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Tag: Central Consumer Protection Authority

  • Ola Electric is Warned by SEBI for Announcing its Network Expansion Plan on Social Media

    Ola Electric, a manufacturer of two-wheeler electric vehicles (EVs), has received an administrative warning from the Securities and Exchange Board of India (SEBI) for breaking its rules. Ola Electric is facing charges for using social media to reveal important details about a planned shop network expansion before first alerting the stock exchanges. According to the current regulations, listed companies must notify stock exchanges of all material information as soon as possible, but no later than “twelve hours from the occurrence of the event or information.” Bhavish Aggarwal, the founder, chairman, and managing director of the electric vehicle manufacturer, released the information about the planned expansion about four hours prior to the firm sharing the data with the exchanges, according to Ola Electric’s filing with the exchange. In its warning letter to the company, SEBI noted that although the aforementioned information was released on the stock exchanges by Ola Electric at 1:36 PM (BSE) and 1:41 PM (NSE) on December 2, 2024, it was first announced on X (formerly Twitter) at 9:58 AM on the same day by Bhavish Aggarwal, the company’s promoter and Chairman-cum-Managing Director.

    Ola Electric Falling to Provide Information to all Investors

    The company was also found guilty by the markets authority of not giving all investors the information in a way that was “equal and timely.” The listed EV manufacturer “failed to take into consideration the interest” of all of its stakeholders, SEBI further noted. In its notice to the company, the regulator stated that Ola Electric had violated Regulations 4(1)(d), 4(1)(f), 4(1)(h), and 30(6) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. SEBI “warned and advised” the company to be “careful in the future” and to enhance its compliance standards to prevent recurrence of similar occurrences, while acknowledging that it took the violations “very seriously.” Additionally, it warned of “enforcement action” should such incidents recur and instructed the corporation to take corrective action. This comes one week after Pritam Das Mohapatra was named the new compliance officer and corporate secretary by the EV manufacturer. He is in charge of monitoring Ola Electric’s adherence to SEBI regulations and the current governance structure.

    More Trouble for Ola Electric

    The aforementioned warning was sent on the same day that the Karnataka High Court denied Ola Electric’s request to have a notice from the Central Consumer Protection Authority (CCPA) on charges of unfair practices, deceptive advertising, and suspected violations of consumer rights revoked. The HC granted some mercy and gave the EV manufacturer a six-week postponement to reply to the consumer protection watchdog’s show-cause notice, even though the CCPA notice demanded Ola Electric to submit new papers.

    Bajaj Auto Beats Ola Electric in E-Scooter Sales Race
    Bajaj Auto has overtaken Ola Electric in the competitive electric two-wheeler market, highlighting its strong performance and market strategy in the EV space.
    StartupTalkyNitin Konde

  • The CCPA will Investigate Ride-Hailing Apps for Having Different Prices

    On December 26, Union Consumer Affairs Minister Pralhad Joshi ordered the Central Consumer Protection Authority (CCPA) to conduct a thorough investigation into the discrepancy in taxi fares that ride-hailing platforms display simultaneously on Android and iOS devices for identical rides. This was in response to a media report about the issue. He has instructed the consumer affairs division to investigate additional industries, like online ticket booking and food delivery applications.

    The minister tweeted, tagging the media report, that the taxi aggregators are allegedly employing differential pricing based on the factors listed in the article below, which on the surface appears to be an unfair trading practice. If that is the case, this is a flagrant violation of the consumer’s right to know. “I have instructed @jagograhakjago through CCPA to carry out a thorough investigation into this and submit a report as soon as possible,” he added. I’ve requested that the department investigate more areas, such as apps for online ticket booking and food delivery. Authorities stated that they will gather the proof and ask the taxi aggregators and other platforms that deal with online ticketing and food delivery for their reaction.

    Reports’ Citing & Uber’s Response

    Joshi was replying to a post that featured a news clip about how the prices of taxi rides on Android and iPhone handsets differed. According to the report’s citing, iPhone users pay more than Android users for transportation to the same destination from three distinct sites in Chennai. This comes a day after a user highlighted a notable price variation when using an Android and an iPhone to book the same ride on Uber in a post on LinkedIn. Uber denied the claim that the “observed fare differences” were caused by the type of phone used as the matter grew into a controversy. The aggregator clarified that the pricing is affected by the numerous variations between these two rides. These requests have distinct pick-up, ETA, and drop-off locations, which will result in different fares. Uber does not adjust trip costs according to the manufacturer of a rider’s mobile device.

