Consumer Protection Act 2019

 

Audio Version Given Below

 

It is said that ‘Consumer is the King’ but this is possible only when a consumer has some rights and he/ she is not at the mercy of the seller/ manufacturer. Keeping this in view, the Government of India passed ‘Consumer Protection Act 1986’ (1986 Act) to protect the interest of consumers against malpractices and redressal of their complaints.
It is said that laws need to be evolved with time to accommodate new situations so that the laws don’t get obsolete. So, in July 2019, Government of India tabled a new act in the parliament: ‘Consumer Protection Act 2019’ (2019 Act). The Act received the President’s assent on 6^th August 2019 and was notified to come into force from 20^th July 2020.

In this article, I will try to discuss how the 2019 Act is different from the 1986 Act.

  1.   Expansion of Definition of ‘Consumer’: Today a consumer doesn’t just go to a shop to purchase a product or avail a service. There are other modes of purchase too. So the new definition of consumer explicitly includes purchasing of products or availing of services form online mode, teleshopping, direct selling or multi-level marketing.
There are many teleshopping websites (now also available as TV channels) from where customer can call on designated phone numbers and place the order of required products.
Similarly, there is a  famous international multi-level marketing company that sells nutrition, beauty and home-care products in India. Anyone purchasing products from such a company will also now be treated as a consumer.

2.   The Health Sector: As per media reports of 2019, the health sector had been dropped from the scope of the 2019 Act. It was said that the definition of ‘services’ does not specifically mention ‘health services’. This ambiguity arose after the word ‘health services’ was removed from the draft bill.
However, technically the health sector remains unaffected. It should be noted that the definition of ‘services’ is an inclusive definition and not an exhaustive one. It means that the list of services in the definition of ‘services’ is not limited to the ones listed in the definition.

3.   Expanding the definition of ‘Unfair Trade Practices’: The 2019 Act has added the following actions to be treated as Unfair Trade Practice:

a)               Not issuing bill: A bill/ cash memo is important documentary evidence and acts as a proof of purchase. It also helps the consumer to file the complaint or claim warranty in case the product/ service is defective.
If the seller doesn’t issue a bill for the purchased product/ service in the prescribed manner, it will be considered as an ‘unfair trade practice’ under the 2019 Act.

b)             Refusing to accept the return of defective products/ services: If a seller refuses to take back defective products and issue a refund as per the conditions on the bill then it will be considered as an unfair trade practice. If the bill does not stipulate any such conditions then this process should be completed within thirty days.
Long back, I had purchased something from a teleshopping company. The product turned out to be defective. That company didn’t accept the return of the defective product. With the 2019 Act in force, such an act will be considered as unfair trade practice.

c)           Disclosing personal information: If any personal information given by the consumer is disclosed to anyone else, except if required by law then such disclosure will be considered as unfair trade practice.
From the description, in the Act, it can be understood that merely informed consent about the disclosure is not sufficient. The information should not at all be disclosed if not required by law. This step will curb the sale of personal data by sellers for monetary benefit.
A couple of years back, I attended a paid course and gave my contact details during the registration. After the course ended I started receiving unsolicited product advertisement emails. I then realised that the course provider had sold my email and phone number to these companies. Now, such an act will be considered as unfair trade practice.

4.   Unfair Contract: The 2019 Act includes a new term ‘Unfair Contract’. Any contract between the seller/ manufacturer/ service provider and the consumer will be termed as ‘unfair’ in the following conditions:

a)               Any contract requiring excessive security deposit to be given by consumer before the contract is executed.

b)             If the penalty of breach of contract is disproportionate to the loss incurred due to the breach.

c)           Refusing to accept pre-payment of debt even when the penalty is paid by the consumer. This will be useful in case of finance companies or banks.

d)           The contract can be terminated unilaterally without a reasonable cause.

e)             The contract imposes unreasonable charges on the consumer.

