E-Commerce Liability Under the Consumer Protection Act 2019 — A Founder’s Guide

BySirish Tamvada

Editorial note: Originally drafted in November 2025 and published as part of The Tamvada Brief archive.

The Consumer Protection Act, 2019 quietly rewrote the rules for every Indian founder selling online. The 1986 Act treated e-commerce as an afterthought. The 2019 Act, together with the Consumer Protection (E-Commerce) Rules, 2020, treats it as a category of its own — with new duties, new liabilities, and a new National Commission jurisdiction that begins at Rs 2 crore.

If you run a marketplace, a direct-to-consumer brand, an aggregator, or a SaaS platform that touches a retail consumer in India, three changes matter.

Change 1 — Product liability now travels with the platform

Section 84 of the 2019 Act introduces a product liability action against a manufacturer, a product seller, and a product service provider. The drafting matters: “product seller” includes any person who, in the course of business, imports, sells, distributes, leases, installs, prepares, blends, packages, labels, markets, repairs, maintains, or otherwise involves the product in the placing of such product for commercial purpose.

For a marketplace, this language is meaningful. An e-commerce entity that simply provides the platform may argue it is not a “seller” within Section 84. But the moment that entity labels, brands, fulfils, or markets the product, the seller characterisation is much harder to escape. The Supreme Court has not yet drawn a definitive line, but the 2020 E-Commerce Rules (notified under Section 101 of the 2019 Act) make a clearer distinction:

  • Marketplace model — the e-commerce entity facilitates transactions between buyer and third-party seller; obligations include due diligence, grievance officer, return policy disclosure
  • Inventory model — the e-commerce entity owns and sells the goods or services itself; full seller obligations apply, including Section 84 product liability

A founder running a marketplace that quietly white-labels a vendor’s product is operating much closer to the inventory model than they may realise.

Change 2 — Unfair trade practices, redefined for the digital era

Section 2(47) of the 2019 Act defines unfair trade practice and expressly includes:

  • Making false or misleading representations of any kind in respect of a product or service
  • Falsely stating that a product is of a particular standard, quality, grade, composition, style, or model
  • Misleading advertising
  • Failure to issue a bill or cash memo
  • Disclosure of personal information given in confidence

The 2020 Rules apply this to e-commerce: prohibiting flash sales that are not genuine, fall-back liability for the platform where a seller’s negligence causes loss, no manipulation of search results, and transparent display of country of origin. Each of these has been a regulatory focus of the Central Consumer Protection Authority (CCPA) since its creation under Section 10 of the 2019 Act.

For founders, the CCPA’s power to issue class-action recall and compensation orders under Section 19 is the regulatory teeth most often underestimated. A single CCPA action can affect every customer who bought a product, not just the complainant.

Change 3 — Jurisdiction and remedy levels reset

Under the 1986 Act, the District Forum, State Commission and National Commission jurisdictions were calibrated to lower value thresholds. The 2019 Act has reset them to Rs 50 lakh / Rs 2 crore for State and National Commissions respectively (subsequently amended through subordinate notifications — confirm the current threshold against the latest notification before relying on this in a notice).

The 2019 Act also introduces:

  • E-filing and e-hearing capacity (Section 17)
  • Mediation as a prescribed mode of resolution (Section 74)
  • Three-year limitation period under Section 69 (with discretion to condone delay)
  • Punishment for misleading advertisement including imprisonment up to two years and fines up to Rs 10 lakh, and up to Rs 50 lakh for repeat offences (Section 89)

These are not trivial. A founder selling a Rs 2,000 product to 50,000 customers across India has roughly 50,000 potential consumer-forum complaints; the cost of even 100 such complaints — in time and counsel costs — exceeds the cost of compliance many times over.

A concrete scenario

Consider a D2C electronics brand selling a Rs 4,000 wireless earphone online. The product is manufactured by a third party in Shenzhen, labelled with the brand’s logo, packaged in the brand’s box, and shipped through the brand’s fulfilment partner. A customer in Mysuru receives a defective unit; the brand refunds reluctantly after three emails. The customer files at the Karnataka State Commission alleging unfair trade practice and Section 84 product liability.

The brand’s defence — “we are only the marketplace” — fails. The brand labelled, packaged, marketed, and provided post-sale service. The brand is the product seller within Section 84. The Commission awards refund + compensation + costs.

Multiply that one matter by 200, and the legal-services cost line in the brand’s P&L exceeds its growth-marketing line.

What every founder selling online should do this quarter

  1. Map your model honestly. Marketplace, inventory, hybrid? The honest answer determines your exposure under the 2020 Rules.
  2. Audit your product pages. Country of origin, grievance officer name and contact, return policy, refund timelines, mandatory disclosures — every page must carry these.
  3. Designate a grievance officer. Required for every e-commerce entity. Display name, designation, contact, and turnaround commitment (48 hours acknowledgement; 1 month resolution).
  4. Reconfigure your post-sale processes. A documented return-and-refund workflow that issues bills, captures complaints, and tracks resolution is what holds up at a Commission.
  5. Train customer service on what not to say. “We will replace it as a one-time gesture” sounds friendly, but is a legal admission that the product was defective. Equip teams with phrasing that resolves customer concerns without prejudicing future legal exposure.
  6. Insure. Product liability insurance is increasingly available for Indian D2C brands. The premium is a fraction of the cost of a single class action.

Counter-position to be aware of

The CCPA has occasionally taken aggressive positions on marketplace liability that the appellate forums have moderated. The line between “facilitator” and “seller” continues to be litigated; reasonable lawyers disagree on where it falls in particular fact patterns. The conservative practice — and the one we typically recommend — is to assume marketplace liability for any product the platform labels, fulfils, or markets, and to operationalise compliance to that standard.

The bottom line

The 1986 Act treated e-commerce as a footnote. The 2019 Act treats it as the main text. Founders who built their compliance posture in 2018 are operating two regulatory generations behind. Catching up is straightforward — but the catching-up has to begin before the first CCPA notice arrives.

Sources & further reading

Primary statute (source: indiacode.nic.in):
– Consumer Protection Act, 2019 — Act No. 35 of 2019

Subordinate legislation:
– Consumer Protection (E-Commerce) Rules, 2020 (notified by Department of Consumer Affairs, July 2020) — consumeraffairs.nic.in
– Central Consumer Protection Authority notifications — ccpa.gov.in (verify availability)

Paired toolkit CTA: Building the compliance back-end of an e-commerce business goes beyond consumer law — DPDP, contracts, employment, IP all intersect. Our Startup Legal Toolkit Pro gives you templates, checklists, and the working playbook for each.

Book a free consultation on TopMate for a one-hour walkthrough of your e-commerce compliance posture.

This blog is informational and educational. It is not legal advice.

Originally published 28 November 2025 · Last updated 12 May 2026.