The new powerful Central Consumer Protection Authority (CCPA), to be set up under the 2019 Consumer Protection Act, is expected to provide greater protection to consumers, safeguarding them from unfair practices and misleading campaigns by manufacturers and dealers. The Act also makes celebrities who are endorsing products liable. The Consumer Protection Bill, 2019 was passed by the Rajya Sabha on August 6 and received Presidential assent on August 9 to become an Act.
Ram Vilas Paswan, Minister for Consumer Affairs, Food and Public Distribution, said in a media interaction on August 13 that “the idea of Central Consumer Protection Authority (a regulatory body, part of the new Consumer Protection Act 2019) is revolutionary and it will give more teeth to provide relief for consumers.” The initiative is seen to be part of PM Modi’s promise of `ease of living’ to the 130 crore Indians.
Over the past three decades, India’s market place has undergone a sea change in products and services being offered, the multiplicity of sales channels and the numerous modes of buying for the ever-growing number of customers, but the rules of the game were governed by the Consumer Protection Act of 1986.
The 2019 Act promises to enforce consumer rights, provide a mechanism for redressal of complaints regarding defects in goods and deficiency in services in a time-bound manner, establish an apex regulatory body, cover product liabilities, bring unfair contracts under its jurisdiction, take stern action against false representation, bring e-commerce transactions within its ambit, impose higher penalties and add penalties for misleading advertisements, including action against celebrities endorsing such products violating the provisions under the Act. It also provides for “Class” action, meaning that if a complaint against a product is proven to be correct by the prescribed authorities, then action can be taken against the whole batch produced.
Also, such complaints can be filed electronically with the District Consumer Commission or State Consumer Commission from the complainant’s location. Earlier, the consumers could file a case only at the place where the product was purchased or where the seller of the product had its registered office. Rules for e-filing of grievances including digital payment of prescribed fee, are in the process of being finalised by the Ministry of Consumer Affairs.
So far, most consumers were unaware of the provisions of the Act and their experiences with a bad product or a misrepresentation of facts remained limited to social media platforms. Those that did try to file cases were disheartened by the number of years it took to bring the wrong doer to book.
While the disposal rate of consumer cases was high (about 90 per cent), the time taken for their resolution was over 12 months on an average, as per a PRS Legislative Research report.
Who is a customer?
Any person who buys goods or pays for services is covered under this new Act. But, it excludes people who buy goods or services for resale or for commercial purposes.
Keeping in tune with the changing times and the proliferation of online shopping and e-commerce, this new Act now brings within its ambit offline transactions, online transactions done electronically, teleshopping, multi-level marketing or direct selling.
A “complainant” according to this Act is a consumer; or any voluntary consumer association registered under any law in force, or the Central government or any State government, or the Central authority, or one or more consumers, where there are numerous consumers having the same interest, or in case of death of a consumer, his legal heir or legal representative, or in case of a consumer being a minor, his parent or legal guardian.
Onus of product liability
The Consumer Protection Act, 2019 also defines product liability, as the liability of a product manufacturer, service provider or a seller to compensate a consumer for any harm or injury caused by defective goods or deficient service. To claim compensation, a consumer has to prove any one of the conditions for defect or deficiency, as given in the Act. This means that if a consumer suffers an injury from a defect in a product or a deficiency in service, he may file a claim of product liability against the manufacturer, the seller or the service provider.
The regulatory mechanism
To ensure complete protection of the interests of the consumer and speedy dispensation of justice, an investigation wing headed by a Director General will be set up within the CCPA to investigate matters related to violations of the provisions of the Act.
The Consumer Protection Act 2019, empowers the CCPA with strict provisions to 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 may go up to five years. Further, the CCPA can also prohibit the endorser, including actors or sportspersons, of a misleading advertisement from endorsing that particular product or service for a period of one year. For every subsequent offence, the period of prohibition may extend to three years. However, there are certain exceptions when an endorser will not be held liable for such a penalty.