5.   E-commerce companies: The e-commerce companies are also covered under the 2019 Act. The definition of ‘product seller’ in the Act mentions “a person otherwise is involved in placing the product for a commercial purpose”. This is how e-commerce companies generally work. They list the products of other sellers/ manufacturers on their platforms. Till now, e-commerce companies used to shrug the responsibility of defective product/ service purchased from their platform saying that they are just aggregators of products, acting as intermediary and they don’t sell the product. Now, this would not be possible. The e-commerce company will have to take the product back and refund the amount paid.
Also, as per Consumer Protection (e-commerce) Rules 2019, these companies will have to display on its website, the terms agreed with the seller  or manufacturer regarding refund, exchange or redressal mechanism etc. so that the consumer can take an appropriate decision.

6.   Central Consumer Protection Authority (CCPA): The CCPA will be established under the 2019 Act. It will act as the regulator under the Act. It will be established by the Government of India. The main objectives of CCPA will be to see that the sellers/ manufactures do not engage in unfair trade practices and do not give any misleading advertisement (including online misleading advertisement). The CCPA will also ensure that no publication of false/ misleading advertisement should take place. This way under the 2019 Act, not just the provider but the publisher of the misleading advertisement will also be held responsible.
It should be noted that though CCPA aims to protect consumer rights, it will not directly redress consumer complaints. The redressal of consumer complaints will be done by redressal commission. The functions of CCPA are focused more on regulating the sellers/ manufacturers.

7.   Endorser also responsible for misleading advertisement: As per 2019 Act, if CCPA finds any advertisement to be misleading, not only can it ban the misleading advertisement and order to release a corrective advertisement but also impose a penalty of up to Rs. 10 lakh on manufacturer or endorser for the first offence and up to Rs. 50 lakh on subsequent offence.
Moreover, the CCPA can also prohibit the endorser from promoting any product for a period up to one year for the first offence and up to three years for the subsequent offence.
This will curb the misleading promotion of products or services by celebrities as they have a huge social following and everything they say about a product or service has an effect on the general public.

8.   Product Liability: A new concept has been added in the 2019 Act. Now, the seller/ manufacturer/ service provider will be deemed responsible for the harm caused to the consumer if the product/ service is defective and will have to compensate the consumer for the same.
However, product liability will not hold good if the consumer misuse the product.
For example, a mobile phone bursts due to a manufacturing defect and harms the consumer, now the manufacturer will be liable to compensate the consumer for the injury. The consumer can file the complaint for compensation with the respective commission (discussed below) for the same. Earlier, to get compensation, a consumer could only approach civil court.

9.   Changes relating to Consumer Dispute Redressal Commissions: The following changes have been made in this regard:

a)               Name: The Consumer Dispute Redressal Forums will now be called Consumer Dispute Redressal Commissions.

b)             Place of complaint: The 2019 Act being consumer-centric, gives the right to consumers to file a complaint from their place of residence or work. This will be useful for consumers as now, to file the complaint with the District Commission they will not have to go to the city where the seller/ manufacturer/ service provider is located.

c)           E- complaint: The complaints can now be lodged electronically with the commission in the prescribed manner.

d)           Monetary limit for complaints: As per the 2019 Act, the jurisdiction for complaints on the monetary basis will be:

District- Up to Rs. 1 Crore

State- Rs. 1 Crore to Rs. 10 Crore

National- Above Rs. 10 Crore

Moreover, now to decide the jurisdiction of a complaint, only the value of products/ services will be considered. The value of compensation will not be added to inflate value and decide jurisdiction.

e)             Mediation: The 2019 Act provides a new mechanism for faster resolution of disputes. The dispute can be solved by mediation if both the parties give written consent for the same. For this purpose, the state governments will establish consumer ‘mediation cells’ in the District and State Commissions and the Government of India will establish the same in the National Commission.

f)           Appeal with State Commission: If any party wants to file an appeal with the State Commission then the appellant will have to deposit 50% of the amount decided by District Commission. This limit was Rs. 25000 in the earlier Act.

g)         Period of Limitation: As per 2019 Act, the Period of Limitation for filing an appeal with the State Commission has been increased from 30 days to 45 days from the date of the order by District Commission.

 

Conclusion

The new Act is consumer-centric. Its scope has been expanded by changing the definitions and including new provisions. It has also taken into account technological advancements by including e-commerce sales. This has made the Act much stronger than its predecessor. The effectiveness of the new Act will be felt in due course.

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