Consumer Protection Act, 2019

The Consumer Protection Act (CPA) is legislation in India that was enacted in 1986 to protect and promote the interests of consumers. The Act aims to provide consumers with effective and speedy redressal of their complaints against unfair trade practices and defective goods or services.

The Consumer Protection Act has been amended several times since its inception to keep pace with changing times and emerging issues.

The latest amendment to the Act, Consumer Protection Act, 2019 came into effect in July 2020, introducing several key changes to strengthen the Act and enhance consumer protection.

Background

1. In consumer movement in India as a ‘Social Force” was born out of the need to defend and advance consumer interests in the face of dishonest and unjust business practices, such as:

• Hoarding
• Illegal Selling
• Adulteration of food and edible oils, etc.

2.  Individual consumers frequently found themselves in precarious situations. The seller would attempt to place all of the blame on the consumer whenever there was a complaint about a product or service that had been purchased.

3. The Monopolies and Restrictive Trade Practice(MRTP) Act of 1969 thus included a chapter on unfair trade practices. According to the MRTP Act, any Trader (Business Entity) or individual could file a complaint with the MRTP Commission regarding an unfair trade practice. MRTP Commission was restricted in its reach was headquartered in Delhi. Also, the complexity of complaints grew over time with companies filing complaints about other companies. (For instance- Colgate-Pepsodent competitive advertisements).

4. The consumers had to file lawsuits in a civil court under a variety of statutes. The grievance redressal procedure became a long drawn-out process. However, no organisation was in place to address consumer complaints.

5. The Consumer Protection Act of 1986 was passed as a single, comprehensive piece of law to safeguard the interests of consumers. The CPA was created with the intention of protecting consumers from dishonest business practices.

6. Indian markets have experienced a significant transformation over time. Due to new issues in consumer markets like deceptive advertising, telemarketing, multi-level, marketing, direct selling, and e-commerce, the Consumer Protection Act needed to be re-enacted. Consequently, the government passed the Consumer Protection Act, of 2019.

Salient features of the Consumer Protection Act, 2019

1. Definition of Consumer

•  A consumer is defined as a person who buys any goods or avails a service It excludes persons who buy a good/service for resale or for commercial purposes
• It covers transactions through all modes i.e offline, and online through electronic means, teleshopping, multi-level marketing or direct selling.

2. Consumer Rights

• The definition of a consumer right is the ‘right to have information about different aspects of a good or service such as its quality, quantity, potency, purity, price and standards.
• Some consumer rights have been defined in the Bill. These are as follows:
  • be protected against the marketing of goods and services which are hazardous to life and property
  • be informed of the quality, quantity, potency, purity, standard and price of goods or services
  • be assured of access to a variety of goods or services at competitive prices
  • seek redressal against unfair or restrictive trade practices.

3. Consumer Protection Council

• The Bill has mandated the central government to establish Consumer Protection Councils known as Central Councils.
• It has also mandated the state government to establish Consumer Protection Councils in states and districts as State Councils and District Councils respectively.
• These are advisory bodies which will advise on the promotion and protection of consumer rights. It will be headed by the respective ministers of consumer affairs at the central and state levels. It will be headed by the District Collector at district levels

4. Central Consumer Protection Authority

• The bill establishes the Central Consumer Protection Authority[CCPA] to protect and enforce the rights of consumers. It will regulate matters related to:
  1. violation of consumer rights
  2. unfair trade practices
  3. misleading advertisements.
• It can also file cases before the Consumer Disputes Redressal Commission.
• It will have a separate investigation wing to investigate cases under the Act.
• It will also have the power to issue directions and penalties against false or misleading advertisements.
• The Authority can issue safety notices to alert consumers against dangerous or hazardous goods or services.

5. Consumer Dispute Redressal Commission

• The bill sets up a 3-tier consumer disputes redressal commissions/consumer courts at district, state and national levels. Complaints to consumer courts can be filed electronically and from the place where the complainant resides.
• A consumer can file a complaint with CDRCs in relation to:
  (i) unfair trade practices;
  (ii) defective goods or services;
  (iii) overcharging or deceptive charging; and
  (iv) Selling of goods or services which may be hazardous to life and safety.
• Complaints against unfair contracts can be made only at the centre and state consumer disputes redressal commissions.
• The final appeal against the order of the national commission shall be made in the Supreme Court.

6. Mediation

• The bill provides for an Alternate Dispute Resolution Mechanism through mediation.
• A grievance can be referred for mediation by the Consumer Forum if it is satisfied that the scope for early settlement by mediation exists.

7. Product Liability

• A manufacturer/service provider/product seller will be held responsible to provide compensation for any damage caused by a defective product or deficient services.
• Compensation may be obtained if the complaint for product liability satisfies any of the following conditions :
  •  Manufacturing defect
  • Design defect
  • Deviation from manufacturing specifications
  • Not conforming to express warranty
  • Lack of adequate instruction for correct use
  • Faulty services.

