Consumer Protection may sound complex but it is something that we as Consumers need every day.
A consumer is someone who purchases or consumes goods and services. He is the one who buys goods and services for personal use and not for commercial purpose or resale. Let us take an everyday example of grocery shopping where we may need Consumer Protection Laws. The food grains we purchase can be mixed with low-quality products so that the trader can make profits even while selling inferior quality goods. Let’s consider a type of Dal. The superior quality Dal can be mixed with some inferior quality Dal and sold at the price of the superior one. Similarly, water can be mixed in Milk. A lot of traders charge more than the MRP (Maximum Retail Price) and consumers go unnoticed. The product may be advertised as something else and sold as another. A few types of unfair trade practices would be:
- Adulteration: When superior quality products are mixed with their inferior counterparts to earn more profit, its adulteration. As we saw in the case of Dal and Milk.
- False Advertising: It means giving out false information about the good quality of a product even when it is not up to the mark. This might involve making false claims about drug abilities that it helps in weight loss.
- False Representation: Displaying a product to be something else when it’s actually not. It can be selling an inferior quality handbag as that of GUCCI or by some other brand.
- Hoarding: When a product is in great demand, a part of its production is kept aside for selling it later which causes a rise in price. Once the prices are high enough, the products are let in the market and traders earn profits. We have experienced it in the case of Onions a lot of times.
There can be numerous more ways of unfair trading from which we as consumers are to be protected.
What is Consumer Protection?
It is a practice of safeguarding buyers of goods and services and the public against unfair practices in the market. Measures of consumer protection are often established by the Law. These laws intend to prevent businesses from engaging in unfair trade practices or fraud in order to either gain an advantage over competitors or mislead the consumers.
Consumer protection is linked to the idea of the Rights of Consumers and the formation of Consumer Organisations, which help consumers make better choices in the market and file complaints against unfair practices.
“The protection of goods and services against low quality or dangerous products and advertisements that deceive people”, is Consumer Protection says the Cambridge Dictionary.
As Introduced by the Ministry of Consumer Affairs, Food and Public Distribution, Consumer Protection Act 2019 is, “An Act to provide for the protection of the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers’ disputes and for matters connected therewith or incidental thereto.”
The New Consumer Protection Act came into effect on July 20, 2020. This Act replaces the Consumer Protection Act of 1986. It defines Consumer as a person who buys any goods, avails a service for consideration. It does not include a person who obtains goods or services for commercial purposes. It covers transactions through both online and offline modes. In addition to earlier rights consumers get five new rights, which are:
- Right to file a complaint from anywhere,
- Right to seek compensation under product liability,
- Right to protect consumers as a class,
- Right to seek a hearing using video conferencing and
- The Right to know why a complaint was rejected.
New Act includes the establishment of the Central Consumer Protection Authority (CCPA) and rules for the prevention of unfair trade practices by e-commerce platforms. The CCPA is empowered to conduct investigations against violation of consumer rights and institute prosecution, an order of discontinuation against traders /manufacturers /endorsers /advertisers/publishers of unfair trade practices and misleading advertisements, order to recall hazardous goods and services, reimbursement of the prices paid, imposing penalties, issuing safety notices to consumers against unsafe goods and services. The CCPA may impose a penalty of up to Rupees Ten Lakhs and imprisonment of up to two years for a false or misleading advertisement. Can also prohibit the endorser for endorsing the misleading advertisements of a particular product for a period of up to One Year. In case of a subsequent offence, the fine may extend up to Rupees Fifty Lakhs and imprisonment of up to Five Years. For every succeeding offence, the period of prohibition may extend to Three Years. However, in exceptional cases, an endorser won’t be held liable for such a penalty.
Consumer Disputes Redressal Commissions (CDRCs) will be set up at National, State, and District levels. A consumer can file a complaint with CDRCs regarding- i) unfair or restrictive trade practices; ii) overcharging or deceptive charging; iii) defective goods or services and iv) offering of goods or services which may be hazardous to life or safety of the consumer.
The Act simplifies the Consumer dispute adjudication process in the consumer commissions, which includes empowering of the District and State Commissions to review their own orders, enabling filing of electronic complaints, complaints in consumer commissions which have jurisdiction over the place of consumer’s residence and video-conferencing for hearings.
