive at eSewapasal, told the Post that the company was initially planning to operate a marketplace.

“But we were afraid of losing trust as sellers can provide any type of goods. So we decided to directly deal with customers,” said Pudasaini. “We have seen these kinds of trust issues between buyers and sellers both domestically and globally.”

According to Madhav Timilsina, president of the Consumer Rights Investigation Forum, another consumer rights advocacy organisation, e-commerce platforms might have made shopping easier but they have also contributed to numerous cases of consumers getting cheated.

“If the department can take action against small businesses within a day, why is it asking Daraz only for clarifications when consumers have been filing cases against it?” said Timilsina. “The company appears to be using the fact that it operates under foreign direct investment to shut down criticism from government bodies.”