Ebay India – An Online Grey Market?

E-commerce in India is expanding. Almost every product can be brought online. Ebay is one of India’s largest online marketplace (ebay.in) and has over thousands of sellers registered who sell both new and old products. But that is hardly the point. The point of concern arises because Ebay India is also probably the largest online grey marketplace. At the expense of sounding exaggerated, it can be well asserted that it is the online counterpart of Palika Bazaar or Gaffar Market in New Delhi. The only big difference being that when we buy stuff from Palika Bazar, we know that it is from a grey market and hence the consequences. But for an average consumer, the legitimacy of Ebay is hardly questionable and the grey market consequences are usually a bolt from the blue. And this is what makes Ebay deals a worst nightmare for consumers than a full blown grey market deal.

Can one buy anything online which is not available for sale in the country yet? Are the laws of India so weak that such practices cannot be stopped? Jai Anand unearths some hard facts and shocking truths.

Let’s go across and look at some of the listings which make the matter serious enough to notice

Samsung focus i917, Not launched in india

Look at the short description of the product

Ebay fraud, Samsung Short Description

Now, look at the detailed description of the product

Ebay fraud, Samsung Long Description

This seller ‘claims’ to be located in West Bengal and is selling imported Samsung focus i917 which has not yet been launched in India. The phone is imported, the short description of the phone mentions the phone to be ‘New: A brand-new, unused and undamaged item’ as highlighted in the image while the detailed description mentions that ‘Expect the phone to be in 9.9/10 condition’ as highlighted above. Moreover, the product has no return policy (which as reported elsewhere on Consumer Tadka is illegal, see Goods Once Sold Will Not Be Taken Back. Don’t Get Stuck, It’s Illegal) and carries a seller warranty. Note that warranty period has not been mentioned. This can have serious implications. A product carries a warranty but has no period of such warranty leaving consumers in a messy fix and absolutely no accountability on behalf of the seller. Why does Ebay allow listing of the products which has an (illegal) no return policy and no warranty?

What more? These products are in all probability smuggled at cheaper prices from abroad and then sold at prices lesser than the market price with concepts like ‘seller warranty’. For the uninitiated, ‘seller warranty’ means the seller assumes the responsibility of items which are not covered under manufacturer’s warranty either because they are smuggled from abroad or those items not available for sale in the region concerned. A manufacturer’s warranty is a valid warranty and is legally enforceable. A seller’s warranty can hardly match this because while manufacturers have a reputation to upkeep and a proper system in place, it may or may not be so with random sellers. The possibility and probability of enforcing a warranty which relies on random sellers, is in itself is a dicey idea. In effect, it is like a promise that every Palika Bazaar shopkeeper has mastered, “Any problem, bring it to us, it is our guarantee”. Think back on the number of times you had actually believed in the enforceability of this promise and you would know what I am talking about.

Delving in details of most of these products is like a dive in a can of worms. This particular product, for instance, carries operator’s logo, unlocked by a third party (not officially unlocked) and could be used as it is. Indian laws do not allow import of used phones in the country which clearly implies that this may also be a smuggled product. It says it is not in new condition because ‘it travels a long way in boxes’. Really?! In that case, every Nokia/Samsung/Blackberry phones should be damaged while they are officially imported to India!

USED/STOLEN PRODUCTS

Used phones are widely sold on Ebay and that too as a commercial activity. Is it legal? Well, that’s another dive in the worms.  If the sellers do not give invoice to people through whom they purchased the product originally, it certainly isn’t a legal activity. Imagine a situation where a user bought a phone through Ebay India from one seller. It turns out to be a stolen phone and the user is caught. Now though the user is not at fault, to prove the same in the court of law is a tedious, embarrassing and harassing process. Well, the situation is definitely exaggerated but certainly not impossible. There have been various instances where users have reported that some of the sellers listed on Ebay are selling stolen goods. Have those matters been duly investigated? I am not very sure but there has definitely been no evident, stringent actions taken to curb this practice.

