Online Shopping Fraud in India: What Legal Remedies Does a Consumer Have: Author: Akshu Tomar
A Chandigarh consumer commission recently pulled up an e-commerce transaction after a shopper was charged in full for a product never delivered, and dragged through months of correspondence before receiving a refund. It is a familiar story. Someone orders a phone or a pair of shoes from what looks like a legitimate website, pays online, and either receives nothing, receives a counterfeit, or discovers money debited through a phishing link disguised as a payment gateway. India's e-commerce market processes crores of transactions daily, and with that scale has come a rise in online shopping fraud — fake websites, non-delivery, counterfeit goods, and payment-related cybercrime.
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Introduction
A Chandigarh consumer commission recently pulled up an e-commerce transaction after a shopper was charged in full for a product never delivered, and dragged through months of correspondence before receiving a refund. It is a familiar story. Someone orders a phone or a pair of shoes from what looks like a legitimate website, pays online, and either receives nothing, receives a counterfeit, or discovers money debited through a phishing link disguised as a payment gateway. India's e-commerce market processes crores of transactions daily, and with that scale has come a rise in online shopping fraud — fake websites, non-delivery, counterfeit goods, and payment-related cybercrime. Indian consumers today have a layered set of remedies spanning consumer protection law, cyber law, banking regulation and criminal law, though using them effectively requires knowing which door to knock on.
The Consumer Protection Act, 2019
The primary shield for a defrauded online shopper is the Consumer Protection Act, 2019, which for the first time expressly brings e-commerce transactions within its fold. A consumer sold a defective, counterfeit, or non-delivered product, or subjected to an unfair trade practice, may approach the District, State or National Consumer Disputes Redressal Commission depending on claim value, seeking refund, replacement, and compensation. The Act also created the Central Consumer Protection Authority (CCPA), empowered to act against unfair trade practices and misleading advertisements, and the Consumer Protection (E-Commerce) Rules, 2020, which impose disclosure and grievance-redressal duties on online marketplaces, including a grievance officer and a duty not to manipulate prices or mislead buyers.
The NCDRC's treatment of Flipkart illustrates this well. In a 2022 order, the Commission found that Flipkart had wiped the original MRP off a product listing and charged a customer more than the printed price for sunflower oil pouches. Rejecting the platform's attempt to distance itself from the seller, the Commission held that a tripartite contract exists between seller, marketplace and consumer, and that the marketplace itself is liable for deficiency in service and unfair trade practice. In a comparable case, a Bangalore district commission held a digital payments intermediary liable when a fund transfer failed and was not credited back promptly — a reminder that liability extends to payment platforms too.
The Information Technology Act, 2000
Where fraud involves hacking, phishing, or unauthorised use of a payment instrument, the Information Technology Act, 2000 supplies remedies alongside the consumer forum route. Section 66C penalises identity theft, including fraudulent use of another person's password or unique identification feature, while Section 66D specifically punishes cheating by personation using a computer resource — directly applicable when a fraudster impersonates a genuine retailer or bank through a fake website. Section 43 allows a civil claim for compensation against unauthorised access causing loss, supporting a claim for funds siphoned off through fraud. A complaint can be lodged with the local cyber-crime cell or via cybercrime.gov.in, often the fastest route to freezing a fraudulent recipient's account.
Banking Remedies and the RBI's Zero-Liability Framework
Many online shopping frauds culminate in an unauthorised debit rather than a defective product. Here, the RBI's 2017 circular on customer protection in unauthorised electronic banking transactions becomes central. It fixes a bank's liability, and correspondingly a customer's zero or limited liability, depending on how quickly the fraud is reported. A customer who reports an unauthorised transaction within three working days of the bank's communication ordinarily bears no liability, provided the loss did not arise from the customer's own negligence, such as sharing an OTP or PIN. Prompt reporting to the bank, alongside the police complaint, is a critical and time-sensitive remedy often overlooked amid the panic of discovering a fraudulent charge.
Criminal Remedies Under the Bharatiya Nyaya Sanhita
Where a seller never intended to deliver the goods, the conduct amounts to cheating, now punishable under Section 318 of the Bharatiya Nyaya Sanhita, 2023 (previously Section 420 of the Indian Penal Code), which criminalises dishonestly inducing a person to deliver property. Filing an FIR alongside a consumer or cyber complaint is useful where the seller is a fly-by-night operator using a disposable website, since a criminal investigation carries powers of arrest and asset tracing a consumer forum does not possess.
Choosing the Right Remedy
In practice, these remedies work best together. A shopper who never received a paid-for product should first lodge a grievance with the platform's designated grievance officer as the E-Commerce Rules require, then file with the National Consumer Helpline or the relevant consumer commission for refund and compensation, and where hacking, phishing, or a fake payment page is involved, simultaneously report to the bank within the RBI's window and to the cyber-crime portal. Overlapping jurisdiction is less a flaw than a recognition that online fraud rarely fits one legal category.
Conclusion
Indian law has moved reasonably quickly to extend consumer, cyber and banking protections into the digital marketplace, and case law from the NCDRC and state commissions shows an increasing willingness to hold platforms, not just individual sellers, accountable for deficiency in service and unfair trade practice. Yet the framework still depends heavily on an alert consumer: reporting within tight timelines, preserving screenshots and payment records, and choosing the correct forum. Until enforcement becomes more automatic and platforms internalise stronger verification of third-party sellers, vigilance on the part of the buyer remains as important as the remedies the law provides.
References
1. The Consumer Protection Act, 2019, ss. 2(1)(r), 34-58.
2. The Consumer Protection (E-Commerce) Rules, 2020.
3. The Information Technology Act, 2000, ss. 43, 66C, 66D.
4. The Bharatiya Nyaya Sanhita, 2023, s. 318 (corresponding to s. 420, Indian Penal Code, 1860).
5. Reserve Bank of India, Master Circular/Circular on Customer Protection - Limiting Liability of Customers in Unauthorised Electronic Banking Transactions, 2017.
6. Flipkart Internet Pvt. Ltd. - NCDRC order on MRP overcharging and unfair trade practice, 2022 (reported in SCC Online Blog, September 2022).
7. Consumer complaint against PhonePe before the Additional Bangalore Urban District Consumer Disputes Redressal Commission, on intermediary liability for failed fund transfer (reported in LiveLaw, Consumer Law).
8. AM Travels v. Consumer - NCDRC Revision Petition No. 1683 of 2023 (order dated 6 September 2023), on deficiency in service and unfair trade practice.
9. National Consumer Helpline, Department of Consumer Affairs, Government of India - consumerhelpline.gov.in.
10. National Cyber Crime Reporting Portal, Ministry of Home Affairs, Government of India - cybercrime.gov.in.