8. Penalties

• A penalty can be imposed by the CCPA on a manufacturer or an endorser of up to Rs 10 lakh and imprisonment for up to two years for a false or misleading advertisement.
• In case of a subsequent offence, the fine may extend to Rs 50 lakh and imprisonment of up to five years.

Benefits to Consumer

1. Seek justice:

• It provides additional forums to the consumer for seeking justice. For instance, the Act establishes Central Consumer Protection Authority (CCPA) to impose penalties for false and misleading advertisements.
• The CCPA can also prohibit the endorser of misleading ads from endorsing for a one-year
  period.
• The Act also provides protection against unfair contracts.

2. Penalise adulteration

• The Central Consumer Protection Authority (CCPA) is also empowered to impose penalties for manufacturing, storing or selling adulterated products.

3. Ensure product liability

• For the first time product liability has been included in the framework of consumer protection.
• The inclusion of product liability provisions will deter manufacturers and service providers from delivering defective goods or deficient services.

4. Timely disposal of cases: The Act provides scope for mediation. It will enable easy disposal of cases and reduce hassle for the consumers.

5. Increased ambit of protection: It covers the new emerging sectors such as E-commerce within its ambit.

6. Flexibility to consumers

• Previously, the complaint could be filed by the consumer only at the place of purchase or at the place where the seller has a registered office.
• The new law empowers the consumer to file a complaint at the place of his residence/work.
• The new Act also provides scope to the parties involved in a consumer case to seek hearing through video conferencing.

7. Fixed time period:

• It sets a time limit of 21 days for the consumer dispute redressal commission to decide on admitting/rejecting a complaint.
• If it doesn’t decide within the time period, the case would be considered as admitted.

Issues with the Act

1. The Act does not include ‘healthcare ’ as one of the services.

2. As per the Act, CCPA would be the central regulator for consumer issues. But other sectoral regulators also exist such as TRAI in the telecom sector and IRDAI in the insurance sector. It may lead to overlapping jurisdiction between the regulators.

3. The consumer has a multiple number of options to register complaints such as consumer courts, councils, sector regulators etc. It may end up confusing the consumers.

4. The commissions lack the staff to handle the increasing workload. For instance, 362 posts of the consumer grievance redressal commissions are lying vacant in 596 districts. The new provision in the Act, such as 21-day deadline to admit complaints will further add to the workload.

5. The Act does not specify the minimum qualifications for the members and the President of the CDRC. It rather delegates this power to the Central Government. If the Commission are made to have only non-judicial members, it would lead to a violation of the Separation of Powers Doctrine. Prescribing these qualifications through Rules would also lead to an excessive delegation of legislative powers.

6. The 1986 Act established selection committees(chaired by a judicial member) to appoint the members of the commission. But the new Act leaves it to the Central government to decide on the method of appointment. This may hamper the independent functioning of these commissions.

7. A number of recommendations of the Parliamentary standing committee have remained unaddressed, such as the right to terminate a contract based on the poor quality of goods supplied/services rendered has not been included under the list of rights.

8. Inclusion of e-commerce within the ambit of the Act may impact the sector negatively. For example, it may lead to a reduction in FDI, may reduce India’s bargaining power in multilateral bodies etc as the Act will result in increased regulation of the sector.

9. Many consider holding the endorsers liable for unfair business practices as draconian because the endorsers cannot be held responsible for running the company.

Consumer Protection: Government Initiatives
1. National Consumer Helpline (NCH) : The toll-free NCH number is 1800-11-4000. It provides guidance to consumers regarding consumer grievances.
2. INGRAM: Integrated Grievance Redress Mechanism (INGRAM) portal helps in creating awareness among consumers about their rights and responsibilities. Consumers can also provide their grievances through it.
3. State Consumer Helplines: State Consumer Helplines have been set up by State Governments. It aims to encourage Alternate Disputes Redressal mechanisms at the State level.
4. Smart Consumer Application: The Government has launched a mobile application “Smart Consumer”to enable the consumer to scan the barcode of the product and get all the details of the product.
5. GAMA: The Government has launched a portal called “Grievances Against Misleading Advertisements (GAMA)”.It is a dedicated portal that helps consumers register their grievances against misleading advertisements.
6. Online Dispute Resolution: An Online Consumer Mediation Centre has been established at the National Law School of India University, Bengaluru. It aims to provide a state-of-the-art infrastructure to resolve consumer disputes both through physical as well as online mediation through its platform.
7. JaagoGrahakJaago: Jago Grahak Jago is a consumer awareness programme from the Ministry of Consumer Affairs, and Public Distribution, Government of India