Subramanium Vutha*

Distance selling, the commerce where consumers and suppliers are not physically proximate, has spawned several issues of regulation in the electronic age. Subramanium Vutha looks at some areas that are a cause for concern

Over the past few months we have examined the Information Technology Act, the rules and regulations issued under it and some related issues.

Several legal scholars and practitioners have been pointing out that the IT Act by itself is only one necessary step towards the creation of an e-commerce framework in and from India. There are a host of other issues to be addressed, including security, privacy, intellectual property rights on the net, on-line advertising and its regulation, unsolicited mail, defamation, internet crimes, jurisdictional issues and remedies for breach of contract.

Worldwide, governments, industry bodies and users are grappling with a multitude of issues and no ready answers are in sight. One key issue is regulation of distance selling, which basically means selling through the Internet, telecom or other such means of communication.

	the velocity of trade on the net has increased tremendously;
	trade between unknown parties is now more likely than ever before, conferring new benefits while giving rise to new risks and potential liabilities;
	the size of the parties and their international network and resources is no longer an impediment to distance selling or buying. The net provides ready and inexpensive access to markets, consumers and sources worldwide, in a manner never experienced before;
	consumers have, and are exercising, buying choices they never even considered before. They can access music, books and other material over great distances in a seemingly effortless manner. The www, it appears, is outdoing the WTO in opening up new opportunities for distance selling;
	The Internet has also transformed thousands of consumers into sellers through auction sites and other forms of "reverse commerce";

For these and other reasons, the volume, velocity and complexity of distance selling can only grow considerably, presenting new challenges for lawmakers and regulators.

	What new information do consumers need to make well-informed decisions before buying from sources far from where they live or work?
	How clear and comprehensive should such information be?
	How will the consumer identify and evaluate the potential supplier?
	How will consumers ascertain the delivered costs of the goods or services ordered, as distinct from the price quoted by the supplier?
	How will they know the starting point and country of the goods and determine whether that has any implications for them? For instance, the source country may be one from which they are not permitted to import such goods or services.
	What remedies do consumers have in the event of delays or a failure in fulfillment by the supplier?
	What right to rescind or withdraw from the contract does the consumer enjoy if the supplier is in breach of his obligations?
	Indeed, what are the supplier’s explicit and implied obligations?

Obviously, such information will vary based on the nature of the product, the markets addressed, the communication mode used and so on. Therefore, distance-selling regulations need to spell out or indicate the nature and scope of the information that suppliers must provide. This will provide consumers with enough information to make a proper buying decision

	What are the special needs of consumers in relation to distance selling?
	Does the Internet add new dimensions to distance selling and do they warrant regulations different from, say, the mail-order business?

Scope of distance selling regulations
Distance selling may involve the use of any of the following means of long-distance communication: telephone, e-mail, tele-fax, radio, television, and web-based interaction, which often uses auctions or automated (programmed) systems. In each of these cases, the information the consumer needs may differ. These may be as elementary as the process to be followed for identifying the goods to ordering and paying for them.

Warranty remedies: Distance selling opens up new challenges by way of warranty fulfillment and remedies for breach of warranties. While the Internet poses new challenges, it also provides means for fulfillment of warranty obligations through the use of call centres, customer-relationship centres and agencies for these purposes. Nevertheless, distance-selling regulations need to address the potential concern of customers and consumers as regards warranty remedies, while at the same time not imposing undue burdens on suppliers.

Right of withdrawal: Most importantly, consumers need to have the right to withdraw from contracts with suppliers. A time frame should be set for reconsideration by the customer, with the right to withdraw from the contract by paying the direct cost of shipment of the goods while seeking a refund of monies advanced or paid. Such withdrawal regulation should also address the rights of the supplier by making such a withdrawal right inapplicable to perishable goods, or goods whose prices tend to fluctuate with the financial markets and which are beyond the control of the supplier.

Spam: Any distance-selling regulation would also need to address the issue of unsolicited calls or "inertia selling". This is when suppliers make unsolicited calls or offers, or supply goods or services without an order, casting a burden on the consumer by way of cost and effort to return such goods or services if they are found unacceptable.

Issues: Should India consider or emulate the European Union’s regulations on distance selling? What special issues and concerns should we consider for Indian conditions? What form of regulatory body should India consider? A fair trade commission for distance selling alone, or one for all consumer trade?

In sum, regulations to provide a framework for distance selling are crucial to the development of e-commerce. These form a natural progression in some countries such as the USA, where the mail-order business has been a major form of selling for several years now. In countries such as India, the mail-order business has not taken off, although distance selling merits greater attention here given the country size and its variety of markets and sources.

Do consider the issues raised in this article and send in your views to yolynd.lobo@schoolnetindia.com

He is also a speaker and contributor on intellectual property rights, e-commerce and information technology law issues, and a member of the Confederation of Indian Industries’ working group on TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights).