Cheating: Liability of E-Commerce Platforms for Third-Party Seller Fraud Under Section 318 of the Bharatiya Nyaya Sanhita

Over the last decade, India has witnessed a remarkable transformation in the retail economy due to the rise of e-commerce platforms such as Amazon, Flipkart, Meesho, Snapdeal, manymore and others. The e-commerce ecosystem has revolutionised access or the accessibility to markets, offering convenience, competitive pricing, and an unprecedented variety of products which are never known before. This isa marketplace model which allows those third-party sellers to make list and sell their products, which has become the backbone of India’s digital commerce success.

However, the rise of online marketplaces has also produced, created  new forms of consumer insecurity and vulnerability. Cases of fake products, non-delivery after payment, manipulation of product descriptions, receiving empty boxes and sale of counterfeit goods or product have grown substantially. Many of these acts fall under the category of "cheating" under criminal law, specifically under the newly codified Section 318 of then Indian Penal Code (BNS), which replaced Section 415 of then “Indian Penal Code (IPC), 1860”. While the primary wrongdoer is often a third-party seller,but here the question naturally and usually arises: to what extent can the e-commerce platform itself be held liable for the cheating committed via its interface?

This question sits right at the crossroads of criminal law, consumer protection, and how we govern digital platforms. E-commerce platforms often like to call themselves “intermediaries,” claiming they simply connect buyers with sellers. They argue that they don’t create content or do not have direct control over how sellers behave. However the consumers are increasingly dependings on the platforms' promises, like “fulfilled by,” “assured badge,” reviews, ratings, refund guarantees, and algorithmic recommendations, when deciding what to buy. Such features may constitute inducement under the meaning of cheating.

The center of this article is the important discussion about platforms immunity and platforms responsibility. The shift which we witnessed from a purely traditional physical marketplace to a digital environment, creates and bring to us new legal challenges,  where fraud can be technologically mediated and hidden behind layers of digital interaction.

This article therefore also seeks to examine the legal foundations/basis, challenges, and implications of applying Section 318 BNS to e-commerce platforms in cases of third-party seller fraud. It conducts a thorough analysis of cheating, reviews the regulatory obligations of platforms, and examines and investigates the scenarios that could lead to criminal liability for a platform,, and offers a critical evaluation of current legislative gaps along with some practical recommendations.

 UNDERSTANDING CHEATING UNDER SECTION 318, BNS

Section 318 of the Bhartiya Nyaya Sanhita (BNS), 2023 primarily defines and prescribes punishment for the offence of Cheating.This mentioned section consolidates and replaces the previous provisions on cheating found in the Indian Penal Code (IPC), such as Sections 415, 417, 418, and 420(Cheating and dishonestly inducing delivery of property), making the law more structured.

1. Definition of Cheating Under Sec. 318

Section 318(1) of the Bharatiya Nyaya Sanhita, 2023, states:

“Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to 'cheat'.”

2. Deconstructing the Ingredients and Key Elements of Cheating

To establish the offense of cheating under BNS Section 318, the prosecution must prove two essential ingredients:

• Deception: The accused must have actively misled the victim, either by making a false representation (examples- lying, pretending to be someone else, showing a fake sample) or by dishonestly concealing facts.
• Fraudulent or Dishonest Inducement: The deception must have caused the victim to act (or not act) in a way they wouldn't have otherwise, resulting in:
• The victim parting with property.
• The victim consenting to someone else keeping property.
• Causation of Harm: The act must cause or be likely to cause damage or harm (in body, mind, reputation, or property).

3. Applicability to E-commerce Fraud

This definition we can say directly relates to common third-party seller fraud:

Deception: If we take e example , A seller lists a "New iPhone 15" but possesses a counterfeit or an empty box. The listing itself is the deception.

Inducement: The customer, believing the listing to be genuine, is induced to place an order.

Delivery of Property: The customer is induced to deliver money (property) to the seller (via the platform's payment gateway).

Harm: The customer suffers wrongful loss (financial loss and loss of the expected product).

So here we know the seller is clearly liable under Section 318, but the question is: can the platform also be held liable, either directly or as an abettor?

E-COMMERCE PLATFORMS AS 'INTERMEDIARIES'

1. The Legal Status of E-commerce Platforms

So E-commerce platforms want always to be called themselves not as sellers but as neutral technology facilitators that simply connect buyers and sellers. Indian law recognizes this distinction through the Information Technology Act, 2000, which classifies these platforms as “intermediaries.” Under Section 2(1)(w) of the Act an intermediary is anyone who receives, stores, or transmits electronic records on be half of another person like we can say including telecom companies, ISPs, search engines, social media platforms, and online marketplaces. This status gives them access or accessibility to a crucial protection: the “safe harbour” provided under Section 79 which shield them from liability for user-generated content such as product listings, posts, or messages.

This immunity is not automatic. To qualify for safe harbour protection, platforms must show that they merely provide access to their systems and do not influence or alter the information shared through them. They must also obey follow andcomply with the “due diligence” requirements set out in the IT Rules, 2021. These rules which we just know require platforms to publish clear policies, warn users against posting unlawful or fraudulent content, remove illegal material when officially notified, and maintain a functioning grievance redressal system with a designated officer. In last while the law allows e-commerce platforms to operate as intermediaries it also expects them to act responsibly and maintain transparency.

2. Liability of E-Commerce Platforms: Doctrinal Analysis

Many of the frauds linked to third-party sellers on e-commerce platforms follow familiar patterns like we have diccus counterfeit or duplicate products, non-delivery after payment, empty or incorrect packages, fake reviews, and misleading claims about quality, origin, or discounts. Even listings for products that don’t actually exist fall into this category. All these actions involve deception and inducement which place or arrange closely with the core ingredients of cheating under Section 318. while the platform may not commit the fraud directly the nature of these acts makes them legally significant and potentially traceable back to the broader ecosystem the platform enables.

e-commerce companies describe themselves or want to be call as neutral intermediaries or mere technology providers, their conduct often tells a different story. There are manys platforms controls keys aspects of the transactions from logistics and packaging to payments, return policies, and seller promotions. Labels which we see on thos platform “Assured,” “Verified,” or “Plus,” along with algorithm-driven product rankings, further blur the line between facilitator and seller. When a platform becomes deeply involved in these operational layers, it begins to look less like a passive marketplace and more like an active participant in the sale. This shift can increase its exposure to liability, and in cases where fraud occurs, may even open the door to potential criminal responsibility for cheating.

3. Can a Platform Be Held Liable Under Section 318?

Till now we all know a platform can be held liable under Section 318 BNS if the deception involved in a fraudulent also transaction can be traced back to the platforms’ own conductfor instance, when it assigns “Assured” or “Badged” labels without real verification, or the uses algorithms that misleadingly promote certain sellers, or what we can say presents inflated ratings that create an impression of guaranteed authenticity. Liability becomes stronger when these representations actually influence a buyer’s decision, fulfilling the element of inducement. The platform’s knowledge or negligence also plays a major role in ignoring complaints, allowing thos repeat offenders to operate, or what we can say it continuing to promote sellers despite clear red flags can all weaken its claim of neutrality. If the platform is starting showing to be wilfully blind or to have knowingly enabled deceptive practices, this may satisfy the requirement of dishonest intent. In more serious caseswhere the platform assists, colludes with, or financially benefits from fraudulent conduct its involvement could amount to abetment, conspiracy, or shared intention, making criminal liability under Section 318 far more plausible.

Here Courts and regulators have increasingly highlight that intermediary safe harbour is not absolute. Platforms lose this protection when they actively participate in transactions or fail to exercise the due diligence required to keep users safe. Consumer protection bodies now expect platforms to verify sellers, monitor misconduct, and compensate users when trust is breached, reflecting a broader trend toward recognizing platform responsibility. If we take Global examples from the country like EU to the U.S. and China which show that platforms that control logistics, payments, or marketing can be held liable in counterfeit or fraud cases, and India appears to be moving in the same direction. Applying criminal liability present or create serious challenges like proving a platform’s intent is difficult as companies say they lacked knowledge and merely hosted third-party listings. Technical hurdles make matters more complex fraudulent sellers use fake details, algorithms operate as opaque “black boxes,” and platforms may claim confidentiality over their internal systems. also platform architecture itself may enable deception, from misleading auto-generated descriptions to weak moderation of fake reviews and incentive structures that reward cheap, fast-selling items. Finally, cross-border issues add another layer of complexity, as many sellers operate from abroad and platforms may be headquartered outside India, making enforcement and cooperation across jurisdictions difficult.

