CCPA fines Dial4Trade ₹10 lakh for listing ammonium nitrate on e-commerce platform

The Central Consumer Protection Authority (CCPA) has imposed a penalty of ₹10 lakh on B2B e-commerce platform Dial4Trade Technologies for listing and facilitating the sale of ammonium nitrate without the mandatory regulatory safeguards required under law.

In an order dated September 1, the consumer watchdog directed Dial4Trade to immediately discontinue the listing, hosting, advertising or facilitation of sale of ammonium nitrate, or any other substance classified as an explosive under the Explosives Act, 1884, or otherwise regulated under applicable law.

The company has also been directed to submit a compliance report within 15 days.

The CCPA had initiated proceedings after a sector-wide examination of e-commerce platforms to ascertain whether hazardous chemicals and explosive substances were being listed, advertised or made available for sale online.

During its inquiry, the authority found that Dial4Trade's platform had hosted listings for ammonium nitrate, which is classified as an explosive under the Explosives Act.

The CCPA said the listings did not disclose seller's valid Petroleum and Explosives Safety Organisation (PESO) licence, buyer eligibility and licensed status, mechanisms for transaction traceability, and the legal restrictions and consequences of unauthorised possession under the Explosives Act.

The authority also found that the listings were accompanied by imagery depicting explosions and blast effects, which it said was capable of conveying the impression that ammonium nitrate was freely available for purchase.

According to the order, the platform argued that it was a B2B marketplace and that the listing had been uploaded by an independent third-party seller without its prior knowledge or approval. It also said the seller's account was blocked after the issue was identified and the listing was added to a banned-product list.

The CCPA, however, rejected the argument that the platform could escape responsibility because the listing was uploaded by a third-party seller.

It said a marketplace facilitating transactions between buyers and sellers is required to exercise reasonable due diligence and cannot disclaim responsibility solely because products are uploaded by third-party sellers.

The authority also rejected the company's contention that its compliance framework, including seller declarations, a banned-product list and keyword restrictions, was sufficient. It said such measures were primarily reactive and did not amount to adequate safeguards for a marketplace dealing in regulated and hazardous substances.

The CCPA held that Dial4Trade had violated provisions of the Consumer Protection Act, 2019 relating to marketing goods hazardous to life and property, misleading advertisements and unfair trade practices, as well as provisions of the Consumer Protection (E-Commerce) Rules, 2020.

The authority said ammonium nitrate is a highly reactive substance and unauthorised sale, possession, transport or use is subject to statutory safeguards. It noted that the Explosives Act contains restrictions on the sale and delivery of explosives, including ammonium nitrate, to persons not authorised or verified.

The order also noted that this was the first proceeding of its kind against the company before the CCPA and took into account mitigating factors, including the subsequent blocking of the seller's account and the platform's steps to strengthen its seller onboarding and content-moderation mechanisms.