    Startups Under the Strict Scanner

    The CCPA has recently taken action against startups and consumer internet platforms for violating consumer protection regulations. This development has occurred at a particular juncture. It began a thorough investigation into many customer complaints against Ola Electric, an electric vehicle manufacturer, in October. Eleven rapid commerce and e-commerce businesses, including Blinkit, Zepto, and Meesho, were given notices for violating metrology standards in the same month. Before that, in April, the CCPA ordered the swift commerce companies to provide evidence for their “10-minute” delivery claims.

    FRAI Urges Government to Empower Kirana Stores with Technology
    FRAI urges the government to provide advanced technology platforms for Kirana stores, enabling them to compete effectively with quick commerce (Qcom) companies.
    StartupTalkyNitin Konde

  • 500 Workers will be Laid Off by Ola Electric Due to Controversies and Subpar Performance

    The electric two-wheeler maker Ola Electric has restructured to reduce its workforce by roughly 500 employees due to concerns about its losses and after-sales service issues. According to the media, the exercise would affect workers at all levels and in all departments. In order to become profitable, the company managed by Bhavish Aggarwal wants to increase operational efficiency by cutting down on redundancies. 

    Employees from all departments will be impacted by the continuing exercise. The goal is to reduce costs in order to increase margins and profitability. According to additional sources, there is no deadline for finishing the exercise. In the second quarter of the current fiscal year, Ola Electric reported a net loss of INR 495 Cr (Q2 FY25). Although the year-over-year (YoY) loss decreased by 5.5%, it increased by 43% from INR 347 Cr in the first quarter of FY25. Ola Electric stated in its quarterly investor presentation that it would prioritise enhancing its bottom line through margin gain investments. Aggarwal, the business’s founder and CEO, stated during a post-earnings call that the company anticipates maintaining a steady operating expense level or possibly a modest decrease over the following two quarters. He said that as the business expands its distribution, revenue would continue to rise and operational costs will essentially remain the same or possibly decrease over the coming quarters. 

    Current Workforce and Financial Dynamics of Ola Electric

    By the end of FY24, Ola Electric had more than 4,000 employees on the payroll, according to its red herring prospectus. In Q2 FY25, the company invested INR 139 Cr in its workforce, a 23% YoY and 13% quarter-over-quarter increase. It’s important to remember that in June of this year, it was reported that Ola Electric intended to reduce its employment by 400–500 employees in an effort to streamline its business before going public.

    Additionally, within the past two years, it has carried out comparable reorganisation operations twice. The most recent exercise takes place during a period of months in which Ola Electrics’ stock has been steadily declining. On November 21, the company’s shares fell more than 12% from their listing price of INR 75.99 to a new all-time low of INR 66.85.

    Ola’s Tug of War with Government’s Agencies

    Growing complaints regarding the company’s e-scooters coincide with the stock’s downturn. The Central Consumer Protection Authority (CCPA) reportedly began a thorough inquiry into the company’s customer complaints last week. Ola Electric received a show-cause notice from the CCPA last month in response to user concerns.

    After that, the business reported that 99.1% of the 10,644 complaints had been settled to the full satisfaction of the client. According to reports in November, the CCPA determined that Ola Electric’s assertions were untrue.

    Telangana Gig Workers Demand State-Owned Ride-Hailing Platform
    The gig workers’ union in Telangana is urging the government to launch a state-run ride-hailing service to ensure fair pay and improved working conditions.
    StartupTalkyNitin Konde

  • CAIT Claims Quick Commerce Platforms Violate Competition Law and FDI Standards

    On 13 November, the Confederation of All India Traders (CAIT) accused rapid commerce platforms of breaking a number of national laws, such as the Competition Act, the Consumer Protection Act, and Foreign Direct Investment (FDI) regulations.

    The trade group stated in a white paper that more than INR 54,000 crore in foreign direct investment (FDI) funds have been given to the nation’s top three rapid commerce platforms: Zepto, Swiggy’s Instamart, and Blinkit, which is owned by Zomato.  Just INR 1,300 crore, or 2.5%, of this has gone towards the creation of tangible assets. According to the report, operating losses brought on by predatory pricing practices may have accounted for more than half of the foreign direct investment.

    It further stated that this is against FDI standards, which were designed to promote long-term growth through the development of infrastructure and assets. 

    Since retail trade is a state matter, CAIT will distribute copies of this white paper to the Ministry of Consumer Affairs, the Competition Commission of India, and the chief ministers of every state, according to CAIT secretary general Praveen Khandelwal.

    Ignoring FDI Norms

    According to the CAIT’s research, these platforms use a “closed nexus of preferred sellers,” which is against the FDI standards and acts. The CAIT claimed that FDI regulations specifically forbid foreign-backed marketplaces from controlling or holding inventory.