An Alternate Dispute Resolution Mechanism of Mediation has also been provided in the New Act. A complaint can be referred for mediation, whenever there is scope for early settlement and parties agree for it. Mediation cells would be attached to Consumer Commissions. A panel of mediators would be selected by the selection committee consisting of the President and a member of the Consumer Commission. Mediation would be held in consumer mediation cells. No appeal against settlement through mediation would be allowed.
Complaints against a Contract which is unfair can be filled with the State Commission and National Appeals from a District CRDC will be heard by the State CRDC. National CRDC will be hearing appeals from the State CRDC. The final appeal will be held before the Supreme Court. The District CRDC will be handling complaints where the value of goods and services does not exceed Rupees One Crore. The State CRDC will be handling complaints where the value of goods and services is more than Rupees One Crore and less than Rupees Ten Crore. Complaints of goods and services valuing more than Rupees Ten Crore will be handled by the National CRDC.
As per the Consumer Dispute Redressal Commission Rules, there will be no fee for filing cases up to Rupees Five Lakh. The State Commissions would be submitting the report to Central Government on a quarterly basis about vacancies, pendency, disposal of cases, and other matters.
The Act also introduces the concept of Product Liability, which means it is the liability of the product manufacturer, service provider or seller to compensate a consumer for harm or injury caused by a defective good or deficient service. To claim the compensation, the consumer has to prove at least one condition of defect or deficiency as mentioned in the Act. The Act provides for punishment by a competent court for manufacturing or selling adulterant or hazardous goods. In case of the first conviction, the court may suspend the licence issued to the person for a period of two years, and in case of second or subsequent conviction cancel the licence.
Under this Act, every e-commerce entity is required to provide information relating to return, exchange, refund, guarantee and warranty, deliveries and shipments, modes of payment, the security of payment methods, grievance redressal mechanism, charge-back options, etc. including the country of origin which are necessary for enabling the consumers to make a right choice at the pre-purchase stage. Every e-commerce platform has to acknowledge the receipt of the consumer complaint within 48 hours and redress it within a period of 1 month.
Rules and Regulations: Under this new Act, apart from general rules, there are Central Consumer Protection Council Rules, Consumer Dispute Redressal Commission Rules, Appointment of President and Members in State/District Commission Rules, E-commerce Rules, Mediation Rules, Model Rules for States and Consumer Commission Procedure Regulations, Mediation Regulations and Administrative Control over State Commission and District Commission Regulations.
Central Consumer Protection Council Rules are provided for the Constitution of the Central Consumer Protection Council, which is an advisory body for consumer issues. Union Minister of Consumer Affairs, Food and Public Distribution would be the head of the council with Minister of State as Vice Chairperson and 34 other members from different fields. The council will have the tenure of 3 years and will have Minister-in-charge of consumer affairs from two States from each region: East, West, North, South, and North Eastern Region. There are also provisions for having working groups from amongst the members for specific tasks.
While comparing the two Consumer Protection Acts we could know that The 1986 Act has six types of unfair practices like false representation, misleading advertisements, etc. The New Act has additional three unfair trade practices, which are: a) failure to issue a bill or receipt, b) refusal to accept a good returned within 30 days and c) disclosure of personal information given in confidence; unless required by law or in public interest. The earlier Act had No Provisions for Product Liability or Unfair Contracts. The 2019 Act has mentions about both. The previous Act had Central Protection Council (CPC) as the promoter and protector of consumer rights. This Act has CPC’s advisory bodies for promotion and protection of consumer rights. The New Act establishes a Central Consumer Protection Authority (CCPA) as the regulating authority which would promote, protect, and enforce the rights of consumers as a class. The 1986 Act did not have a regulating authority. The 2019 Act gives us an Alternate Dispute Redressal Mechanism which the earlier one did not. The New Act has improved the penalties and got provisions for e-commerce platforms as well.
The Act is a welcome move as it seems to fill the cavities of the old Act and is being introduced during a crucial phase where consumers and their rights need to be protected as the global markets are becoming more and more consumer-centric. This Act simplifies the consumer dispute adjudication process and introduces the concept of product liability. In the earlier Consumer Protection Act 1986 a single point access was given to justice, which was time-consuming. CCPA provides for additional swift executive remedies. The new Act has been introduced after several amendments to provide protection to buyers not only from traditional sellers but also from new e-commerce platforms. Now the popular phrase ‘buyer beware’ can be replaced with ‘seller beware’ or ‘manufacturer beware’ taking into consideration the implementations to protect the consumers. This Act will prove to be a significant tool in protecting consumer rights in the country.