Users who bought used phones from Ebay have reported various problems like broken screen, low battery, accessories not working and other damages to the phone. Though sellers take responsibility for their listing and information, yet in most cases return shipping cost is to be borne by the buyer – so, in effect, users pay for seller’s fault too. In numerous cases, sellers do not take responsibility and say that ‘This is what was mentioned in the listing’ and buyers end up losing their hard-earned money.

Here is another illustration. Following is the listing of the phone, seller ‘claims’ to be located in Mumbai and have huge no. of listings of used mobiles.

Used Phone Listing

The seller only mentions ‘Nokia E6 Mobile in Excellent Condition with All Accessories’ and has not attached any original photo of the mobile, only a generic photo. Phrase ‘excellent condition’ is subjective; what may be excellent condition for the seller may not be the same for the customer. Hence, there is a need to show the original photos of the product while listings such products. Why doesn’t Ebay as a consumer friendly, legal online marketplace make policies to encourage and ensure that anyone selling a used product must attach an original picture of the product to give a fair degree of idea of at least the physical condition of the listed product? (Physical condition may be crucial for certain products like a mobile and a visual proof also discourages undesirable, lofty claims about the product which may eventually turn out to be false.)

FAKE/REPLICA PRODUCTS

The Ebay can of worms is seemingly endless. To multiply the concerns highlighted above, one can even get imitation of numerous products from Ebay ranging from mobiles to watches, any brand, Tag Heuer, Rolex, Rado, Vertu, Apple and others. The situation becomes even more problematic when there is a clear, deliberate intention of passing down a fake replica as the real deal.

Let’s look at some listings below

Ebay Fraud Replica 1

Ebay Fraud Replica 2

Ebay Fraud Replica 3

These three listings of Tag Heuer and Rado watch are priced between Rs.3000-6000 while the original watches costs over Rs.2 lacs. Nowhere do these listings mention that they are fake or replicas. Even if they do mention, it is illegal to sell replica of any product and the sellers/manufacturers of such replicas are liable to the companies concerned. Many of the consumers who are not aware that they are actually replicas (since it is not mentioned), end up buying the product and feel cheated when they realize that product received is a cheap replica. Moreover, for obvious reasons, these products do not have any return policy or warranty. One may argue that the consumers should be careful enough to notice something amiss if the prices of otherwise expensive products are slashed to this extent. But, the point is, can Ebay shrug its responsibility towards the consumers on the basis of their common sense? Why doesn’t Ebay take any steps to remove the listings of replica products? And why doesn’t it duly warn its consumers against this practice?

RETURN POLICY AND WARRANTY

Return policy and warranty of the product are two extremely important points that buyers must take into account and as a general rule should ensure that they check these policies before buying anything.

Following is the return policy and warranty of the Nokia E-6 listing (attached above)

Nokia E-6 Return policy

Note that in return policy it says ‘Item must be returned within 7 days and refund will be given as exchange’. Besides the fact that the policy in itself violates the law which grants consumer the right to get their grievances addressed as they deem fit, the policy with all legal points aside is a huge inconvenience to any average consumer. Any consumer who is unhappy with the product or does not find the product in so called ‘excellent condition’ cannot get refund of his purchase (not by simple means at least) and he only has an option of ‘exchange’. This is highly unethical because despite seller not delivering the right product, the consumer still has no option. There are no serious repercussions for the seller and he can send out a similar product as ‘exchange’. With the exception of the bunch of consumers who are willing to take the longer route to justice through consumer forums, an average Ebay consumer is nothing but stuck with these draconian policies. How can Ebay allow such a policy to be put in place which is not only unethical but is also in violation of the law of the land?

The consumer woes don’t end here. Shipping cost for the return too has to be paid by the buyer/consumer and as mentioned earlier, it is like consumer paying for the seller’s fault. Even in circumstances where the seller has not sent the right product, return shipping cost still has to be borne by the buyer. Why doesn’t Ebay stop such practice? In case of a clear cut fault by the seller (not in the product itself), why should a buyer pay for shipping?