     Additionally, the trade group has asserted that these quick-commerce platforms restrict market access by predatory pricing, deep discounting, and exclusive agreements with specific suppliers, all of which are violations of the Competition Act. According to the report, they are driving small retailers and kirana shops out of the market by giving chosen vendors free or drastically reduced storage and delivery services. 

    CAIT claims that Blinkit uses five major vendors, including Superwell Comtrade, TAMS Global, and Kemexel Ecommerce. Among other companies, Swiggy Insatmart depends on PYD Retail, Bhagwati Stores, Getmax Globe, and FOCLO Technologies. As an inventory-based e-commerce company, Zepto, on the other hand, directly supplies products, completely avoiding third-party vendors.

    Vertical Agreement With Preferred Players

    According to the white paper, these platforms have vertical agreements with their favoured vendors, giving them complete control over price, distribution, storage, production, and supply. This restricts consumer options, affects purchase costs, and hinders independent sellers’ access to the market. Furthermore, it asserts that the platforms are violating the Consumer Protection Act by not giving customers clear information about the merchants. According to the trade group, these activities are putting the livelihoods of 3 crore kirana shopkeepers in jeopardy and forcing over 25% of them to close. 

     The white paper was released at a time when regulators are looking more closely at platforms for quick commerce. The Food Safety & Standards Authority of India (FSSAI) requested on 12 November that operators of e-commerce and quick-commerce food businesses guarantee a minimum shelf life of 30% or 45 days prior to product expiration at the time of delivery to customers. The Central Consumer Protection Authority (CCPA) also sent notices to e-commerce and quick commerce companies last month for violating the Legal Metrology Packaged Commodity Rules (PCR) 2017 by failing to display the MRP and “best-before” dates for perishable goods on their platforms.

    Ola Electric in Hot Water: Consumer Body Calls for Investigation
    A consumer watchdog urges investigation into complaints about Ola Electric, highlighting rising concerns around product and service issues.
    StartupTalkyNitin Konde

  • Problems for Ola Electric: A Consumer Watchdog Recommends that Complaints be Looked into

    The Central Consumer Protection Authority (CCPA) has ordered a thorough investigation into suspected “deficiencies” in Ola Electric’s services and products, particularly with regard to its scooters, indicating further difficulty for the company. This action comes after Ola addressed previous regulatory notifications about outstanding customer complaints.

    Nidhi Khare, the consumer affairs secretary, announced on 14 November 2024 that the Bureau of Indian Standards (BIS) has been instructed by the top consumer rights regulator to confirm the company’s statements about how it resolves customer complaints.

    The investigation was formally started on November 6, and the BIS director general, acting as the ex-officio Director General of Investigation, has been given 15 days to provide a detailed report.

    Plethora of Complaints Triggered the Investigation

    The National Consumer Helpline (NCH) received 10,644 complaints against Ola Electric between September 2023 and August 2024, which sparked the investigation. According to a response from Ola Electric dated October 21, 99.1% of consumers were satisfied with the company’s complaint resolution procedure. A sample of consumers was then contacted by the CCPA to get their opinions on grievance redressal.

    According to an investigative official, 130 of the 287 customers that the NCH call agents dealt with were dissatisfied with the company’s answer (79.2%). It was merely a sample test to confirm Ola’s claims. Their claim of 99% satisfaction ought to have been mirrored in the cross-verification as well.

    Customers are Not Satisfied With the Resolution

    According to numerous clients, problems continued even after complaints were resolved, and some cases were closed too soon without being satisfactorily resolved, the official continued. Ola Electric insisted in a regulatory filing that it has settled 99.1% of the CCPA’s objections. The company also stated that it had submitted comprehensive responses to a show-cause notice issued by the CCPA on 7 October, which detailed alleged consumer rights violations, misleading advertising, and abusive trade practices.

    Who is BIS?

    The Bureau of Indian Standards (BIS) is India’s national standards body. BIS is in charge of the smooth operation of the standardisation, marking, and quality certification of goods processes as well as any related or incidental issues. 

    The national economy has benefited from BIS’s primary functions of standardisation and conformance assessment by supplying safe, dependable, and high-quality products; reducing consumer health risks; safeguarding the environment; encouraging imports and exports as alternatives; managing the overabundance of varieties, etc. In addition to helping consumers and businesses, BIS’s standards and certification programme also assist a number of public policies, including those pertaining to building and construction, consumer protection, food safety, product safety, and the environment.

    Through its standardisation and certification efforts, BIS has recently sought to directly address a number of national priorities as well as other government projects, including Digital India, Make in India, Swacch Bharat Abhiyan, and ease of doing business. When developing standards, BIS keeps up with the latest developments in technology, climate change, energy and environmental conservation, health and safety conditions, and trade facilitation. 

