Time to frame some rules for Ubers and Flipkarts in the interest of consumers
E-commerce companies, sustained on massive doses of funding provided by private equity funds, have been such a boon to consumers that we were happy to condone glitches, especially if the redress or reversal process was smooth and efficient. But large and well-funded e-commerce companies are probably so focused on fund raising and increasing valuation that they may be in danger of forgetting that the customer is central to their mega plans. Some funded e-tailers seem to believe that throwing money at consumers to compensate for bad experiences is an adequate customer retention strategy. As the business grows, companies are finding it difficult to offer cash compensation and to dish out freebies; some brazenly renege on promises published on their promotional material.
Consider a few examples.
The FSSAI (Food Safety and Standards Authority of India), India’s food safety regulator has caused global giant Nestlé to destroy Maggi noodles worth several hundred crores of rupees because of high mono sodium glutamate (MSG) in its tastemaker. BigBasket has such few checks & balances that rotten potatoes and cauliflowers have been delivered to a customer on two separate occasions.
Each time, the e-tailer dumped the value of the product on its e-wallet with barely a word of regret. Is this good enough to retain the customer? Clearly not; in fact, many are opting out. The irony is that BigBasket, which is flush with private equity funds, uses the money to discount the MRP of low-cost items, like bread, but has not even been able to fix its log-in software which frequently fails to recognise the login details or mobile numbers of registered users.
In December 2014, this column said that online retailers must be made responsible for the products they sell and advertise. For instance, leading white-goods manufacturers openly say that they will not honour warranties on products purchased online, but companies like Snapdeal continue to advertise the warranties and claim that the manufacturer cannot renege on product warranties.
In one particular case, a consumer complained that Flipkart was claiming to offer a discount by projecting a false high price that was crossed out, while the discounted price was the actual MRP printed on the product.
Apart from being a false and misleading claim, this would also fall foul of the Legal Metrology Act. While Flipkart removed the post product, it continues to insist that it is merely an aggregator and any complaint lies with the seller, who is also bound by a one-sided contract.
Uber, the often controversial radio taxi service, is probably the only one that requires customers to have cash in a PayTM wallet to be able to book the cab. Now, it also docks their account by Rs100 for cancelling a ride five minutes after booking; it also has a dynamic pricing system whereby its fares shoot up with increased demand.
Uber, dubbed one of the most innovative companies in the world, has no system of compensating customers if the taxi turns up well off the estimated time, or, the driver cancels the booking after accepting it, or is unprofessional and rude. In fact, PE-flush operators like Olacabs, which were previously generous in compensating customers when their service delivery was a problem, now merely offer an apology. Olacabs does not even have a GPS system for its drivers, who are notoriously clueless about most city roads. This is a serious issue because ordinary black-and-yellow taxi-drivers have to meet rigorous conditions, including knowledge of the city roads, to obtain a licence.
All online retailers and service-providers have notoriously one-sided contracts which nobody reads. None of this mattered while they wowed customers with choice, price and speed of delivery. But rapid growth and gigantic size is bound to have an impact. Aggrieved consumers will be shocked at the one-sided terms in their legal disclaimers. Flipkart and Snapdeal, who call themselves marketplaces, are especially aggressive about not accepting responsibility for prices and product details posted on their websites. Amazon has taken a similar stand in the UK. This is absurd.
For instance, a refrigerator of Videocon is not sold by the manufacturer, but by multiple distributors on Flipkart. There is one single product display, although prices may vary. When you click to purchase, the whole process, right up to confirmation, payment, tracking and delivery is done by Flipkart. Yet, it says, “You shall independently agree upon the manner and terms and conditions of delivery, payment, insurance, etc, with the seller(s) that you transact with.” It also says that the pricing reflected on its website may be incorrectly reflected due to technology glitches or typographical errors, in which case the order will be cancelled. In Flipkart’s case, some of these one-sided terms have been shot down by consumer courts and it has been forced to compensate or deliver products as displayed on the website. But the days of customer-delight are clearly coming to an end and it has an aggressive legal department which works hard at evading responsibility.
If you use Uber, you provide an implicit warranty that you are over 18, have identified yourself accurately and will not transfer or assign your account to anybody. On its part, Uber accepts very little responsibility—like Flipkart, it calls itself an intermediary, even as it arrogates the right to collect vast amounts of personal data and even wants to track you, when you are not using the Uber app, through your IP address. The last bit is now the subject of a complaint before the Federal Trade Commission in the USA. But Uber is not the only company that has raised privacy concerns. The giant Google had angered privacy campaigners in the US who found that it has secretly installed audio-snooping code that was capable of listening to conversations held in front of a computer with users’ permission on Chromium, its open source.
In a column on Moneylife’s e-paper, my colleague Yogesh Sapkale had listed issues that consumers must watch out for while shopping online. The major ones are: uncertain delivery schedules (some list 9 and 10 days for delivery even in metros); poor quality products; unclear and one-sided terms and conditions which make issues relating to size and fit (for products like clothes and shoes) very hard to deal with; and cumbersome refund processes if you have paid in advance.
Clearly, the time has come to put in place come ground rules and policies and stop e-commerce sites from putting up such blatantly one-sided terms. In fact, since e-commerce sites have often challenged whether the product details and price that they post on their website can even be construed as an advertisement, the need for statutory rules becomes all the more imperative. Unfortunately, government departments don’t wake up until there is a flashpoint. Until we have bubble-like conditions where investors are vying with each other to fund e-commerce businesses and boost their valuations, there will be relatively few complaints. However, this does not mean that aggrieved consumers should be forced to fight it out individually in consumer courts and work at setting precedents in this new marketplace. It is time for the ministry of consumer affairs to set some ground rules.
(Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism. She can be reached at [email protected]