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Consumer Protection Act, 2019

Consumer protection act, 2019 - a brief overview.

The Consumer Protection Act, 2019 is an important topic for the UPSC exam. This is a part of the polity and governance segments in the UPSC syllabus. In this article, we give you a brief description of the details of the newly-passed Act, salient provisions of the Act, its importance and associated concerns, for the IAS exam .

Consumer Protection Act, 2019:- Download PDF Here

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The new Consumer Protection Act was passed by Parliament in 2019. It came into force in July 2020 and replaced the Consumer Protection Act, 1986.

Read about the important acts in India from the linked article.

Given below is a gist of the Consumer Protection Act, 2019:

Enactment Date:  August 9, 2019
Act Year:  2019
Short Title:  The Consumer Protection Act, 2019
Long Title:  An Act to provide for 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
Ministry:  Ministry of Consumer Affairs, Food and Public Distribution
Department:  Department of Consumer Affairs

Need for the new act:

  • The Digital Age has ushered in a new era of commerce and digital branding, as well as a new set of customer expectations. Digitisation has provided easy access, a large variety of choices, convenient payment mechanisms, improved services and shopping as per convenience. However, there are also associated challenges related to consumer protection.
  • To help address the new set of challenges faced by consumers in the digital age, the Indian Parliament passed the landmark Consumer Protection Bill, 2019 which aims to provide timely and effective administration and settlement of consumer disputes.

Consumer Protection Act 2019 Details:

  • Consumer Protection Act, 2019 is a law to protect the interests of the consumers. This Act provides safety to consumers regarding defective products, dissatisfactory services, and unfair trade practices.
  • The basic aim of the Consumer Protection Act, 2019 is to save the rights of the consumers by establishing authorities for timely and effective administration and settlement of consumers’ disputes.

Rights of the consumers:

  • Consumers have the right to information on various aspects of goods and services. This could be information about the quantity, quality, purity, potency, price, and standard of goods or services.
  • To be protected from hazardous goods and services. Right to protection against goods and services that can be dangerous to life and property.
  • To be protected from unfair or restrictive trade practices.
  • Consumers have the right to access a variety of goods and services at competitive prices.
  • Consumers should have the right to redressal.

Also, read about the  National Consumer Disputes Redressal Commission (NCDRC) in the linked article.

Refer to the links below for IAS exam preparation:

Salient Provisions of the Consumer Protection Act 2019

New definition of consumer :

  • The new Act has widened the definition of ‘consumer’.

Definition of consumer:

  • As per the Act, a person is called a consumer who avails the services and buys any good for self-use. Worth to mention that if a person buys any good or avails any service for resale or commercial purposes, he/she is not considered a consumer. This definition covers all types of transactions i.e. offline and online through teleshopping, direct selling or multi-level marketing.

Central Consumer Protection Authority :

  • The Act proposes the establishment of the Central Consumer Protection Authority (CCPA) as a regulatory authority.
  • The CCPA will protect, promote and enforce the rights of consumers and regulate cases related to unfair trade practices, misleading advertisements, and violation of consumer rights.
  • The CCPA will have the right to take suo-moto actions, recall products, order reimbursement of the price of goods/services, cancel licenses, impose penalties and file class-action suits.
  • The CCPA will have an investigation wing to conduct independent inquiry or investigation into consumer law violations.

To get the List of important Acts that Transformed India for the upcoming UPSC exam preparation, candidates can visit the linked article.

Consumer Disputes Redressal Commission: 

  • The Act has the provision of the establishment of Consumer Disputes Redressal Commissions (CDRCs) at the national, state and district levels to entertain consumer complaints.
  • As per the notified rules, the State Commissions will furnish information to the Central Government on a quarterly basis on vacancies, disposal, the pendency of cases and other matters.
  • Overcharging or deceptive charging
  • Unfair or restrictive trade practices
  • Sale of hazardous goods and services which may be hazardous to life.
  • Sale of defective goods or services
  • As per the Consumer Disputes Redressal Commission Rules, there will be no fee for filing cases up to Rs. 5 lakh.

E-Filing of Complaints:

  • The new Act provides flexibility to the consumer to file complaints with the jurisdictional consumer forum located at the place of residence or work of the consumer. This is unlike the earlier condition where the consumer had to file a complaint at the place of purchase or where the seller has its registered office address.
  • The new Act also contains enabling provisions for consumers to file complaints electronically and for hearing and/or examining parties through video-conferencing.
  • Consumers will also not need to hire a lawyer to represent their cases.

Product Liability & Penal Consequences :

  • A manufacturer or product service provider or product seller will now be responsible for compensating for injury or damage caused by defective products or deficiency in services.
  • This provision brings within its scope, the product manufacturer, product service provider and product seller, for any claim for compensation. The term ‘product seller’ would also include e-commerce platforms.

Penalties for Misleading Advertisement:

  • The CCPA may impose a penalty on a manufacturer or an endorser, for a false or misleading advertisement. The CCPA may also sentence them to imprisonment.

Provision for Alternate Dispute Resolution :

  • The new Act provides for mediation as an Alternate Dispute Resolution mechanism. For mediation, there will be a strict timeline fixed in the rules.
  • As per the recently notified rules, a complaint will be referred by a Consumer Commission for mediation, wherever scope for early settlement exists and parties agree to it. The mediation will be held in the Mediation Cells to be established under the aegis of the Consumer Commissions. There will be no appeal against settlement through mediation.

Unfair Trade Practices:

  • The new Act has armed the authorities to take action against unfair trade practices too.
  • The Act introduces a broad definition of Unfair Trade Practices, which also includes the sharing of personal information given by the consumer in confidence unless such disclosure is made in accordance with the provisions of any other law.

The Central Consumer Protection Council:

  • As per the notified Central Consumer Protection Council Rules, the Central Consumer Protection Council would be headed by the Union Minister of Consumer Affairs, Food and Public Distribution with the Minister of State as Vice Chairperson and 34 other members from different fields.
  • The Council, which has a three-year tenure, will have a Minister-in-charge of consumer affairs from two States from each region – North, South, East, West, and NER. There is also a provision for having working groups from amongst the members for specific tasks.

Applicability:

  • This Act is applicable to all the products and services, until or unless any product or service is especially debarred out of the scope of this Act by the Central Government.

Aspirants can read about different rights available to Indian citizens from the links given below:

 

Consumer Protection Act 2019 Significance:

Empowering consumers:

  • Consumer-driven businesses such as retail, e-commerce would need to have robust policies dealing with consumer redressal in place.
  • The new Act will also push consumer-driven businesses to take extra precautions against unfair trade practices and unethical business practices.

Inclusion of the e-commerce sector:

  • E-commerce has been witnessing tremendous growth in recent times. The Indian e-commerce market is expected to grow to US$ 200 billion by 2026.
  • As per the notified rules, every e-commerce entity is required to provide information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism, payment methods, the security of payment methods, charge-back options, etc. including country of origin which are necessary for enabling the consumer to make an informed decision at the pre-purchase stage on its platform.
  • The e-commerce platforms will have to acknowledge the receipt of any consumer complaint within forty-eight hours and redress the complaint within one month from the date of receipt under this Act. This will bring e-commerce companies under the ambit of a structured consumer redressal mechanism.
  • E-commerce entities that do not comply will face penal action.