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  • Several Rapid Commerce Companies Receive Notices from the CCPA for Disclosure Issues

    Companies like Zepto, Blinkit, and nine others have received notices from the Central Consumer Protection Authority (CCPA) as part of a significant crackdown on a number of e-commerce and quick-commerce operators. According to media reports, complaints regarding suspected breaches of the Legal Metrology Act’s Mandatory Declaration Rules prompted the issuance of these notices.

    For these offences, the CCPA has issued notices to eleven businesses operating in this domain. Some vendors have listed goods for human consumption without mentioning the best before or expiration dates, or without including the manufacturing date. In several cases, items were marketed without following proper labelling or packaging guidelines. These are grave offences. According to a CCPA official, the regulatory agency has requested that these businesses reply to the notices. 

    According to sources, Swiggy, Instamart, Meesho, MyGlamm, and Snapdeal are among the other businesses that have received these notifications. The Ministry of Consumer Affairs oversees the Central Consumer Protection Authority, or CCPA.

    Consumer and Consumer Forums Highlighted the Matter

    Consumer forums, including LocalCircles, and consumer concerns prompted these notifications. According to Sachin Taparia, the founder of LocalCircles, hundreds of customers have complained on their website regarding these violations. Most of them mentioned that they have received goods that are nearing their best before or expiration date through fast commerce and other e-commerce platforms.

    Following the required validation and due diligence, LocalCircles authorities discovered that numerous online platforms are in violation of the 2017 Legal Metrology Packaged Commodity Rules Amendment, which mandates that online platforms reveal the best before date of packaged goods.

    Additionally, LocalCircles polled internet shoppers nationwide to see if they could see the best-before dates on products intended for human consumption displays. According to the poll, 57% of these customers had trouble finding this information, up from 50% in 2023.

    Who is Central Consumer Protection Authority?

    Established under the Consumer Protection Act, 2019, the CCPA went into effect on July 24, 2020, and is designed to regulate issues pertaining to consumer rights violations, unfair trade practices, and deceptive or false advertisements that harm consumers’ interests and those of the general public.

    The CCPA maintains regional offices throughout India in addition to its headquarters in Delhi, the nation’s capital. A Chief Commissioner and other Commissioners chosen by the Central Government oversee the CCPA.

    The rule mandates that important product facts, such as the maximum retail price, weight, manufacturer information, expiration date, and consumer grievance addresses, be shown on packaged goods by both online and physical merchants.

    In India’s largest cities, quick commerce—which provides incredibly quick delivery of groceries and everyday necessities—has become immensely popular, drawing both venture capital investment and customers. The regulatory action comes after CCPA Chief Commissioner Nidhi Khare recently stated that authorities were looking into whether rapid commerce platforms were complying with disclosure laws. As part of larger initiatives to safeguard consumer interests in digital commerce, the Consumer Affairs Ministry had previously hinted that it would take action against businesses deemed to be in violation of these rules.

    Ola Electric Claims 99% Resolution of Customer Complaints
    Ola Electric resolves 99.91% of 10,644 customer complaints, including issues like, delivery delays and service failures, as reported into the CCPA in September 2024.
    StartupTalkyNitin Konde

  • Ola Electric Asserts that 99% of Consumer Complaints are Resolved

    According to Ola Electric, out of the 10,644 customer complaints it has received thus far, 99.91% have been handled and resolved successfully. In a regulatory filing on September 21, 2024, the manufacturer of electric two-wheelers notified the Central Consumer Protection Authority (CCPA) of the latest developments on long-pending customers’ issues. The CCPA issued a show-cause notice to the Bengaluru-based company earlier this month in response to subpar conditions at its service centres throughout the nation.

    The Department of Consumer Affairs’ National Consumer Helpline reports that between September 1, 2023, and August 30, 2024, 10,644 complaints were filed against Ola e-scooters. Of these, 1,899 deal with new vehicle delivery delays, 3,389 with servicing delays, and 1,459 with unmet promises of services.

    The Claims Made by Ola in its Filing

    Ola Electric said in a regulatory filing that it would like to make it clear that it has a strong system in place to handle concerns about its electric two-wheeler. In reality, the company would like to highlight that, thanks to Ola Electric’s strong redressal system, 99.1% of the 10,644 complaints it received from the CCPA were resolved to the full satisfaction of the consumer.

