ANALYSIS OF THE CONSUMER PROTECTION ACT, 2019

Consumer Protection Act, 2019 - Rakshit Gupta

INTRODUCTION

Finally, the 1986 Consumer Protection Act has been superseded by the 2019 Consumer Protection Act. Today’s Indian customer needed this replacement. According to statistics, nearly 329 million Indians will buy products online, meaning that 70% of mobile internet users will shop online[1]. We may infer from this statistic that the new Consumer Protection Act of 2019 would be highly beneficial to Indian consumers.

WHO IS THE CONSUMER?

A customer is someone who buys goods or services for personal use rather than for production or resale. A customer is someone who makes the decision to purchase or not buy something in a store, or who is affected by advertising and marketing[2]. A consumer is someone who buys something for a consideration that has been paid or agreed to be paid or partly paid and partly promised.

The origins of the consumer movement can be traced back to the landmark case Carlill V. Carbolic smoke ball company,[3] in which the manufacturer was required to adhere to minimum quality requirements for the first time to safeguard the consumer.

In the landmark case of Donoghue V. Stevenson[4], decided in 1932, the producer was held responsible for the damage caused to the customer, which was a significant victory in a period when consumer rights were restricted. The key point, in this case, was that the manufacturer took good care of the product.

INTRODUCTION TO CPA 2019

 “The President of India gave his acquiescence to the Consumer Protection Act, 2019 (New Act) which, on August 9th 2019, was published in the official gazette[5]. It takes effect on July 20th, and one of its main provisions is the establishment of the Central Consumer Protection Authority (CCPA), which will promote, secure, and enforce consumer rights”[6].

The new consumer protection bill includes several new safeguards for customers. It is intended to assist customers and solve problems in providing basic consumer rights in a major area known as e-commerce. Consumers in India have six basic rights: the right to be protected, the right to choose, the right to be informed, the right to consumer education, the right to be heard, and the right to seek redress[7]. The new consumer protection bill seeks to safeguard these rights by introducing modern methods and practices.

SALIENT FEATURES OF THE CONSUMER PROTECTION ACT 2019
  1. Establishment of Central Consumer Protection Authority: The New Act establishes the Central Consumer Protection Authority as a governing body (CCPA). “The CCPA has been granted strong enforcement powers, including the right to take suo moto actions, recall products, order refund of the price of goods/services, revoke licenses, and bring class action litigation if a consumer case involves a group of people”[8].
  2. Consumers are described in a broader sense: The New Act has broadened the concept of “consumer.” Anyone who buys goods, whether in person or online, by electronic means, teleshopping, direct sales, or multi-level marketing, is now included in the definition[9]. The previous Act did not include e-commerce purchases, but the New Act does.
  3. Unfair Business Practices: Unless the disclosure is made in compliance with the terms of another law, the New Act broadens the definition of unfair trade practices to include the sharing of personal information given in confidence by a consumer.
  4. Product Liability and Penal Penalties[10]: In the case of a compensation lawsuit, the New Act establishes the concept of product liability, which protects the product manufacturer, product service provider, and product seller. “The word “product seller” is described as “any person involved in placing a product for a commercial purpose,” which would include e-commerce platforms. The defence that e-commerce sites are simply “platforms” or “aggregators” will be rejected. Manufacturers face greater liability risks than goods service suppliers and retailers, since, under the New Act, manufacturers would be responsible in product liability actions even though they can show that they were not incompetent or dishonest in making an express guarantee.” There are certain exceptions to liability claims under the New Act, such as the product vendor’s liability if the product has been misused, modified, or altered.
  5. Incorporation of Alternate Dispute Resolution: Mediation as an Alternative Dispute Resolution method is provided for in the New Act, allowing the process of dispute adjudication easier and faster[11]. This will help to speed up dispute resolution and ease pressure on consumer courts, which are already dealing with a backlog of cases.
  6. Complaints Can Be Filed Online[12]: The New Act gives consumers the option of filing grievances with the jurisdictional consumer portal, which can be found either at their place of residence or at their place of business. This is different from the current system of filing complaints at the point of sale or the seller’s registered office. Thanks to the New Act, consumers can now file claims electronically, and hearings and/or interviews can now take place through video conferencing. As a result, customers will be less inconvenienced and threatened.
  7. Punishment for Deceptive Advertising: “For false or misleading advertising, the CCPA may impose a penalty of up to INR 10,00,000 (Ten Lakhs) on the manufacturer or endorser. For the same, the CCPA can sentence them to up to 2 (two) years in prison. A subsequent offence could result in a fine of up to INR 50,00,000 (Fifty Lakhs) and a sentence of up to 5 (five) years in prison[13]. The CCPA also has the power to bar an endorser of a deceptive commercial from endorsing the product or service for a period of up to one year. The term of prohibition can be extended to 3 (three) years for each subsequent offence.

Given the recent cases in which customers were exposed to unfair trade practices as a result of celebrities posing as brand ambassadors, the New Act creates liability for endorsers. In such cases, the endorser needs to take responsibility and exercise due diligence to refute liability charges by checking the veracity of the advertisement claims.”

  1. Pecuniary Jurisdiction Strengthening: “Under the New Act, revised financial limits have been established. As a result, if the amount of products or services charged does not surpass INR 10,000,000 (Ten Million) the district forum[14] will now hear consumer grievances. The State Commission[15] has jurisdiction over disputes with a value of more than INR 10,000,000 (Ten Million) but less than INR 100,000,000 (One Hundred Million), and the National Commission[16] has jurisdiction over disputes with a value of more than INR 100,000,000 (One Hundred Million).”

COMPARATIVE ANALYSIS

S.No.

Basis

Consumer Protection Act 1986

Consumer Protection Act 2019

1.

Regulator

 There is No Separate Regulator

CCPA is Formed in CPA 2019.

2.

Complaint Filed

A lawsuit may be filed in a consumer court in the jurisdiction of the defendant/office seller.

A consumer case may be filed in the consumer court of the plaintiff’s residence or place of employment.

3.

Product Liability

There was no simple product liability clause before.

Consumers may now seek compensation for harm caused by a defective product.

4.

Jurisdiction

District- Up to INR 2million

State- INR 2million to INR 10million,

National- Above INR 10million.

District- Up to INR 10million

State- INR 10million to INR 100milllion

National- Above INR 100million

5.

Mediation

There were no formal requirements for mediation.

The settlement will now be referred to mediation by the courts.

 

WHAT CAN BE CONCLUDED?

Finally, the government has acknowledged the importance of customer issues. As a result of the recent consumer protection act, several new words have been added to the statute. The government is concerned about online fraud. However, no mention is made of banking frauds, even though many banks claim to open accounts with 0Rs. There are no penalties to consider, but if you do not keep a certain amount in your bank account after opening it, they will charge you a fine. The fine is not excessive; in most cases, it is in the range of 50Rs. However, when the fine is calculated over a large number of individuals, the cumulative amount becomes immense. For these types of deceptive ads, the govt. should provide clear guidelines.

Author(s) Name: Rakshit Gupta (Symbiosis Law School, Pune)

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References:

[1] https://www.statista.com/topics/2454/e-commerce-in-india/.

[2] https://debitoor.com/dictionary/consumer.

[3] 1893 (1) Q.B.256.

[4] (1932) A.C.562.

[5]http://www.nishithdesai.com/information/research-and-articles/nda-hotline/nda-hotline-single-view/article/new-consumer-protection-law-in-india-broadening-the-horizon.html?no_cache=1&cHash=761270d01627de9ff2d1e43c52c5c21b.

[6]https://www.livemint.com/news/india/consumer-protection-act-2019-comes-into-force-from-today-covers-e-commerce-too-11595245073150.html.

[7] https://vikaspedia.in/social-welfare/social-awareness/consumer-education/consumer-rights.

[8] Section 17 of the Consumer Protection Act, 2019.

[9] Section 2(7) explanation (b) of the Consumer Protection Act, 2019.

[10]Sections 82-87 of CPA 2019, Chapter VI.

[11]Chapter V of the Consumer Protection Act, 2019.

[12] https://edaakhil.nic.in/index.html.

[13] Section 21(2) & Section 89 of the Consumer Protection Act, 2019.

[14] Section 34(1) of the Consumer Protection Act, 2019.

[15] Section 47(1)(a)(i) of the Consumer Protection Act, 2019.

[16] Section 58(1)(a)(i) of the Consumer Protection Act, 2019.

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