Time-bound redressal:

  • A large number of pending consumer complaints in consumer courts have been common across the country. The new Act by simplifying the resolution process can help solve consumer grievances speedily.
  • A main feature of the Act is that under this, the cases are decided in a limited time period.

Responsible endorsement:

  • The new Act fixes liability on endorsers considering that there have been numerous instances in the recent past where consumers have fallen prey to unfair trade practices under the influence of celebrities acting as brand ambassadors.
  • This will make all stakeholders – brands, agencies, celebrities, influencers and e-commerce players – a lot more responsible. The new Act would force the endorser to take the onus and exercise due diligence to verify the veracity of the claims made in the advertisement to refute liability claims.

Upholding consumer interests:

  • For the first time, there will be an exclusive law dealing with Product Liability.
  • Product liability provisions will deter manufacturers and service providers from delivering defective products or deficient services.
  • The new legislation empowers the National Consumers Dispute Redressal Committee as well as the State Commission to declare null and void any terms of a contract while purchasing a product. This will go a long way in protecting consumers, who are often subject to contract conditions that favour a seller or manufacturer.

Alternate dispute redressal mechanism:

  • The provision of Mediation will make the process of dispute adjudication simpler and quicker.
  • This will provide a better mechanism to dispose of consumer complaints in a speedy manner and will help in the disposal of a large number of pending cases in consumer courts across the nation.

Simplified process for grievance redressal:

  • The new Act would ease the overall process of consumer grievance redressal and dispute resolution process. This will help reduce inconvenience and harassment for the consumers.
  • The enhanced pecuniary jurisdiction and provisions providing statutory recognition to mediation processes, enabling filing of complaints from any jurisdiction and for hearing parties through video-conferencing will increase accessibility to judicial forums and afford crucial protection in times when international e-commerce giants are expanding their base.

Read more about the  Consumer Confidence Index (CCI) at the linked article.

Consumer Protection Act 2019 Concerns:

State regulation:

  • As part of the Consumer Protection Act, 2019, the Ministry of Consumer Affairs will compile a code of conduct for advertisers and agencies, a move designed to curb unfair practices and misleading claims. The planned code will detail penalties for advertisers and their agencies and publishers if misleading advertising and false claims are found.
  • There have been concerns that this approach would mark a move from self-regulation to a more federated oversight.

Implementational challenges:

  • The existing vacancies at the district commission level would undermine the effective implementation of the new Act.

Lack of differentiated approach:

  • As per the proposed rules for the e-commerce businesses, companies are not allowed to “manipulate the price” of goods and services offered on their platforms to gain unreasonable profit or discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Act.
  • The clause on the manipulation of price by e-commerce companies appears irrelevant as sometimes, the e-commerce companies would want to reduce the price to enhance sales volume. For a country with market size of around $25 billion, the guidelines should have taken a deeper view of the e-commerce ecosystem, covering all prevailing business models between consumers, marketplaces and sellers.

Relevant Links:

Frequently Asked Questions related to the Consumer Protection Act 2019

What is the consumer protection act in india, what are the main features of the consumer protection act, what is the aim of the consumer protection act.

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Consumer protection act,2019: analysis and challenges for future.

Consumer Protection Act,2019.jpg

The Author, Prof. (Dr.) Chitrapu Kama Raju is Principal at IFIM Law School and Abhishek Sharma is 2nd Year B.COM.LLB student at Chandigarh University, Punjab.

Introduction

Mahatama Gandhi once said that “ A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so”. The digital age has ushered and immensely grown in a fresh new era of e-commerce and brought new customer expectations. The digital age has brought easy access, increased choices and time saving modes of shopping for the consumers. 

Due to the spurt of digitalization, the old Act possessed certain challenges and needed immediate attention. But the time has come where consumers can witness and cherish the new Consumer Protection Act, 2019 (hereafter referred as 2019 Act) that has recently replaced the three-decade old Consumer Protection Act, 1986 hereafter referred as the 1986 Act. The historical day was 6 August 2019 when the government passed the landmark Consumer Protection Act, 2019. 

The 1986 Act consisted some huge legal flaws which the 2019 Act proposes to settle in. The 2019 Act proposes a slew of measures and tightens the existing rules present in 1985 Act to further enhance consumer welfare. This article will make the readers understand the key aspects of the Consumer Protection, 2019, compare with the 1986 Act.

New Additions

Now new consumer protection laws were needed owing to the drastic change in the manner market functions. There is rise in international trade, global supply chains and rapid development of e-commerce. India has also witnessed the backlog of pending cases in the consumer courts. The new market set-up has witnessed mis-leading advertisements, and a special check was needed on direct selling and multi-level marketing. The new Act is going to benefit the society at large

  • E-Commerce and false advertisement:

The definition of “consumer” under the new Act i.e. 2019 Act includes the consumers who make purchases through e-commerce platform. The earlier Act did not include the consumers who buy products online and this lacuna has beenfilled by the 2019 Act. There is a separate provision for endorsement of goods and se services, which are normally endorsed by the celebrities are covered under the provision of false and misleading advertisement. The onus on the celebrities is additional to the liability placed on the manufacturers and service providers. Mis-leading advertisement shall also mean deliberately hiding important information. CCPA which shall be discussed later also regulates false and mis-leading advertisement.

  • Food Safety and Standards Act, 2006

The 2019 Act includes the definition of “food” as defined under the Food and Standards Act, 2006. This has replaced the definition of “goods” under the 1986 Act. This would help in bringing the number of food delivery platforms to come under the ambit of consumer protection.

  • Telecom Services

In order to bring the telecom services under the 2019 Act, “telecom” has been added to the definition of “services”. However, it would have been much better if such inclusion was added as “telecommunication service” as defined by the Telecom Regulatory Authority of India Act (TRA), rather than “telecom”.

  • Pecuniary Jurisdiction

The income of the consumers and their shopping lifestyle has tremendously grown over the period of time. The amount which the consumers spend in their purchase, projects, infrastructure was very minimal as compared to 21 st century. Therefore, there was extra burden on the National Commission. Therefore, in the light of this issue, the pecuniary jurisdiction of the Consumer Courts has changed;

Earlier: UPTO 20 Lakhs

Earlier: 20 Lakhs- 1 CR

Earlier: Above 1 CR

Now: UPTO 1 CR

Now:  1 CR- 10 CR

Now: Above 10 CR

  • Structural Reforms

Composition

1 President and atleast 2 members

1 President and atleast 4 members

1 President and atleast 4 members

Location

In district of the State

In each state

At NCR

Qualification

As given by Central Government

As given by Central Government

As given by Central Government

Filing Complaint

By Central Authority; may be filed electronically

By Central Authority; may be filed electronically

By Central Authority; may be filed electronically

Place of Suing

Where the complainant resides or works

Where the complainant resides or works

---

A case is deemed to be admitted if no decision is given within 21 days. If complainant do not reach the consumer forum then case shall be decided on merit.

From orders of District Commission to State Commission

From State Commission to National Commission

From National Commission to Supreme Court

 

  • Central Consumer Protection Authority

Central Consumer Protection Authority (CCPA) has been set up to promote, protect and enhance consumer rights. The headquarter shall be in NCR and regional offices shall be decided by the government. The authority shall regulate the violation of consumer rights, unfair trade practices, and misleading advertisements. There shall be an investigation wing headed by Director general (DG).