The product mentioned above carries a delivery warranty of 6 months.  Now in case there is some serious fault in the phone, shipping cost has to be borne by the buyer to send it to the seller, which typically costs Rs.200-250 and the seller may or may not honor the warranty and may charge the customer for the service of the phone as well. The worst scenario is when the seller through which the user has bought the phone is no longer registered on Ebay. It is crucial to note that the warranty clause at Ebay is only in the listing; the customer does not get any sort of warranty card to claim such warranty. Nowhere does Ebay clarify the course of action in such circumstances and does not specify who is to be held liable in such a scenario.

MASSIVE TAX EVASION

If one looks at the above paragraphs, I have put ‘claims’ in quotes. That’s because there is no verification at all if one wants to become a seller on Ebay. It’s as easy as registering via a mobile number in India for Indian residents or by providing credit card details for others. Ebay doesn’t care if one runs a company or not, what are the sources of the products being sold and moreover they don’t even ask for any valid/accountable proof of identity whatsoever.

One is not even asked for a CST number (required for every shop to sell goods outside state for the purpose of sales tax) before selling any of the items. At the first brush, this seems nothing but a conspiracy for massive tax evasion since anyone is allowed to sell anything at any rate with no accountability of sales tax or import duties. Ebay definitely has its excuses as there are ‘individuals’ who wish to sell second hand goods used by them so asking them a TIN/CST number would be useless. But a blanket exclusion is highly questionable and certainly not desirable.

Ebay requires the user to submit a proof of identity and address only if his Paisapay payment goes beyond Rs.50,000. So in effect one can sell anything without any proof of identity and address as far as payment does not cross Rs.50,000. And that is not all. Indian laws requires mandatory registration of VAT if a person sales cross Rs.5,00,000 annually and there are way many sellers at Ebay who cross this mark. But Ebay does not ask any of these sellers to provide any documents. A seller can transact by just using a savings account which can be changed anytime. There are sellers who use multiple savings accounts to transfer the money to avoid tax issues. How is that possible that Ebay India transfer payment of high value to the sellers for these unofficial products through online bank transfer (NEFT), where is the tax? Ebay needs to and must verify the seller’s VAT and CST numbers if his sales cross Rs.5, 00,000 annually.

Not all online market sites are resorting to covert means. There are websites like www.buynsellindia.com which ask for identity verification. But obviously who would like to go through such formalities if a big brand name like Ebay is supporting covert practices. Why would the sellers migrate? For all those buyers who get the Apple products in India, it’s heaven because believe it or not, there are sellers at Ebay who thrive on a reputation that they sell original smuggled goods and not fake smuggled goods. Notwithstanding that fake or not, the goods after all are smuggled!

REDRESSAL ISSUES

The trouble with Ebay doesn’t end here. There are more limitations at the customer care/redressal end. The sellers who have account related problems are not even given a contact number as to know why their account has been suspended. All they can do is write an email to the web help team who work from outside India but cannot contact the anyone at Ebay directly. They have to wait for their reply via email only. So in case a seller’s account has been suspended, it can take months before the issue gets across to the concerned persons. Consumer forums are full of problems with Ebay India which blocks the money of sellers and then asks them to reply through email. As expected, no interest is paid on the amount for the period it is blocked. There are hundreds of sellers whose payment has been blocked by Ebay for years and in some cases it ranges in lacs. Ebay India, it seems believes in breaking the law rather than following the it and ‘Jugaad’, evidently, is their preferred mode of operation.

Shortcuts have inevitable downsides and the shortcut called Ebay has one too many. While we can hope that the regulators take note of such irregularities and ensure that they are curbed, it is ultimately the duty of the consumers/users of websites like Ebay to be aware and cautious of all the possible downsides including the loss of revenue to the country and avoid patronizing such activities.

Jai Anand is a law student and is currently pursuing his III year at Jindal Global Law School. Author can be followed here

All views are personal and this post was originally posted at Akosha’s blog at https://info.akosha.com/consumer-complaints/e-commerce/ebay-india-an-online-grey-market/