Proposed Quality Control Order for e-comm firms; experts raise concerns over lack of clarity

The Department of Consumer Affairs shared a QCO draft on online customer reviews, as the threat of fake reviews erodes trust in ecommerce. Experts say the initiative's success will depend on clear implementation strategies and clarity on consequences for violations.

By  Akanksha NagarMay 22, 2024 9:12 AM
Proposed Quality Control Order for e-comm firms; experts raise concerns over lack of clarity
By mandating stricter regulations and accountability measures for e-commerce platforms, the order is likely to reduce the prevalence of fraudulent reviews, thereby fostering a more trustworthy digital marketplace. (Image: Unsplash via Markus Winkler)

As India’s e-commerce market continues to grow, so do consumer grievances online. The market is estimated at $112.93 billion in 2024 and is expected to touch $299.01 billion by 2029, growing at a compound annual growth rate (CAGR) of 21.5% over this period. Meanwhile, the number of consumer grievances relating to e-commerce registered on the National Consumer Helpline has increased significantly—from 95,270 in 2018 (22 percent of total grievances), to 444,034 in 2023 (43 percent of total grievances).

So, it only makes sense for the industry to have a net positive reaction to the Department of Consumer Affairs (DoCA) holding a stakeholder meeting with e-commerce firms (including Amazon, Google, and Flipkart) on the protection of consumer interest and safeguarding consumers from online fake reviews.

DoCA is considering a mandatory quality control order (QCO) under Section 16 and Section 25 of the Bureau of Indian Standards Act (BIS), 2016 — this was said to be only a ‘voluntary compliance’ last year. (These sections empower the Ministry of Consumer Affairs to establish standards for products, services and systems.)

The draft details

The proposed QCO (aimed at implementing the IS 19000:2022 standard for online consumer reviews) prohibits organisations from publishing consumer reviews online with biased objectives and prejudices, editing reviews to change their message, or preventing or discouraging negative review submissions.

It requires companies to identify the author of online reviews and check for biases and problematic language in the reviews. The standard also prescribes specific responsibilities for review authors and administrators.

The QCO applies to all companies that manage and publish consumer reviews.

As per the draft shared by industry sources with Storyboard18, companies do not require a certification from the BIS but they must register with the standards body and self-certify that they are compliant.

The QCO provides different implementation timelines— six months for large and medium enterprises and all aggregators agnostic of their size. 12 months for small enterprises and 18 months for micro-enterprises under the micro, small, and medium enterprises Act, 2006. Additionally, businesses are required to ensure that paid and fake reviews are not posted on their platforms; nor should they provide rewards to users based on their reviews.

The challenges

While the industry has welcomed the draft, many have their share of doubts. For one, the QCO mandates companies to determine if a review was paid. To ascertain this, businesses will need to figure out a paper trail between review brokers and reviewers making it a difficult task for big and small companies alike. Further, neither the QCO nor the BIS’s standard provide any guidance on ascertaining the biased objectives and prejudices of reviewers.

Experts said it remains unclear how companies can self-certify.

It is an open secret that reviews can be “bought,” and while it will be relatively easier to identify fictitious reviews and those that have been edited or misrepresented, it will be more difficult to clamp down on paid and incentivised reviews from real people, noted Samit Sinha, Founder & Managing Partner, Alchemist Brand Consulting.

The government should also simultaneously run an educational campaign for consumers to help them distinguish between authentic and fake reviews, he suggested.

Vaibhav Kaushik, Co-founder and CEO, Nawgati (an app that monitors real-time congestion) said that such a draft would help consumers trust online shopping more, he also said that the tricky part is making sure these new rules are followed.

The real test is how the government will enforce the rules. They need to figure out how to keep e-commerce sites in check and what the consequences are if they don't play by the rules, he opined. Without these checks, fake reviews could still slip through the cracks.

By mandating stricter regulations and accountability measures for e-commerce platforms, the order is likely to reduce the prevalence of fraudulent reviews, thereby fostering a more trustworthy digital marketplace. This move not only benefits consumers but also supports honest businesses that may have been unfairly impacted by misleading reviews.

However, a key challenge remains in the implementation and enforcement of these regulations.

“The ministry has yet to address the specifics of how these measures will be monitored and what penalties will be imposed for non-compliance. Ensuring that platforms have robust systems in place to detect and prevent fake reviews, without excessively burdening them, is critical," highlighted Sahil Chopra, Founder and CEO, iCubesWire.

Chopra added, "Moreover, the order does not detail how consumer education and awareness will be promoted to help individuals identify and report suspicious reviews effectively.”

Although the QCO is a positive step towards enhancing trust in e-commerce, the success of this initiative will depend heavily on clear implementation strategies and continued oversight to ensure compliance and effectiveness, he added.

First Published on May 22, 2024 9:00 AM

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