  • Unfair Contracts

An unfair contract shall mean a contract between manufacturer/trader/service provider and a consumer which causes harm to the consumer or significant change in the rights of the consumer. One of such examples can be unilateral termination of the contract without any prior information. For the same purpose a complaint can, be filed in the State Commission up to 10 Crore INR and in National Commission above 10 Crore INR.

  • Product Liability

The Manufacturer, Product Service Provider and Product Seller shall be liable under the new Act for any kind of harm caused by their product(s) which results in any injury or death of the consumer. However, the liability on the part of the manufacturer will be more. This shall also apply to the e-commerce platforms as well. The harm should be caused by the defective good which results in injury, death, mental agony, loss of consortium or any other harm. The harm must be real and does not include any economic loss.

  • Mediation (Alternate dispute Resolution)

The new Act provides facility for mediation which shall be voluntary and not binding on the parties. Median shall make the process quicker, simpler and help with speedier resolution of disputes. The Consumer Mediation Cell (CMC) shall be attached to each district, state and national level which is itself a tedious and lengthy task owing to the funding that courts get and the lack of infrastructuralfacilities especially at the district level.

  • Filing of Complaint

The complaint can be filed by the consumer himself or the parents and legal guardian of the consumer. The new Act allows the consumer to file a complaint at the place where he/she resides or at the place he/she works. The complaint can also be filed electronically and heard vial video conferencing in certain circumstances.

  • Offences and Penalties \

                                                        Penalties for non-compliance of orders

Imprisonment from 1 month to 3 years

Imprisonmentup to 6 months

Fine from Rs. 25,000/- to Rs. 1,00,000 /-

Fine up to Rs. 20,00,000/-

Or Both

Or Both

Punishment (Products Containing Adulterant)

Does not result in injury

Imprisonment: Up to 6 months

Fine: Up to Rs. 1,00,000/-

Injury not amounting to grievous hurt

Imprisonment: Up to 1 Year

Fine: Up to Rs. 3,00,000/-

Injury resulting in grievous hurt

Imprisonment: Up to 7 years

Fine: Up to Rs. 5,00,000/-

Death of Consumer

Imprisonment: 7 years to life

Fine: Up to Rs. 10,00,000/-

                                                      Punishment (Spurious Goods)

Injury not amounting to grievous hurt

Imprisonment: 1 year

Fine: Up to Rs. 3,00,000/-

Injury resulting in grievous hurt

Imprisonment: 7 years

Fine: Up to Rs. 5,00,000/-

Death of Consumer

Imprisonment: 7 years to life

Fine: Up to Rs. 10,00,000/-

Challenges for the future

Central Consumer Protection Authority (CCPA) has been set up to promote, protect and enhance consumer rights. The headquarter shall be in NCR and regional offices shall be decided by the government. The authority shall regulate the violation of consumer rights, unfair trade practices, and misleading advertisements. To enforce and enhance this authority will be dedicated task for the government and its implication will certainly be very important for 2019 Act. While it is laudable initiative but it is unclear as to how this authority will function and certain function relating to investigations and inquiries. There is an overlap between the functions of director General while considering the investigative wing and search and seizure functions. CCPA is empowered to order recall of goods, reimburse price and issue directions and penalize manufacturers or endorsers. Interestingly, appeal against such orders can only be preferred before the national Commission. The circumstances or the criteria under which National Commission shall entertain such cases is till unclear. It is unclear whether the existing cases will be transferred on account of change in pecuniary jurisdiction. However, there are speculations that only fresh cases shall fall under the new jurisdiction.

We can say that Consumer Protect Act, 2019, the process of drafting was started in 2010 is one of the sincerest steps taken by the central government for enhancing consumer rights and speedy delivering of justice. The new Act touches on may aspects such as Mediation and E-commerce which the world was unaware in 1986. So, it was important to amend the act when digitalization has changed the way a consumer conduct online transactions and mode of shopping has shifted from offline to online. Certainly 2019 Act is a positive step towards reformation, development and enhancing consumer rights. Socio-economic developments are taking place every year and e can aspect new amendments to 2019 act as well. But the real implementation of 2019 Act will be seen in coming times by analyzing how much relief it offers to the consumers.  

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Product Liability under the Consumer Protection Act, 2019

  • Legal Blogs
  • Aishwarya Agrawal
  • September 23, 2024

Law firm

Product liability refers to the legal responsibility of manufacturers, sellers, or service providers for the harm caused by defective or faulty products. The Consumer Protection Act, 2019 has codified product liability for the first time in India, bringing it in line with global legal standards. This legislation aims to provide consumers with clear rights and the means to seek redress for damages caused by defective products or deficient services. In this article, we will explore the concept of product liability under Consumer Protection Act, its legal implications, and how it interacts with other legal frameworks.

Overview of the Consumer Protection Act, 2019

The Consumer Protection Act, 2019 was enacted to replace the Consumer Protection Act, 1986 with updated provisions that address modern consumer issues, particularly in the digital and e-commerce era. It introduces new concepts such as product liability, unfair trade practices in online transactions, and the creation of a Central Consumer Protection Authority (CCPA) to regulate and enforce consumer rights.

Consumer Protection Act aims to provide a faster and more efficient redressal mechanism for consumer complaints by introducing Consumer Disputes Redressal Commissions at the district, state, and national levels. The Act defines various rights of consumers, including protection against unfair trade practices, access to information, and redressal for grievances. One of the most significant inclusions under Consumer Protection Act is the product liability regime, which enables consumers to seek compensation for harm caused by defective products or deficient services.

Definition of Product Liability under Consumer Protection Act

Product liability is explicitly defined in Section 2(34) of Consumer Protection Act as the responsibility of a product manufacturer, product seller, or product service provider to compensate for any harm caused to a consumer due to:

  • Defective products sold.
  • Deficiency in services relating to the product.

The scope of product liability extends beyond the physical product to the services associated with its sale, repair, or maintenance. The Act specifies that claims for product liability can be made against the following:

  • Product manufacturer : The entity responsible for manufacturing the product.
  • Product seller : Any person who is involved in the sale of the product but is not the manufacturer, such as a retailer or distributor.
  • Product service provider : The individual or entity responsible for maintaining, installing, or repairing the product.

The law imposes strict liability on product manufacturers, meaning they can be held liable even if they were not negligent. This ensures a higher level of consumer protection as it shifts the burden to the manufacturer, who is in the best position to ensure the safety and quality of their products.

Key Provisions Related to Product Liability

Grounds for product liability action.

Under Consumer Protection Act, a consumer can bring a product liability action against a manufacturer, seller, or service provider if the product is defective or the service is deficient. Some of the specific grounds for initiating a product liability claim include:

  • Defective Product : A product can be considered defective if it does not meet reasonable safety expectations or causes harm during its intended use. This could include manufacturing defects, design defects, or defects due to inadequate warnings or instructions.
  • Excessive Pricing : A product may be deemed defective if the consumer is charged excessively for it, especially when there is no justifiable reason for the high price.
  • Unsafe Products : Any product that poses a risk to life and safety can be the basis of a product liability action. This applies when a trader sells hazardous products despite being aware of their unsafe nature, or when products do not meet prescribed safety standards.
  • Unfair or Restrictive Trade Practices : Consumers can file claims for harm caused by any unfair or restrictive trade practices adopted by the seller, including false or misleading advertising or denial of proper service after purchase.

