India’s app economy needs a satisfactory consumer grievance redressal forum

The conventional consumer grievance redress mechanisms are expensive and arduous, and lack the legislative backing to tackle these emerging challenges


Apps | smartphone

When the protagonist’s father in Tamil movie Anniyan pleads to the court that a lot of people should be brought to the book for complicity in his daughter’s tragic demise, the proposition is laughed off. But it did highlight that economic agents in any market fall into the abyss called ‘regulatory gap’.

An app is a technological route to map the buyers and sellers involving a consideration. The reliance on trust and quality of good/service being exchanged holds the sanctity of the app. Given this, both sides of this relationship must get a fair deal.

In the second decade of this millennium, “App Economy” gained currency. It refers to the smartphone and tablet revolution whereby a mobile application is available for just about everything. India has come to occupy a place of prominence in this ecosystem. According to McKinsey Global Institute’s analysis, India trails behind only China in app economy numbers: with over 1.17 billion wireless-phone subscribers, 560 mn internet subscribers, 354 million smartphones and 294 million social media users. A la App Annie, a recent report by app-intelligence-platform, India is world’s second largest market for app downloads in 2021: Indians spend at an app an average of 4.6 hours daily in Q3 2021.

In the context of an app, we have service providers on one hand and customers on the other. Service providers could be cab aggregators, rental service agents, e-commerce giants, grocery providers linked to their potential customer bases through an app. The state oversees this relationship from a broader lens and ensures that exchange of services is fair, just, smooth and sustainable. While this ‘app’ vehicle has helped reach customers faster, made the service more widely accessible and increased revenues of firms, there are instances of the contractual terms remaining unfulfilled.

Often, when more competition enters, each service provider improves their offering through survival tactics to differentiate themselves. They use unique brand logos, dynamic user-interface and marketing channels to spread the word about the USP of their product/service. With every new firm entering the market, the industry as a whole evolves as the wheels of innovation churn.

The other route is when companies themselves put in more consumer-satisfaction-oriented features to form a loyal customer base. When grocery delivery apps provide a chatbot that has nested queries to cover all possible grievances of customers, cab aggregators provide a 24-hour helpline that has quick conflict resolution and clear mention of rates without the garb of surge, or e-commerce websites provide easy navigation on their website without the confusion of ads on the same screen, consumers come back to the service provider again and again.

Ergo, the consumer grievance redressal forum is where the path to higher growth lies for a company. If companies mask their unfair price margins or cut corners in the quality of their service, the consumer feels let down and may wish to retract. The bounty of large customer discounts, lightning fast deliveries and premium perks aside, consumer-satisfaction may also be factored into the business expansion strategy.

Beyond the solutions mentioned above, the state has to be the broad overarching stakeholder to close the loopholes of consumer grievances through regulation and monitoring. Ensuring transparency in value parameters will help in flawless service delivery that not only provides sustainable profits and growth opportunities to companies but also gives improved and satisfactory experience to customers.

Among the key principles enunciated in United Nations Guidelines for Consumer Protection are those relating to fairness and equity and redress. In the app economy, these two principles are being particularly hammered hard. Two reasons can be proffered for this. First, the reliance of most of these apps on algorithms – numerable lines of code that determine a whole host of things, from the fare you pay for a ride to the restaurant you are suggested – and the fact that these algorithms are not necessarily written with the principle of equity and fairness at the core of the exercise (e.g. if you add a drop location to your app-based cab ride, the additional fare you pay is not just the ‘fair’ fare based on the additional distance, but accounts for the fact that you would not mind paying a few more bucks for the comfort of carrying on the journey without alighting from your cab).

Second, the entire supply chain of service provisioning is so splintered that the set of individuals providing you the good/service on the ground have no organic linkage with the set of people who you ring up in case the first set of people goof up (e.g. the customer care section of the app that lets you hire furniture has no leverage over the people who deliver the furniture). While the first characteristic of the app economy leads to the non-fulfilment of ‘fairness and equity’, the second takes away the right to redress.

In addition to the corporate-led strategies to address consumer grievances, the regulatory gap highlighted at the outset may also be closed through state-led interventions. The conventional consumer grievance redress mechanisms such as consumer courts and civil damage suits are – as earlier – expensive and arduous, and lack the legislative backing to tackle these emerging challenges (say, we don’t have an all-encompassing statute for cab hailing, self-drive car booking or furniture rental apps). A dialogue on how effectively and efficiently – the two cardinal regulatory principles – a megacosm for satisfactory consumer grievance redress in the app economy needs to be initiated.

Anshuman Kamila is Assistant Director, Department of Economic Affairs, Ministry of Finance; Akshita Goyal is a Consultant at Deloitte India. Views are purely personal.

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