Daily News Analysis

THE CONSUMER PROTECTION Act 2019

23rd July, 2021 Polity

Context:

  • Recently, government has come out with a list of proposed amendments to the Consumer Protection Act of 2019. 

Draft Rules:

  • the draft amendments propose banning of fraudulent flash sales and mis-selling of goods and services on e-commerce platforms.
  • Ban on misleading users by manipulating search results, and appointment of chief compliance officer and resident grievance officer are some of the other amendments being proposed.
  • E-commerce entities are also required to provide information not later than 72 hours of the receipt of an order from a government agency for prevention, detection and investigation and prosecution of offences under any law, as per the proposed amendments. 
  • It has also proposed 'fall-back liability' for every marketplace e-commerce entity to ensure that consumers are not adversely affected in the event where a seller fails to deliver goods or services due to negligent conduct by such seller.

Challenges:

  • Some states have argued that proposed rules can disturb the state's business ecosystem, especially with regard to MSMEs and small entrepreneurs and will also limit the choices for consumers, rather than safeguarding their interest.
  • The regulation of these firms should actually come within the ambit of the Competition Commission of India
  • There are a lot of other quality checks that these marketplaces put in place. There are consumer courts that cheated customers can This just adds to the bureaucracy
  • There’s not enough state capacity for implementing some of these rules.

 

Background

  • The Consumer Protection Bill, 2019 was introduced in Lok Sabha by the Minister of Consumer A airs, Food and Public Distribution in 2019.
  • The Bill replaces the Consumer Protection Act, 1986.

 Key features of the bill

 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 online, and online through electronic means, teleshopping, multi-level marketing or direct selling.

 Rights of consumers

  • Six consumer rights have been defined in the Bill.

Six new consumer rights

  • The right to be protected against the marketing of goods, products or services which are hazardous to life and property.
  • The right to be informed about the quality, quantity, potency, purity, standard and price of goods, products, or services to protect the consumer against unfair trade practices.
  • The right to be assured, wherever possible, access to a variety of goods, products, or services at competitive prices.
  • The right to be heard and to be assured that consumer’s interests will receive due consideration at appropriate fora.
  • The right to seek redressal against unfair trade practice or restrictive trade practices or unscrupulous exploitation of consumers.
  • The right to consumer awareness.

 Central Consumer Protection Authority

  • The central government will set up a Central Consumer Protection Authority (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.

CCPA will carry out the following functions, including

  • Inquiring into violations of consumer rights, investigating and launching prosecution at the appropriate forum
  • Passing orders to recall goods or withdraw services that are hazardous, reimbursement of the price paid, and discontinuation of the unfair trade practices, as defined in the Bill
  • Issuing directions to the concerned trader/ manufacturer/ endorser/ advertiser/ publisher to either discontinue a false or misleading advertisement, or modify it.
  • Imposing penalties, and
  • Issuing safety notices to consumers against unsafe goods and services.

Penalties for misleading advertisement

  • 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 o ence, the fine may extend to Rs 50 lakh and imprisonment of up to five years.

Role of Endorser

  • 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 o ence, 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.

Consumer Disputes Redressal Commission

  • Consumer Disputes Redressal Commissions (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
    • The ordering of goods or services for sale which may be hazardous to life and safety.
  • 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.
  • Final appeal will lie before the Supreme Court.

Jurisdiction of CDRCs

  • The District CDRC will entertain complaints where the 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.

2.9 Product liability:

  • Product liability means the liability of a product manufacturer, service provider or seller to compensate a consumer for any harm or injury caused by a defective good or deficient service.
  • To claim compensation, a consumer has to prove any one of the conditions for defect or deficiency, as given in the Bill.