A three-tier, Consumer Disputes Redressal Commission (CDRC) will be set up, starting at the district level, State level, and going up to national level, depending on the value (in Rupees) of the complaint. The district CDRC is empowered to deal with complaints, where value of goods and services does not exceed Rs 1 crore, the State CDRC will deal with values between Rs 1 crore and Rs 10 crore. The national CDRC will look into complaints where value of goods and services is over Rs 10 crore. A complainant will have to file a written complaint with the commission.
Appeals from a district CDRC will be heard by the State CDRC, and appeals from the state CDRC will be heard by the National CDRC, with a provision that if the matter still remains unresolved, a consumer can take the appeal to the Supreme Court of India.
A complaint is expected to be resolved within three months, provided the case does not require analysis or testing of commodities. In cases where analysis and testing is required, a time frame of five months has been provided to address the grievances of the complainant. Also there is a provision of 21 days, by which time if a complainant doesn’t get a response from a commission, then it is deemed to have been admitted, apart from the fact that no complaint can be dismissed without a hearing from the commission that receives the complaint.
There is also a provision of mediation in the new Act, with mediation cells to be attached to the district, State and national CDRCs, whereby the commissions may refer a matter for mediation if the parties consent to settle their dispute in the said manner.
Comparison of Consumer Protection Act, 1986 with the Consumer Protection Act, 2019
Provision: Ambit of law
All goods and services for consideration
Free and personal services are excluded
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
Provision: *Unfair trade practices
1986 Act: Includes six types of such practices like false representation, misleading advertisements
Adds three types of practices to the list, namely: (i) failure to issue a bill or receipt (ii) refusal to accept goods returned within 30 days and (iii) disclosure of personal information given in confidence, unless required by law or in public interest
Contests/ lotteries may be notified as not falling under the ambit of unfair trade practices
Provision: Product liability
1986 Act: No provision
Claim for product liability can be made against manufacturer, service provider, and seller
Compensation can be obtained by proving one of the several specified conditions in the Act
Provision: Unfair contracts
2019 Act: No provision
Defined as contracts that cause significant change in consumer rights
Lists six contract terms which may be held as unfair
Provision: Central Protection Councils (CPCs)
CPCs promote and protect the rights of consumers
CPCs established at the district, State, and national level
Makes CPCs advisory bodies for promotion and protection of consumer rights
Establishes CPCs at the district, State and national level
2019 Act: No provision
Establishes the Central Consumer Protection Authority (CCPA) to promote, protect, and enforce the rights of consumers as a class
CCPA may: (i) issue safety notices (ii) pass orders to recall goods, prevent unfair practices and reimburse purchase price paid and (iii) impose penalties for false and misleading advertisements
Provision: Pecuniary jurisdiction of Commissions
District: Up to Rs 20 lakh
State: Between Rs 20 lakh and up to Rs 1 crore
National: Above Rs 1 crore
District: Up to Rs 1 crore
State: Between Rs 1 crore and up to Rs 10 crore
National: Above Rs 10 crore
Provision: Composition of Commissions
District: Headed by current or former district judge and two members
State: Headed by a current or former High Courtjudge and at least two members
National: Headed by a current or former Supreme Court Judge and at least four members
District: Headed by a President and at least two members
State: Headed by a President and at least four members
National: Headed by a President and at least four members
2019 Act: Selection Committee (comprising a judicial member and other officials) will recommend members on the Commissions
2019 Act: No provision for Selection Committee. Central government will appoint through notification
Provision: Alternative dispute redressal mechanism
2019 Act: No provision
2019 Act: Mediation cells will be attached to the district, State, and national Commissions
If a person does not comply with orders of the commissions, he may face imprisonment between one month and three years or fine between Rs 2,000 and Rs 10,000, or both
If a person does not comply with orders of the Commissions, he may face imprisonment up to three years, or a fine not less than Rs 25,000 extendable to Rs 1 lakh or both
2019 Act: No provision
Defines direct selling, e-commerce and electronic service provider
The Central government may prescribe rules for preventing unfair trade practices in e-commerce and direct selling
Note: *Defined as deceptive practices to promote the sale, use or supply of a good or service
Sources: Consumer Protection Act, 1986, Consumer Protection Bill, 2018, PRS
News Research Department