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Consumer Protection Act 2019

  May 26, 2020

Consumer Protection Act 2019

It replaces the Consumer Protection Act, 1986.   

How is the 2019 Act an improved version over the 1986 law?

The Act scores on five additional points that were not there in earlier law

(i) Product liability

(ii) Class action

(iii) Misleading advertisements

(iv) Celebrity responsibility

(v)   Regulator

Who is a consumer?

Since 1986, technology has been transformational and so the online consumers also figure in the definitionA consumer is defined as a person who buys any good or avails a service for a consideration.  It does not include a person who obtains a good for resale or a good or service for commercial purpose.  It covers transactions through all modes including offline, and online through electronic means, teleshopping, multi-level marketing or direct selling.

What are 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 standard.'

What are the existing rights of consumers?

There were a total of 6 consumer rights:

What are the five new rights under the CPA 2019?

In addition to the existing consumer rights, there are five new consumer rights we get as a consumer.

1. Right to file a complaint from anywhere

According to this new right, consumers can now file a complaint with the District Consumer Commission or State Consumer Commission from anywhere, home, office or while on a weekend trip. Presently, the consumers are required to file a case only at the place where the product was purchased or where the seller of the product has his registered office. The consumer affairs ministry will now frame rules for electronic filing of complaints and specify norms for paying the required fee digitally. This will reduce harassment of consumers to a great extent.

2. Right to seek compensation under product liability

Any complainant can file a case against the manufacturer or seller of a product for any loss caused to the complainant on account of a defective product, which applies to all services. If there is a manufacturing defect or the product in question does not conform to the express warranty the manufacturer or the seller will be held liable. This provision brings e-commerce under its ambit.

3. Right to protect consumers as a class

If we have a complaint that relates to violation of consumer rights or unfair trade practices or misleading advertisements that are prejudicial to the interests of consumers as a class, we can do two things. Forward the complaint in writing or in electronic mode to district collector or the commissioner of regional office or the Central Consumer Protection Authority (CCPA) for class action.

4. Right to seek a hearing using video conferencing

According to this, any complaint will be presented before the district commission based on an affidavit and documentary evidence placed before it. If an application has been forwarded by a consumer for hearing through video conference, the commission can allow for this provision.

5. Right to know why a complaint was rejected

No commission can reject a complaint without hearing the complainant. The commission, in fact, must decide about admitting or rejecting a complaint within 21 days, by which if it is not decided then the complaint is deemed as having been admitted.

Central Consumer Protection Authority (CCPA) is being set up? What will it do?

Central Consumer Protection Authority: The central government will set up a Central Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers.  It will regulate matters related to violation of consumer rights, unfair trade practices, and misleading advertisements.  The 1986 did not have a regulator.   The CCPA will have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into such violations. CCPA will carry out the following functions, including:

(i) Inquiring into violations of consumer rights, investigating and launching prosecution at the appropriate forum;

(ii) Passing orders to recall goods or withdraw services that are hazardous, reimbursement of the price paid, and discontinuation of the unfair trade practices, as defined in the Act;

(iii) Issuing directions to the concerned trader/ manufacturer/ endorser/ advertiser/ publisher to either discontinue a false or misleading advertisement, or modify it;

(iv) Imposing penalties, and;

(v) Issuing safety notices to consumers against unsafe goods and services.

(vi) Penalties for misleading advertisement: The CCPA may impose a penalty 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.

(vii) CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to one year. For every subsequent offence, the period of prohibition may extend to three years.  However, there are certain exceptions when an endorser will not be held liable for such a penalty.

How do Consumer Disputes Redressal Commissions (CDRCs) help?

Consumer Disputes Redressal Commission: Consumer Disputes Redressal Commissions (CDRCs) will be set up at the district, state, and national levels.  A consumer can file a complaint with CDRCs in relation to: (i) unfair or restrictive trade practices; (ii) defective goods or services; (iii) overcharging or deceptive charging; and (iv) the offering of goods or services for sale which may be hazardous to life and safety.  Complaints against an unfair contract can be filed with only the State and National   Appeals from a District CDRC will be heard by the State CDRC.  Appeals from the State CDRC will be heard by the National CDRC.  Final appeal will lie before the Supreme Court.

What are the respective jurisdictions?

The District CDRC will entertain complaints where value of goods and services does not exceed Rs one crore.  The State CDRC will entertain complaints when the value is more than Rs one crore but does not exceed Rs 10 crore.  Complaints with value of goods and services over Rs 10 crore will be entertained by the National CDRC.

How is product liability addressed?

Product liability means the liability of a product manufacturer, service provider or seller to compensate a consumer for any harm or injury caused by a defective good or deficient service.  To claim compensation, a consumer has to prove any one of the conditions for defect or deficiency, as given in the Act.

How does it deal with celebrities?

Celebrity endorsements are a huge part of the advertising industry. However, as per the Consumer Protection Act 2019, an endorser is liable to a fine of Rs 10 lakh and one-year ban on future endorsement for misleading ads. Only in cases where the endorser can prove that they have done due diligence to verify claims made in the ads, they will be exempted from punishment. It aims to inculcate a certain level of awareness and responsibility among the celebrities about the brands they endorse. A celebrity would now be compelled to make an informed decision while endorsing products and services. 

Do you think allowing class suits are a game changer?

A class action is a legal proceeding in which one or several petitioners bring suit on behalf of a group. The judgment or settlement agreed to arising from the suit covers all members of the group or class. 

The new CPA 2019 allows it. 

The purpose of the legislation is to ease the process of addressing grievances of consumers. Class action is a step in that direction.

The Act proposes to set up a Central Consumer Protection Authority (CCPA) to tackle e-commerce frauds, violation of consumer rights, unfair trade practices and misleading advertisements. The agency can also initiate class action, including enforcing recall, refund and return of products. Currently, the task of prevention of or acting against unfair trade practices is not vested in any authority.