Strict Liability on Manufacturers

One of the most significant features of Consumer Protection Act is the imposition of strict liability on manufacturers. A manufacturer can be held liable for harm caused by a defective product even if they were not negligent. This represents a departure from traditional fault-based liability systems where negligence must be proven. In product liability claims under Consumer Protection Act, the focus is on the harm caused by the product rather than the intent or fault of the manufacturer.

Strict liability applies in the following situations:

  • Manufacturing Defect : If a product deviates from its intended design or specification, causing it to become unsafe.
  • Design Defect : When the product’s design is inherently dangerous or defective, leading to harm.
  • Lack of Adequate Warnings : If the manufacturer fails to provide sufficient instructions or warnings about potential dangers associated with the use of the product.

Consumer Rights and Remedies

Consumer Protection Act ensures that consumers have the right to seek compensation for harm suffered due to defective products or deficient services. The Act defines “harm” to include:

  • Injury or death.
  • Damage to property.
  • Mental or emotional distress arising from defective products.

Consumers can file product liability actions seeking compensation for the above types of harm. They can also demand additional remedies such as repair, replacement, or refund of the product in cases of manufacturing defects.

Limitation on Product Liability Claims

Consumer Protection Act does impose certain limitations on product liability claims. For example, a manufacturer or seller may not be held liable if:

  • The product was misused or altered by the consumer.
  • The consumer failed to follow adequate instructions or warnings.
  • The harm caused was due to factors unrelated to the product itself.

Statutory Exemptions and Defences

Consumer Protection Act also recognises several defences available to manufacturers and sellers in product liability claims, including:

  • Compliance with regulatory standards : If a product complies with all applicable regulatory or safety standards, the manufacturer may use this as a defence.
  • Negligence or misuse by the consumer : If the harm was caused by the consumer’s misuse or alteration of the product, the manufacturer or seller may not be held liable.
  • Warnings provided : If adequate warnings or instructions were given regarding the safe use of the product, and the consumer failed to follow them, the manufacturer may not be liable for any resulting harm.

Redressal Mechanisms under Consumer Protection Act

Consumer Protection Act provides an efficient and structured system for consumer grievance redressal. The Consumer Commissions have been set up at the district , state , and national levels , where consumers can file complaints, including product liability claims. These commissions are designed to provide quick and accessible resolution of disputes.

Jurisdiction of Consumer Commissions

The jurisdiction of Consumer Commissions is determined by the value of the claim :

  • District Commission : Claims up to INR 1 crore.
  • State Commission : Claims between INR 1 crore and INR 10 crore.
  • National Commission : Claims exceeding INR 10 crore.

Consumers can file complaints with the appropriate commission based on the value of their product liability claim. The Commissions are also empowered to refer cases to mediation if both parties agree.

Fast-Track Redressal

Consumer Protection Act introduces provisions for summary proceedings in consumer cases, including product liability claims. This allows for a faster resolution of cases, reducing the burden on the courts and ensuring consumers get timely redressal.

Appeals and Revisions

If a consumer or the opposing party is dissatisfied with the decision of the Consumer Commission, they can file an appeal to the next higher commission:

  • Appeals from the District Commission go to the State Commission.
  • Appeals from the State Commission go to the National Commission.
  • Appeals from the National Commission go to the Supreme Court of India .

These appeal provisions ensure that parties have access to higher judicial forums if they believe an error has been made in the initial decision.

Role of the Central Consumer Protection Authority (CCPA)

The Central Consumer Protection Authority (CCPA) is a newly constituted body under Consumer Protection Act with wide-ranging powers to protect and enforce consumer rights. The CCPA can:

  • Conduct investigations : The CCPA can investigate cases of violations of consumer rights, including product liability issues, and take suo moto action.
  • Order recalls : It has the power to recall hazardous or unsafe products from the market.
  • Impose penalties : The CCPA can impose penalties on manufacturers, sellers, or service providers for violations of consumer rights or product liability provisions.
  • File complaints : The CCPA can file complaints on behalf of consumers in the Consumer Commissions.

The creation of the CCPA marks a significant development in the enforcement of consumer rights, including product liability, by centralising regulatory authority and providing consumers with an additional layer of protection.

Product Liability in E-Commerce and Digital Transactions

One of the key areas where Consumer Protection Act has made significant progress is in regulating e-commerce platforms and digital transactions. With the rise of online shopping, there has been a growing need to address product liability in this domain.

Responsibilities of E-Commerce Platforms

Under Consumer Protection Act, e-commerce platforms are required to:

  • Ensure transparency : E-commerce platforms must provide complete and accurate information about the product, including safety features and warranties.
  • Disclose seller information : E-commerce companies must disclose the details of the sellers on their platforms to enable consumers to seek redress for defective products.
  • Resolve consumer complaints : E-commerce platforms must establish efficient consumer grievance mechanisms to address complaints related to defective products.

E-Commerce and Product Liability

E-commerce platforms can also be held liable for product defects if they act as a seller or directly influence the sale of the product. If the platform only facilitates the transaction without directly influencing the sale, the liability may fall on the individual seller. However, if it is proven that the platform had a direct role in the sale, they can also be held responsible.

The extension of product liability provisions to the e-commerce sector is a significant step in ensuring consumer protection in the rapidly expanding digital marketplace.

Key Case Laws on Product Liability in India

Several judicial decisions have shaped the product liability landscape in India. Notable cases include:

Johnson & Johnson Hip Implant Case

One of the most prominent product liability cases in India involves Johnson & Johnson Pvt. Ltd. for its faulty hip implants. Patients who received the defective implants experienced severe health issues, leading to a government-led investigation and compensation scheme.

An expert committee was set up to determine the compensation payable to the affected patients. The Central Drugs Standard Control Organisation (CDSCO) directed Johnson & Johnson to pay compensation to the patients. The company challenged the decision, and the case is still pending before the Delhi High Court. This case highlights the role of government authorities in ensuring accountability for defective products.

Mercedes Benz India Private Limited v. Revathi Giri

In this case, the National Consumer Disputes Redressal Commission (NCDRC) held that claims of manufacturing defects in vehicles must be substantiated by expert opinion from an authorised laboratory. The case involved a complaint about a defective Mercedes Benz car, and the NCDRC emphasised that proving a manufacturing defect requires proper technical evaluation. This decision reinforced the importance of expert testimony in product liability cases involving technical products.

Neo Build Infrastructure v. Sushil Ranjan Roy & Ors.

This case involved a real estate dispute where the NCDRC ruled that homebuyers retain their consumer rights even after taking possession of a flat or plot. The NCDRC held that the relationship between the consumer and the service provider (developer) does not end with the execution of the conveyance deed. This ruling clarified that the scope of consumer protection extends to post-purchase grievances, setting a precedent for product liability in real estate transactions.

Comparison with Other Product Liability Frameworks

Product liability frameworks differ from country to country, with varying levels of consumer protection. In this section, we compare India’s product liability framework under Consumer Protection Act with those of the United States and the European Union.

Product Liability in the United States

The U.S. has one of the most developed product liability regimes, characterised by strict liability, negligence-based liability, and breach of warranty claims. Product liability claims in the U.S. often lead to significant punitive damages, especially in cases where a manufacturer’s negligence or misconduct is proven.

The Consumer Product Safety Commission (CPSC) regulates product safety in the U.S., and manufacturers are required to follow strict safety standards. U.S. law also allows for class-action lawsuits , where multiple consumers can file claims for harm caused by a defective product.

In comparison, India’s product liability regime under Consumer Protection Act is still in its nascent stages, and punitive damages are not as prevalent. However, the codification of strict liability and the establishment of Consumer Commissions provide consumers with robust protection.

Product Liability in the European Union

The Product Liability Directive of the European Union imposes strict liability on manufacturers for defective products. Consumers in the EU can claim compensation without proving the manufacturer’s fault. The Directive applies to all goods, including food and medical products, and provides a harmonised system for product liability across member states.

In India, Consumer Protection Act’s product liability provisions are similar in that they impose strict liability, but the implementation and enforcement mechanisms differ due to the absence of a unified regional legal framework. Additionally, the EU’s emphasis on product recalls and mandatory reporting of defective products is more stringent than in India.

Challenges and Future Developments

While the inclusion of product liability under Consumer Protection Act is a significant step forward, there are still challenges in the enforcement and implementation of these provisions. Some of the key challenges include:

Lack of Awareness

Many consumers are still unaware of their rights under Consumer Protection Act, particularly in rural areas. This limits the number of product liability claims filed and reduces the overall effectiveness of the legislation.

Expert Testimony

In technical cases, such as those involving medical devices or automobiles, the need for expert testimony can be a barrier for consumers seeking redress. The cost and complexity of obtaining expert opinions may deter consumers from pursuing product liability claims.

Enforcement of E-Commerce Regulations

While Consumer Protection Act covers e-commerce platforms, enforcement remains a challenge due to the global nature of many online businesses. Ensuring that foreign sellers comply with Indian product liability laws can be difficult.

Future Trends

As the Indian economy grows and becomes more consumer-centric, the scope of product liability is expected to expand. We may see more class-action suits, particularly in sectors such as healthcare , automobiles , and technology . Additionally, with the rise of artificial intelligence and smart devices , new legal questions will emerge about liability for harm caused by these products.

The Consumer Protection Act, 2019 has introduced a comprehensive framework for product liability in India, offering consumers enhanced protection against defective products and deficient services. The Act’s provisions for strict liability , centralised redressal mechanisms , and the role of the Central Consumer Protection Authority have modernised consumer rights in India.

However, challenges remain in enforcement, particularly with regard to technical expertise and e-commerce regulations. As awareness grows and the legal framework evolves, product liability claims in India are expected to increase, offering consumers more robust remedies and encouraging manufacturers to prioritise safety and quality.

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Home » Articles » Analysis and Key Highlights of Consumer Protection Act 2019

Analysis and Key Highlights of Consumer Protection Act 2019

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by B&B Associates | Aug 10, 2020 | 0 comments

Analysis and Key Highlights of Consumer Protection Act 2019

The Consumer Protection Bill, 2019 was proposed in the Parliament by Mr. Ram Vilas Paswan, the Minister of Consumer Affairs, Food and Public Distribution. The 2019 bill was enacted by the Lok Sabha on 30th July 2019 and subsequently by the Rajya Sabha on 6th August 2019. The bill was passed in order to amend the 1986 Act i.e. Consumer Protection Act, 1986 . On 9th August 2019, the President of India gave his assent to the Consumer Protection Act, 2019 (‘2019 Act’). The 2019 Act was adopted with the intention of ensuring effective and productive regulation and settlement of customer conflicts and relevant matters. In general, the Act’s intent is “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”.

Instead of bringing an amendment to the 1986 Act, the government introduced a new law itself to offer better security for customers in comparison to existing approaches, taking into account the growing e-commerce sector and emerging ways of distributing products and services such as online sales, teleshopping, direct selling, and multi-level marketing.

This article aims to provide insight into new provisions, analyze the nature, extent, and impact of new provisions and include a comparative overview of some of the main provisions of CPA 2019 vis-à – vis CPA 1986.

Flaws in the 1986 Act

The Consumer Protection Act of 1986 consisted of several major procedural defects which are proposed to be resolved in by the 2019 Law. In order to further boost public protection, the 2019 Act introduces a series of steps and tightens current laws contained in the 1986 Act. The Consumer Protection Act 2019 brings about fundamental changes to the existing 1986 Act; however, it also envisages a Central Consumer Protection Authority and vests power and control in this authority without proposing adequate administrative safeguards.

Salient Features of Consumer Protection Act 2019

Definition of consumer.

The concept of ‘consumer’ has been generalized to involve individuals engaged in offline or online purchases through electronic means or through teleshopping or direct sales or multi-level marketing. A consumer is defined as a person who buys any good for consideration or makes use of a service. It does not involve any individual who obtains a good for commercial purposes for resale or a product or service. This includes purchases across all forms, including offline, and online, through electronic media, teleshopping, multi-level marketing, or direct sales. As per the act; a person is called a consumer who takes advantage of the services and purchases any good for self-use. It does not include anyone obtaining goods or availing services without consideration.

Section 2 (7) of the Act, defines Consumer as follows:

  • buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person but does not include a person who obtains such goods for resale or for any commercial purpose; or
  • hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such service other than the person who hires or avails of the services for the consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first-mentioned person, but does not include a person who avails of such service for any commercial purpose.

‘Telecom’ has been added to the definition of ‘services’ to bring telecom service providers within the purview of the 2019 Act. But surprisingly, such inclusion has not been worded as ‘telecommunication service’ defined under the Telecom Regulatory Authority of India Act, which would have included internet, cellular, and data services.

Rights of consumers

Six consumer rights have been defined in the Act, including the right to:

  • To be secured from the selling of life and property-threatening goods, products or services;
  • To be notified, as required, of nature, quantity, efficacy, consistency, value, and price of goods, products or services, so as to protect the customer from unfair trading practices;
  • To be assured exposure to a range of commodities, products or services at fair rates whenever possible;
  • To be recognized and to be assured that the concerns of customers would be provided due consideration at sufficient forum;
  • And pursue relief from unfair commercial practices or unreasonable trading policies or the unscrupulous exploitation of consumers; and
  • To consumer awareness

Central Consumer Protection Authority

The CCPA shall conduct the following duties which include:

  • investigating and pursuing infringements of consumer rights at the required forum;
  • issuing orders for recall or removal of dangerous products, a refund of the price charged and discontinuation of deceptive trade practices as specified in the Bill;
  • issuing guidance to the individual concerned;
  • imposing penalties, and;
  • issuing safety notices to consumers against unsafe goods and services.

E-commerce was described as the buying or selling of goods or services through the internet or electronic network, including digital items. The central government has been allowed to take steps and draft guidelines to discourage discriminatory e-commerce activities. In the case of goods being offered by internet portals, the availability of services requires to be ascertained without paying any fees separately. Whether off-shore e-commerce would also be covered and eventual enforcement of CPA 2019 qua these entities is not clear.

The new Act empowers the central government to make laws, to take appropriate steps to discourage unfair trading practices and to protect customers’ privileges and interests.

Grounds to File Complaints

Although the CPA 1986 regulations specified six main grounds for filing complaints, the CPA 2019 expanded the count to seven, and also significantly altered one of the current grounds for filing complaints as provided for in Section 2(c)(i) of CPA 1986. These include:

  • Introduction of Unfair Contracts & expansion of Unfair Trade Practices – Under previous law, a complaint should only be filed where any dealer or service supplier has adopted an unreasonable trading practice or a discriminatory trading practice. Now “unfair contract” has also been added which further expands the ground for complaints and allows consumers to challenge unfair, unilateral, and unreasonable contracts.
  • failure or non-issuance of a bill or a cash memo;
  • refusal to take back or withdraw defective goods or withdrawal or discontinuance of deficient services or refusal to refund the consideration amount paid within the period as stipulated in the bill or cash memo or receipt or in the absence of such stipulation, refusal to withdraw or refund goods or services within thirty (30) days;
  • disclosure of consumer’s personal information to any other person unless such disclosure is made in accordance with the provisions of any law for the time being in force or in the public interest.

Product Liability

This is major and important incorporation of the Act. The New Act stipulates stringent legal requirements on traders. A product manufacturer, product service provider, and product retailer may be held responsible for any harm done by a faulty product made by the supplier, serviced by the service provider, or sold by the product seller, as the case may be. The extent of their liability is collectively specified under section 84, section 85 and section 86 of the New Act. The chapter, dealing with product liability, applies to any claim for compensation under a complainant’s product liability action for any harm caused by a defective product manufactured by a product manufacturer or served by a product service provider or sold by a product seller.

Product liability means a product manufacturer, service provider, or seller’s obligation for compensating a customer for any damage or accident incurred by a damaged item or defective service. To claim liability, a customer must show all of the fault or malfunction factors, as laid forth to the Act.

Section 2 (34) of the Act, defines “product liability” as the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by a deficiency in services relating thereto. Whereas section 2 (35) of the Act defines “product liability action” as a complaint filed by a person before a District Commission or State Commission or National Commission, as the case may be, for claiming compensation for the harm caused to him.

Consumer Disputes Redressal Commission

The New Act empowers the respective governments to establish a National Commission for the Redress of Consumer Disputes, a State Commission for the Redress of Consumer Disputes, and a District Consumer Disputes Redressal Commission. The role of these commissions formed under the New Act is equivalent to that of the commissions set up under the Old Act. They have the authority to handle concerns from customers about certain products or services. The New Act also grants the SCDRC and the NCDRC, an authority to consider grievances about unfair contracts.

A consumer can file a complaint with CDRCs in relation to:

  • unfair or restrictive trade practices;
  • defective goods or services;
  • overcharging or deceptive charging;
  • the offering of goods or services for sale which may be hazardous to life and safety.

Nevertheless, the pecuniary authority, i.e. the monetary value of the grievances which can be pursued has been considerably expanded for each of these commissions to minimize the pressure on the State and National Commissions by allowing customers to approach the District Commission for grievances worth up to Rupees 1 Crore.

The 2019 Act provides the right of judicial review, which will require Consumer Commissions to reconsider their decisions, thus reducing the pressure imposed by chosen petitions to rectify obvious irregularities in front of the record. In sharp contrast to the 1986 Act, it is now necessary to make appeals from the State Commission to the National Commission even if they raise serious legal issues. The National Commission’s challenges to the Supreme Court can only be made against allegations that arise within the National Commission. In addition, to reinforce the noose on the early submission of appeals, the timeframe for preferred appeals has also now been rendered stricter. 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. The final appeal will lie before the Supreme Court.

Penalties for false or misleading advertisements

CCPA also is allowed to take measures against inaccurate or deceptive advertising. For each subsequent breach, CCPA will levy a penalty of up to INR1 million and up to INR 5 million. It is important to note that such penalties can be imposed on endorsers too, thereby bringing actors/actresses in the scope of penalty. Nevertheless, if he/she specifies that they conducted due diligence to validate the veracity of the statements before accepting the same, the endorser will be protected from any liability. Therefore, before signing up for any ads, endorsers/actors/celebrities would always have to perform a comprehensive due diligence/research.

The CPA 2019 also provides for the settlement of disputes by way of mediation in case there is a likelihood of compromise at the acceptance point of the complaint or at some further date, provided the parties consent. For accelerated settlement, a mediation cell would be attached to each city, state, and national commission and its regional benches.

Comparative Analysis of 1986 Act and 2019 Act

While judicial pronouncements have been issued bringing the purchases made through online methods within the consumer ambit. The 2019 Act specifically protects customers from purchasing products or services digitally. The act has since made endorsers responsible for fraudulent or deceptive ads in relation to the incorporation of internet sales. In the 1986 Act, it was just the suppliers and the service providers that were liable for this. Under section 21(2) of the 2019 Act, even after obtaining a notice from the customer, the commission may impose a fine of fifty lakhs if the endorser continues to advertise false information about the products.

Under the act, disclosure of personal information given during the transaction is also considered an offense. The Act also proposes product liability provision whereby the manufacturer must not only compensate for the defective goods but must also compensate for any loss or injury caused to the complainant by the defect. For example, if a bike is sold to you and the break is loose, resulting in an accident, the manufacturer must compensate for the defect and also compensate you for the accident that you faced due to the defect.

The Act also proposes the establishment of an independent regulator, the Central Authority for Consumer Protection (CCPA). Although this body does not respond to customer complaints or resolve lawsuits, it will take regulatory action to counter unfair trading practices, etc.

Consumer Protection Act of 1986 Consumer Protection Act of 2019
1. No separate regulator 1. CCPA to be formed to consider grievance on unfair contracts.
2. All goods and services for consideration, while free and personal services are excluded. 2. All goods and services, including telecom and housing construction, and all modes of transactions (online, teleshopping, etc.) for consideration. Free and personal services are excluded.
3. Includes six types of such practices, like false representation, misleading advertisements 3. The 2019 Act adds three types of practices to the list, namely: failure to issue a bill or receipt; refusal to accept a good returned within 30 days; and disclosure of personal information given in confidence, unless required by law or in the public interest. Contests/ lotteries may be notified as not falling under the ambit of unfair trade practices.
4. No Provision for product liability. 4. Claim for product liability can be made against a manufacturer, service provider, and seller. Compensation can be obtained by proving one of the several specified conditions in the Act.
5. No Provision for Alternate dispute redressal mechanism 5. Mediation cells will be attached to the District, State, and National Commissions.
6. No Provision for E-commerce 6. E-commerce defines direct selling, e-commerce, and electronic service providers. The central government may prescribe rules for preventing unfair trade practices in e-commerce and direct selling.
7. Central Protection Councils promote and protect the rights of consumers. They are established at the district, state, and at the national level. 7. The 2019 Act makes CPCs advisory bodies for promotion and protection of consumer rights. Establishes CPCs at the District, State, and National levels.
8. No Provision for unfair contracts 8. Unfair contracts are defines as contracts that cause a significant change in consumer rights. Lists six contract terms that may be held as unfair.

Consumer Protection Act 2019 has incorporated some improvements to the previous CPA 1986. CPA 2019 broadened the reach of India’s consumer protection regime. The amendments introduced vide CPA 2019 tend to further motivate customers by exploiting liabilities not just on their peers, i.e., retailers, suppliers, service providers, but also on certain endorsers of these items. It also attempts to address issues that CPA 1986 did not fully address, such as consumer interests as a class, etc. The new Act focuses on topics such as mediation and e-commerce that were not open to the world in 1986. It was also necessary to amend the act as digitalization transformed the manner in which a customer performs electronic purchases and shopping mode has moved from offline to online. The 2019 Act definitely marks a significant step in improving, expanding, and strengthening consumer protection.

CPA 2019 has aimed to simplify and fasten the customer dispute resolution process by growing the commissions’ pecuniary authority, adding mediation cells, raising commission members, imposing higher fines, etc.

This article was written and submitted by Shashi Anand Choudhary . Mr. Shashi is a corporate attorney based in Pune, Maharashtra.

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Consumer Protection Act 2019

Topics Covered: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Consumer Protection Act, 2019

The Consumer Protection Act, 2019 has come into effect from July 20, replacing the earlier Consumer Protection Act, 1986.

  • The Consumer Protection Bill, 2019 got the President’s nod on August 2019.

Highlights of the legislation:

  • Definition of consumer:

A 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.
  • Six consumer rights have been defined in the act, including the right to:
  • Right to Safety.
  • Right to be Informed.
  • Right to Choose.
  • Right to be heard.
  • Right to seek Redressal.
  • Right to Consumer Education.
  • Central Consumer Protection Authority:

The central government will set up 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 CCPA will have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into such violations.
  • Increased compensation:

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.

  • Consumer Disputes Redressal Commission:

CDRCs will be set up at the district, state, and national levels.  A consumer can file a complaint with CDRCs in relation to:

  • Unfair or restrictive trade practices;
  • Defective goods or services;
  • Overcharging or deceptive charging; and
  • The offering of goods or services for sale which may be hazardous to life and safety.

Complaints against an unfair contract can be filed only at the State and National levels.

  • 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.
  • Jurisdiction of CDRCs:
  • 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.
  • Mediation :

The act provides for reference to mediation by Consumer Commissions wherever scope for early settlement exists and parties agree for it.

  • Mediation Cells to be attached to Consumer Commissions. Mediation to be held in consumer mediation cells.
  • Panel of mediators to be selected by a selection committee consisting of the President and a member of Consumer Commission.
  • No appeal against settlement through mediation.
  • Impact of Consumer Protection Act, 2019 on e-commerce platforms:

The e-commerce portals will have to set up a robust consumer redressal mechanism  as part of the rules under the Consumer Protection Act, 2019.

  • They will also have to mention the country of origin which are necessary for enabling the consumer to make an informed decision at the pre-purchase stage on its platform.
  • The e-commerce platforms also have to acknowledge the receipt of any consumer complaint within forty-eight hours  and redress the complaint within one month from the date of receipt under this Act.
  • Product Liability:

A manufacturer or product service provider or product seller will be held responsible to compensate for injury or damage caused by defective product or deficiency in services

act1986_act2019

Insta Link:

Prelims Link:

  • National vs State Commissions vs District Dispute redressal Forums, their compositions.
  • Ambit, jurisdiction of the courts and Appeals.
  • Can CCPA file suo motu cases?
  • Consumer Disputes Redressal Commission- jurisdictions.
  • Appeals from a National CDRC.
  • Consumer definition and rights defined under the act.

Write a note on consumer dispute redressal mechanism under the Consumer Protection Act of 1986.

Sources: pib.

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The Consumer Protection Act, 2019: Overview and Key Highlights

GnS Legal logo

Introduction

The Consumer Protection Act, 2019 (“New Act”) received the President’s assent on August 9, 2019 and has replaced the Consumer Protection Act, 1986 (“Old Act”). The Central Government appointed [1] July 20, 2020 as the date on which the following provisions of the New Act shall come into force.

  • Section 2 [Except clauses (4), (13), (14), (16), (40)] [DEFINITIONS]
  • Sections 3 to 9 (both inclusive) [CONSUMER PROTECTION COUNCILS]
  • Sections 28 to 73 (both inclusive) [Except sub-clause (iv) of clause (a) of sub-section (1) of section 58] [CONSUMER DISPUTES REDRESSAL COMMISSION]
  • Sections 74 to 81 (both inclusive) [MEDIATION]
  • Sections 82 to 87 (both inclusive) [PRODUCT LIABILITY]
  • Sections 90 and 91 [OFFENCES AND PENALTIES]
  • Sections 95, 98, 100 [MISCELLANEOUS]
  • Section 101 [Except clauses (f) to (m) and clauses (zg), (zh) and (zi) of sub-section 2] [MISCELLANEOUS]
  • Sections 102, 103, 105, 106, 107 [MISCELLANEOUS]

Highlights of the New Act

The New Act seeks to usher in a new era of consumer protection laws and makes suitable changes to bring the law in tune with the changing times. The law has always been consumer-centric, more so with the passing of the New Act. The following, amongst other changes have been brought about in the law:

1. Extension of the law to e-commerce businesses: The New Act introduces key changes to include within its ambit e-commerce businesses and ensure recognition and regulation of online transactions between consumers and sellers/service providers as matters falling under the Act. To this effect, the definition of “consumer” has been expanded to include “offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing” [2] . The Old Act did not specifically include e-commerce transactions and this lacuna has been addressed by the New Act.

The Act refers to the prevention of unfair trade practices in e-commerce and direct selling and also deals with protection of interest and rights of consumers. [3] It has also specifically defines “electronic service provider” as a person who provides technologies or processes to enable a product seller to engage in advertising or selling goods or services to a consumer and includes any online marketplace or online auction sites. [4] The ‘electronic service provider’ is included under the definition of a product seller. [5] These online marketplaces and auction sites can now be hauled up in product liability actions under specified circumstances. [6] It will no longer be open to e-commerce platforms to take the defense that they merely act as “platforms” or “aggregators”.

2. Product liability and penal consequences: The concept of “product liability” has been newly introduced and is defined as the responsibility of a product manufacturer or product seller of any product or service to compensate for any harm caused to a consumer due to defective product manufactured, sold or deficiency in services relating thereto. There are increased liability risks for manufacturers as compared to product service providers and product sellers, considering that under the New Act, a manufacturer will be liable in product liability action even where he proves that he was not negligent or fraudulent in making the express warranty on a product. Certain exceptions have been provided under the New Act from liability claims, for instance the product seller will not be liable where the product has been misused, altered or modified. [7]

3. Changes to pecuniary jurisdiction : While under the Old Act [8] , the pecuniary jurisdiction was ascertained on the basis of “value of the goods or services and the compensation, if any, claimed” , the New Act [9] bases the jurisdiction on “value of the goods or services paid as consideration” . Thus, the old practice of forum shopping by inflating the compensation claim has been done away with and the pecuniary jurisdiction shall now be fixed based on the consideration actually paid by the consumer.

Further, the District Forum can now entertain consumer complaints where the consideration paid does not exceed INR 1,00,00,000 (INR One Crore), the State Commission can entertain disputes where such value exceeds INR 1,00,00,000 (INR One Crore) but does not exceed INR 10,00,00,000 (INR Ten Crore), and the National Commission can exercise jurisdiction where such value exceeds INR 10,00,00,000 (INR Ten Crore).

4. Changes to territorial jurisdiction and e-filing of complaints: The New Act provides flexibility to the consumer to file complaints with the jurisdictional consumer forum located at the consumer’s place of residence or work. This is unlike the earlier practice of filing the complaint at the place of purchase or where the seller resides or has its registered office. The New Act also contains enabling provisions for consumers to file complaints electronically and for hearing and/or examining parties through video-conferencing. This is aimed to provide procedural ease and reduce inconvenience and harassment for the consumers.

