By Ikshita Parihar and Shruti Dutt from Aureus Law Partners
The Consumer Protection Act, 2019 (“Act”) came into force on 20th July 2020. Finally, the 34-year-old Consumer law was reviewed, revised and replaced by the Consumer Protection Act of 2019. The effort has been made to just not change the wine but the bottle too.
It marks a significant and a watershed step in improving, expanding and reinforcing consumer protection through various new grounds of complaint like misleading advertisement, endorsement, unfair contract, product liability. The Act also focuses on mediation and e-commerce which has been one of the major inclusions in the Act.
This new law, with its many new provisions, is trying to empower the new-age consumers. Many facets of this law tackle those aspects which were never a part of consumers’ lives in the ’80s when the old law was formulated. Indian consumer, his buying pattern, his market and the product in the market went through huge change but the law remained the same so it was high time that this law changed too. Let’s have a look at some of the changes that this Act will bring in.
E-commerce:
The definition of “consumer” has been widened by including persons who engage in offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing. This has brought e-commerce within the purview of the Act. E-commerce has been defined as buying or selling of goods or services including digital products over digital or electronic network under the Act. Generally, e-commerce players evade liability by presenting themselves as aggregators. However, The Consumer Protection (E-Commerce) Rules, 2020 have been framed in furtherance of the Act, to prevent unfair trade practices in the e-commerce market. Such rules provide for various compliances. It provides for appointing grievance redressal officer, requirement of sellers through an undertaking to give accurate information etc. Furthermore, to ensure compliance with the Act and Rules a nodal officer is required to be appointed by e-commerce entities, however, his exact power and role has not been outlined.
New Grounds for complaint:
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Product Liability: The Act provides for product liability action under Chapter VI. It means that consumers can claim compensation for any injuries suffered from a defective product. This action can not only be brought against the product manufacturer but also against a product seller and product service provider. Now, the sellers on e-commerce platform dealing in faulty/unauthentic products will also be made liable. Further, in a situation where the manufacturer of product is not known or cannot be found the product seller can be made liable. This significantly enhances the realm of protection available to the consumers against various persons involved in the supply chain of the product.
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Misleading Advertisements and Endorsement Liability: The Act seeks to impose stringent penalty on manufacturers and endorsers for misleading advertisements. It attracts penalty up to 10 lakhs and imprisonment which may extend up to 5 years, it also provides for prohibiting an endorser who is a part of a misleading advertisement from being a part of any endorsement for a period of 1 year. This will compel celebrities to carry out due diligence before advertising false claims.
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Unfair Contracts: These are contracts having such terms which cause significant change in the rights of consumer, for instance insurance contracts where the terms are skewed in favour of the company. The Act gives power to the ‘State Commission’ and ‘National Commission’ to declare any terms of contract, which is unfair to any consumer, to be null and void. This will fetch massive relief for the consumer.
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Unfair Trade Practices: The Act includes certain new categories of unfair trade practices i.e. non issuance of bill or cash memo for goods or services rendered, refusal to take back or withdraw defective goods, failure to refund money within the period stipulated in the bill or 30 days, and disclosing personal information given by the consumer in confidence. This will at least, in absence of any data protection law, allow the consumer to take action for disclosing confidential information.
Establishment of an Authority:
The Act seeks to establish a Central Authority namely, the Central Consumer Protection Authority (“CCPA”) to promote, protect, and enforce the rights of consumers related to misleading advertisements and unfair trade practices as a class. The power to recall goods has also been granted to the CCPA. The Act incorporates CCPA in the definition of “complainant”, thereby allowing it to initiate action on its own. To enforce the said provision the Act further provides for establishment of an investigation wing headed by a Director-General to inquire and investigate, upon a reference by the CCPA. District Collectors have been tasked and entrusted to undertake certain functions pertaining to inquiries and investigations. This will certainly allow the CCPA to protect the interest of the consumers. But it is unclear how the CCPA will practically function. There is also some overlap between the powers of investigation wing and the District Collector, which prospectively may cause a conflict of interest.
Procedural Aspects:
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Jurisdiction: The Act eases the filing of the complaint by allowing the consumer to file a complaint where he resides or personally works for gain. Further, the Act provides for a change in pecuniary jurisdiction. Where the consideration paid for the goods and services does not exceed Rs.1 crore the complaint shall be filed before the District Commission where it exceeds Rs.1 crore but is less than Rs.10 crores the complaint shall be filed before the State Commission and where it exceeds Rs.10 crores the complaint shall be filed before the National Commission. However, the Act is silent on whether the matters pending before the Commissions will be transferred as per the new jurisdiction. If such pending cases are transferred it will further lead to a mammoth pile, and without a doubt further delay in deliverance of justice to consumers. Further, the District Commission lacks the infrastructure to deal with the increased number of cases owing to the change in the pecuniary jurisdiction.
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Mediation: Upon filing of a consumer complaint under the provisions of the Act, if the Commission is of the view that there are elements of settlement in the dispute, it may refer the matter for mediation in accordance with Chapter V of the Act. The inclusion of mediation in the Act is an attempt to fasten the dispute resolution process and reach early settlements. However, what the government has failed to take into account is that mediation may be inadequate as it is only when all the amicable means of resolving a disputes have failed that the consumer seeks justice before courts. Thus, the induction of another step of mediation may add to the delay. Furthermore, it is evident from history that the consumer lacks bargaining power and therefore, he is less likely to secure adequate compensation without the interference of the Commissions.
The Act is quite comprehensive as it also provides for penalties including imprisonment for manufacture, sale, distribution etc. of adulterated and spurious goods. It also establishes Consumer Protection Councils at the Central and State levels for protecting consumer’s interest and spreading awareness, and makes a provision for electronic filing of complaint.
The New act is an attempt to empower the consumer on paper but it will be the implementation and execution which will decide the fate of Indian consumer. With lakhs of pending cases in consumer fora, the unending web of adjournment, staff scarcity and delays – the only thing which is in consumers’ hand is to pray that one doesn’t end up with a faulty product.
