Nepal Introduces Stringent E-Commerce Law to Safeguard Consumer Rights

In an effort to ensure consumer protection and crack down on wayward behavior in the rapidly growing e-commerce market, Nepal has unveiled a draft bill with substantial penalties for errant sellers. The proposed legislation aims to hold operators of online platforms and sellers accountable for their actions, proposing two to three years of imprisonment and fines ranging from Rs. 300,000 to Rs. 500,000 for failure to process returns or exchanges within the specified time frame.

Registered in the National Assembly by Industry Minister Ramesh Rijal, the bill envisions stringent action against e-commerce platforms that breach the advertised guarantees and warranties of goods and services. It mandates sellers to refrain from selling goods to e-commerce platforms without an agreement and demands clear disclosure of goods and services details to customers.

The government's move to enact this bill comes a decade after the launch of e-commerce in Nepal, during which a lack of regulations has emboldened unscrupulous players. Consumers have reported issues such as receiving damaged products, incorrect items, price discrepancies, and a lack of return and refund policies.

The proposed law mandates e-commerce platforms to retain transaction details for six years and specifies that e-commerce businesses can only operate through official websites or apps. However, consumer rights activists argue that the penalties are insufficient to curb fraudulent activities and are calling for more stringent provisions to protect consumers adequately.

The bill has faced criticism for not addressing concerns related to compensation for consumers from the time a complaint is filed until a verdict is reached. Additionally, gig workers, who play a crucial role in delivering goods for e-commerce platforms, have not been mentioned in the legislation.

E-commerce entrepreneurs acknowledge that although the law has been long-awaited, certain vital aspects have been omitted. They highlight the need to govern unhealthy price competition among online retailers and address data privacy and digital payment issues comprehensively.

E-commerce is rapidly expanding in Nepal, with the formal sector estimated to have an annual turnover of Rs10 billion and growing at a rate of 150 percent annually. Informal online retailers contribute significantly to the market as well.

The implementation of this e-commerce law is expected to formalize the informal online marketplace, bring it under the tax net, and safeguard consumer rights by ensuring the proper implementation of return, exchange, and refund policies.

The bill also stipulates that e-commerce platforms not listed in the electronic system of the Department of Commerce, Supplies, and Consumer Protection will face fines ranging from Rs. 10,000 to Rs. 50,000. Inspections will be conducted by the Department of Commerce, Supplies, and Consumer Protection to enforce compliance.

To operate an e-commerce business, traders must set up a platform with a dedicated section for customer grievances and have their e-commerce platform listed in the Department of Commerce, Supplies, and Consumer Protection's e-commerce portal.

The bill emphasizes the need for transparency in pricing, delivery charges, delivery time, and payment methods. Goods can be returned if they are not as advertised or if the wrong item is delivered.

Importantly, the proposed legislation emphasizes the confidentiality of customer information, prohibiting its disclosure or use for the seller's own purposes. It also mandates an agreement with sellers to provide goods and services before they are listed on the e-commerce platform.

Ultimately, the e-commerce law seeks to bolster consumer confidence and foster a secure and reliable e-commerce environment for both buyers and sellers in Nepal.