5. Consumer Protection Councils: The provisions relating to constitution and powers of the Consumer Protection Councils at Central and State levels are not included in the notification. However, the Rules on Composition of the Central Council, their term etc. have been notified. As per these Rules, the Central Council shall consist of upto 36 members. The objective of the Central and State Councils is to render advice on promotion and protection of the consumers’ rights under the Act. [10]

6. Central Consumer Protection Authority: The New Act introduces the establishment of a Central Consumer Protection Authority (“CCPA”) by the Central Government. The CCPA is a regulatory authority and shall be empowered to impose penalties, recall goods, cause withdrawal of services, provide refunds and investigate into matters. It shall also be responsible for protecting the rights of consumers as a class and shall further ensure that no person engages in unfair trade practices and that no misleading advertisements are made. The CCPA will have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into consumer law violations. Further, the New Act also introduces electronic mode for filing complaint for unfair trade practices or false or misleading advertisements to the District Collector, the Commissioner of the Regional Office or the CCPA. [11]

7. Mediation: The New Act provides for mediation as an Alternate Dispute Resolution mechanism, making the process of dispute adjudication simpler and quicker. The dispute can be resolved either in whole or in part. If the mediation is successful, the terms of such agreement shall be reduced in writing. Where the consumer dispute is settled only in part, the Commission shall record the settlement of the issues which have been settled and continue to hear the remaining issues involved in the dispute. If the mediation is not successful, the Commission shall continue to hear all the issues involved in the dispute. [12]

8. Strict penalties for false and misleading advertisements: The New Act has defined the term “misleading advertisement” in relation to any product or service as “an advertisement which falsely describes the product or service which gives a false guarantee and is likely to mislead the consumer as to the nature substance, quantity or quality of such product or service and conveys an express or implied representation which, if made by the manufacturer or seller or service provider, would constitute an unfair trade practice and shall also include information which is concealed deliberately” . [13]

The CCPA is empowered to impose a penalty of up to INR 10,00,000 (INR Ten Lakhs) on a manufacturer or an endorser, for a false or misleading advertisement. The CCPA may also sentence them to imprisonment for up to two years for the said offences. In case of a subsequent offence, the fine may extend to INR 50,00,000 (INR Fifty Lakhs) and imprisonment of up to five years. The 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. [14]

An appeal against an order passed by the CCPA can be filed before the National Commission within a period of 30 days from the date of receipt of such order. [15]

The New Act is certainly a welcome change for consumers. It takes those extra steps required for addressing the concerns and loopholes in the earlier law, especially relating to the increasingly popular online transactions and e-commerce where the legal rights and liabilities of the respective parties were unclear under the Old Act. There is a definite shift in the approach towards a more consumer-friendly law that not only makes it easier for a consumer to initiate consumer disputes but also enhances his or her rights and imposes additional safeguards and liabilities on manufacturers and endorsers.

Having said that, the critical area remains that of the huge backlog of consumer cases before the respective Consumer Forums and long pendency of consumer disputes for years on end. While the New Act attempts to address this issue by enhancing the pecuniary jurisdiction of all Forums, this so-called solution may prove counter-productive if the quality and strength of infrastructure and manpower at District Forums and State Commissions is not immediately enhanced by the Government. Such enhancement is necessary not only to make these Forums truly functional and effective but also prepare them for handling the fresh load of cases that will befall them as a result of the changes brought about by the New Act.

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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.

  • 1 Background
  • 2 Salient features of the Consumer Protection Act, 2019
  • 3 Benefits to Consumer
  • 5 Issues with the Act

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:

  • 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.
  • 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

  • violation of consumer rights
  • unfair trade practices
  • 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.
  •  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.

 

All goods and services except free
and personal services.

 

All goods and services except free and personal services. It also includes all modes of transactions[eg-online, teleshopping etc.]

 

 

 

No Provision

 

 

It provides scope for holding the manufacturer, service provider and seller liable. It also enables the consumer to obtain compensation

 

 

 

No Provision

 

Established the CCPA, which has the power to investigate, recall, and impose penalties on manufacturers, distributors, and sellers for misleading advertisements and unfair trade practices.

No Provision

 

Mediation cells will be attached to
commissions at the three levels – district, state and national.

 

No Provisions

 

It empowers the central government to prescribe rules to prevent unfair trade practices in e-commerce and direct selling.

No Provision

 

Establishes Central Consumer Protection Authority[CCPA] to protect and enforce the
rights of the consumers.

 



District: Up to Rs. 20 Lakh

State: Rs 20 Lakh to Rs. 1 Crore.

National: Above Rs. 1 Crore

(The pecuniary value was calculated on the total value of the goods/services.)

 

District: Up to Rs. 1 Crore

State: Rs. 1 Crore to Rs. 10 Crore

National: Above Rs. 10 Crore

(The pecuniary value will be calculated on the actual value paid for the goods/services)

 

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

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  6. Consumer Protection Act 2019 in Detail current Affairs 2020

COMMENTS

  1. Consumer Protection Act, 2019 - Salient Features & Summary

    The Act proposes the establishment of the Central Consumer Protection Authority (CCPA) as a regulatory authority. The CCPA will protect, promote and enforce the rights of consumers and regulate cases related to unfair trade practices, misleading advertisements, and violation of consumer rights.

  2. Consumer Protection Act,2019: Analysis and Challenges for Future

    The 2019 Act proposes a slew of measures and tightens the existing rules present in 1985 Act to further enhance consumer welfare. This article will make the readers understand the key aspects of the Consumer Protection, 2019, compare with the 1986 Act.

  3. Product Liability under the Consumer Protection Act, 2019

    Product liability refers to the legal responsibility of manufacturers, sellers, or service providers for the harm caused by defective or faulty products. The Consumer Protection Act, 2019 has codified product liability for the first time in India, bringing it in line with global legal standards. This legislation aims to provide consumers with ...

  4. Analysis and Key Highlights of Consumer Protection Act 2019

    The Consumer Protection Act 2019 brings about fundamental changes to the existing 1986 Act; however, it also envisages a Central Consumer Protection Authority and vests power and control in this authority without proposing adequate administrative safeguards.

  5. Consumer Protection Act 2019 - INSIGHTS IAS - Simplifying ...

    The Consumer Protection Act, 2019 has come into effect from July 20, replacing the earlier Consumer Protection Act, 1986. The Consumer Protection Bill, 2019 got the President’s nod on August 2019. A consumer is defined as a person who buys any good or avails a service for a consideration.

  6. CRITICAL ANALYSIS OF CONSUMER IN CONSUMER PROTECTION ACT 2019

    Consumer Protection Act, 2019 and Consumer Protection (E-commerce) Rules, 2020, and literature study allow analysis of 290 online consumers answering research questions and attaining research objectives.

  7. Safeguarding the Rights of Consumers

    Consumer protection measures help to uphold the basic rights of consumers, such as the right to be informed, the right to choose, the right to safety, and the right to be heard. These rights are essential for building a fair and just society.

  8. The Consumer Protection Act, 2019: Overview and Key Highlights

    The Consumer Protection Act, 2019: Overview and Key Highlights. GnS Legal. India July 28 2020. Introduction. The Consumer Protection Act, 2019 (“New Act”) received the President’s...

  9. Consumer Protection Act, 2019 - Free UPSC IAS Preparation For ...

    Contents. 1 Background. 2 Salient features of the Consumer Protection Act, 2019. 3 Benefits to Consumer. 4. 5 Issues with the Act. 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.

  10. Consumer Protection Act, 2019

    The Consumer Protection Act, 2019 establishes the Central Consumer Protection Authority (CCPA) whose primary objective will be to promote, protect and enforce the rights of consumers. It is empowered to: Conduct investigations into violations of consumer rights and institute complaints/prosecution. Order recall of unsafe goods and services.