4. Judicial Interpretation And Case Studies

Indian courts have considered various facets of intermediary liability for third-party seller fraud under both IT Act and criminal statutes like Section 318 BNS:

IndiaMart Case (Patna High Court): In this case, IndiaMart was arrayed as an accused after a consumer, having paid for goods never delivered by a third-party seller, argued that the platform failed to exercise due diligence. IndiaMart relied or depend on Section 79 for immunity, the Court emphasized that this protection is conditional—platforms must actively check and ensure sellers are legitimate. Exemption does not apply if due diligence is missing.​

Bazee.com Precedent: The Bazee.com case led to stricter rules for intermediaries under Section 79 and the 2011 IT Rules, strengthening consumers protections at the digital marketplace.​

'Actual Knowledge': The Shreya Singhal Precedent

The Supreme Court in Shreya Singhal v. Union of India (2015), clarified what "actual knowledge" means also it held that for an intermediary to obligated to take down content when it must receive 'actual knowledge' through either:

• A court order; or
• A notification from the appropriate government agency.

This is a very high threshold, Mere customer complaints, even hundreds of them, do not constitute "actual knowledge" as per this judgment. This makes it extremely difficult to hold a platform liable for failing to act.

Delhi High Court (Christian Louboutin v. Darvey’s): The court held that if a platform actively participates in the marketing or storage of fraudulent or counterfeit products, it can be liable as an abettor, not just a passive intermediary. This sets a precedent for liability when platforms cross the line from facilitator to participant.

Key Judicial Principles:

• Intermediaries are liable for fraud if they have “actual knowledge” of unlawful content and fail to act.
• Blanket immunity does not protect platforms that ignore due diligence or are complicit in the fraudulent transaction.
• The scope of “cheating” under BNS extends to e-commerce intermediaries when they facilitate or fail to prevent third-party acts that induce consumer loss.

CONCLUSION

In last at conclusion, the liability of e-commerce platforms for third-party seller fraud under Section 318 of the BNS sits at the intersection of criminal law and digital-platform responsibility. While platforms currently benefit from strong “safe harbour” protections under Section 79 of the IT Act, the bar for the establishing “actual knowledge” is high after that Shreya Singhal judgment. This means platforms are usually shielded from criminal liability so long as they respond to official takedown notices. However this immunity weakens once a platform shifts from being a passive intermediary to playing an active role also such as promoting sellers, offering “verified” or “assured” tags, or otherwise inserting itself into the transaction in ways that may mislead consumers.

Now looking ahead policymakers should consider expanding the definition of “actual knowledge” to include recurring fraud patterns reflected in a platform’s own grievance data, and also should issue clearer guidance on how the BNS and IT Act interact in cases of digital fraud. Platforms also have to  strengthen seller verification, allow their or tie their “assured” labels to real accountability, and act proactively when patterns of consumer complaints emerge. The Consumers also have an important role like filing grievances on the platform, reporting cases to consumer-protection bodies, and registering cyber-crime complaints all help create the formal record needed to trigger legal action and ensure safer online marketplaces.

REFERENCES

• RATANLAL & DHIRAJLAL, BHARATIYA NYAYA SANHITA (37th ed. 2025).
• The Information Technology Act, 2000,
• India's Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021
• Surbhi Srivastava & Dr. Mudra Singh, Legal Framework for E-commerce in India: Regulatory Challenges and Opportunities in Digital Economy, INT’L J. RES. PUBL’N & REV. (2024–25).
• Ajmer Singh, Emergence of Liability of Online Intermediaries: Critical Analysis, 6 Bharati L. Rev. 175 (Apr.–June 2018), available at https://docs.manupatra.in/newsline/articles/Upload/6DA55DA5-E223-40CB-9F78-43A98DF7E31B._Prof._175-190__cyber%20and%20it.pdf
• Neha Kumari, [E-commerce Trends in India], Int’l J. Rsch. Publication & Rev. (July 2024), available at https://journalirr.com/wp-content/uploads/2024/07/Neha-Kumari-14.pdf
• Bharatiya Nyaya Sanhita, § 318 ( 2025). 
• Dinesh Agrawal v. State of Bihar, Cr. WJC No. 347 of 2018 (Patna High Ct. May 2, 2018
• Avnish Bajaj v. State (NCT of Delhi), (2005) 3 CompLJ 364 (Del. HC)
• Shreya Singhal v. Union of India, AIR 2015 SC 1523, (2015) 5 S.C.C. 1 (India)
• Christian Louboutin SAS v. Nakul Bajaj & Ors., CS (COMM) 344/2018 (Delhi High Ct., Nov. 2, 2018).