    A notice from the Automotive Research Association of India (ARAI) was also addressed by the company, which is run by Bhavish Aggarwal. Prior to the company’s BOSS sale, the notification raised concerns about the price plan of its S1 X 2 kWh scooters. Ola Electric gave clients an invoice dated October 6 that showed a INR 5,000 discount and stated that it had not changed the prices during the sale. Additionally, it provided a screenshot taken from its app, verifying that the scooter’s cost had not altered.

    What Exactly Happened Earlier?

    With as many as 80,000 customer complaints each month going viral on social media and stories of Ola Electric vehicles collecting dust at repair locations, this calculated approach is a response to growing customer unhappiness. Both lawmakers and consumer watchdogs were drawn to the outcry.

    Ola Electric was recently served with a show-cause notice by the Central Consumer Protection Authority (CCPA), which included possible abuses of consumer rights, deceptive advertising, and unfair business practices. More than 10,000 outstanding after-sales service concerns were highlighted in the notification.

    Ola Electric has made plans to grow its network of service centres in response to these problems, with the goal of increasing the number from 400 to 1,000 by the end of the year. Industry experts caution that expanding the number of centres alone might not address the main problem. An analyst said, “Instead of growing, the company should concentrate on enhancing the quality of current service stations.”

    The CCPA Has Issued a Show Cause Notice to Ola Electric Due to Deceptive Advertising
    Following the Central Consumer Protection Authority’s (CCPA) show-cause notice to the business on 7 September 2024, shares of newly listed Ola Electric Mobility dropped 6.17 percent in intraday trading to INR 85.21 on 8 September 2024.
    StartupTalkyNitin Konde

  • Customers’ Advocacy Group CCPA Mandates Ola to Provide Refund Options

    On October 13, 2024, the Central Consumer Protection Authority (CCPA) announced that Ola, a ride-hailing company, has been ordered to make improvements that will benefit customers. These modifications include giving refund alternatives and giving receipts for auto rides. Chief Commissioner Nidhi Khare of the CCPA noted that Ola’s no-questions-asked refund policy did not give customers the option to get bank account refunds; instead, it only offered coupon tickets for future rides.

    The CCPA declared in a statement that “this practice violates consumer rights.” “Using this facility to take another ride is not an incentive for customers to use the company’s no-question-asked refund policy.”

    The app displays the notice, “Customer invoice for auto rides will not be provided due to changes in Ola’s auto service T&Cs,” if a customer tries to view an invoice for an auto ride that they booked on Ola, according to the regulator.

    As per CCPA, failing to provide a bill, invoice, or receipt for the products sold or services rendered qualifies as an “unfair trade practice” for the purposes of the Consumer Protection Act of 2019. It has instructed the taxi aggregator to provide its clients with bills.

    Who is Central Consumer Protection Authority?

    Established under the Consumer Protection Act, 2019, the CCPA went into effect on July 24, 2020, and is designed to regulate issues pertaining to consumer rights violations, unfair trade practices, and deceptive or false advertisements that harm consumers’ interests and those of the general public.

    The CCPA maintains regional offices throughout India in addition to its headquarters in Delhi, the nation’s capital. A Chief Commissioner and other Commissioners chosen by the Central Government oversee the CCPA.

    Ola Aligning Itself with CCA

    In accordance with the Consumer Protection Act of 2019, the regulator further ordered Ola to provide bills or invoices for every auto ride that was scheduled through its platform, referring to the lack of such evidence as an “unfair trade practice.”

    Ola has made a number of changes in response to the CCPA’s intervention. These include posting the contact information of grievance and nodal officers on its website, making cancellation policies and fees obvious at the time of booking, expanding the list of options for reasons why a ride may be cancelled, and making the fare component breakdowns available to the public.

    The addresses of the pickup and drop places were displayed to drivers, and the payment periods were adjusted to enable drivers to get paid quickly.

    What Leads CCPA to Intervene?

    From January to October 2024, the CCPA received 2,061 complaints against Ola. The most common concerns included overcharging, delays in refunds, and troubles with drivers.

    “The Consumer Protection Act (CCPA) has demonstrated unwavering commitment to upholding Ola’s adherence to the legal framework designed to safeguard consumer rights by means of its regulatory intervention,” the regulator remarked.

     This action is taken in response to the CCPA’s increased examination of digital platforms in order to safeguard consumer interests in the quickly expanding ride-hailing and e-commerce industries.

    The CCPA Has Issued a Show Cause Notice to Ola Electric Due to Deceptive Advertising
    Following the Central Consumer Protection Authority’s (CCPA) show-cause notice to the business on 7 September 2024, shares of newly listed Ola Electric Mobility dropped 6.17 percent in intraday trading to INR 85.21 on 8 September 2024.
    StartupTalkyNitin Konde