31st July, 2021 – CONSUMER PROTECTION ACT, 2019: IS IT BENEFICIAL FOR THE BUYERS? by Vasu @LEXCLIQ

ABSTRACT

Consumer rights refer to those sets of rights, which are essential for protecting the consumer from the unlawful or malpractices of the retailers, sellers. wholesalers, traders, service providers etc., These rights enable the consumers to have detailed information related to quality, quantity, purity and standard of the products and provided services. Consumers are major elements of any economic system and their wellbeing is necessary for the betterment of the economy. And hence having sound legislations with adequate checks and balances become essential for the welfare of the consumers. One of the most essential such act was the Consumer Protection Act, 1986, which was indeed a sincere attempt at bringing in checks and balances to protect the consumers. However, as a result of evolving needs of the industry, globalisation of markets and booming of e-commerce industry on a large scale in today’s times, the scope of checks and balances had to be broadened, most crucially was the inclusion and protection of consumers on e- commerce platforms. As a result, Consumer Protection Act, 2019 was introduced.

CHAPTER 1

NEED OF THE CONSUMER PROTECTION ACT,2019.

The Indian consumer market has undergone a dramatic transformation in the past 2 decades as a consequence of the proliferation of emerging digital technology, and cutting-edge technological innovations such as smart phones, easily accessible internet facilities, cloud computing techniques etc. E-commerce is rapidly gaining momentum. The Consumer Protection Act  1986 , was the maiden legislative attempt to provide protection   and help the customers realise their rights ,On account of various technological advancements  and changing nature of market places such as teleshopping  and online shopping as well as  the loopholes in the provisions contained in the act especially in matters connected with brand recalls , risky contracts , misleading advertisements  the act had    become ineffective to an extent  and is no longer in use.  As a result, it was suggested that the act needed modifications and was eventually replaced with Consumer Protection Act, 2019. Because of the advent of digitalization, the old act required quite a lot amendments and immediate consideration. And with the current repayment, the consumers can now cherish the safeguards provided by the new act. This was in compliance to the recent adoption of globalization of business segments which promotes digitalization of things and organisations.

The advanced era has brought out a separate web-based world and changed the customer buyer relationship. The market access is now just a click away on the webpage. With customers offered with increased choices of products from across the world. Although this is a time saving process but this comes with certain risky and uncertain elements. As a result, an additional onus is also imposed on endorsers apart from manufactures, retailers and service providers, as a safeguard against misleading advertisements.

With the number of pending lawsuits in customer courts and significant postponement in delivering prompt service, it has infringed the rights granted to the consumers and has unreasonably prolonged the disposal of minor or petty issues. The urgent need of the moment was to enact a new legislature to empower and make the consumers feel protected. The Consumers Protection Act 2019, received approval from the parliament as well as the President   on 9th August 2019.[1] to mete out speedy justice to the aggrieved consumers as well as seal up the deficiencies of the repealed act intends to eliminate anomalies and Consumers are confronted with a variety of issues. Mediation, for example, is an innovative process. Besides the creation of a Consumer Information Centre Class action lawsuits, Security Authority etc.

CHAPTER 2

DRAWBACKS OF THE CONSUMER PROTECTION ACT,1986.

Besides the technological advancements, there were also a couple of drawbacks in the Consumer Protection Act, 1986. They were as follows:

1) As per Section 13 (3A) of  CPA , 1986  the time period mandated for disposal of cases was 3 months in normal cases and 5 months if  there is a need for procedural testing of goods [2].But the fact be that due to heavy backlog of cases and arbitrary  and frequent adjournments , these timelines are not observed seriously .[3] This makes the process not only time consuming  but also heavily draining people’s pockets. This refrains the affected consumers from adopting the course of justice and instead they prefer bearing out the consequences if their rights are breached.

2) One of the prime reasons in delay of cases are the prevailing vacancies in various Consumer forums. They include various members of the consumer courts including the presidents, who play vital role in adjudicating the cases. It has been noted that more than 400 such posts have been lying vacant and barely any efforts have been taken by governmental agencies to fill this gap.

3)  Also there has been an erroneous practice while appointing members of the Consumer forum. They usually delegate a person without necessary qualifications and then train them for the purpose they have been appointed [4]. As a result, the appointed people end up not having the adequate skills and knowledge to carry out their tasks and this makes the entire setup unprofessional and informal. Also, the members cannot coordinate well among themselves and brings in differences and procedural delays. This itself contributes to malfunctioning of the forums.

4) Also, the president is not conferred with the power to take suo- moto cognizance of the cases if some dispute has the potential to impact a large size of the population. For instance misleading advertisements or online frauds which can rope in a huge chunk of population in limited span of time [5] .This power becomes necessary as it can act as a preventive measure thereby acting act as a protective shield for the mass.

In an attempt to uproot these drawbacks, and bring in some reformation to the laws which were not so promising under the 3-decade old Consumer Protection Act, 1986. Consumer Protection Act, 2019 was introduced.  The Recent statistics projected by the e –commerce cell projected the nearly 70 % of population who have access to the internet facilities are bound to shop online, the trend especially seen in metropolitan cities with the number being as high as 329 million.[6] Hence this reformation was a must.

Consumer Protection Act, 2019 majorly serves the purpose of safeguarding the 6 basic consumer rights namely, right to safety, right to choose, right to consumer education, right to be informed, right to be heard and right to seek redressal. So, at the end of the day if these basic rights should be enjoyed by all the customers and in case of breach of any of those rights, their inadequacies should be adequately addressed.

The definition of a consumer as per the 2019 amended act has been modified to incorporate the buyers who purchase goods directly through the online business platforms. This was one of the major lacunae which was prevalent in the 1986 Act.

CHAPTER 3

THE IMPORTANT FEATURES OF CONSUMER PROTECTION ACT,2019.

The concept of consumer in the old Consumer Protection Act was restricted to purchasing products or services; it did not exclusively provide online, offline, or teleshopping purchases. The concept of user has been broadened by the new act, which now provides descriptions of online purchases. Teleshopping, multi-level marketing, as well as offline transactions.

Regulatory Authority: As per the provisions of the old act there was no monitoring and regulating agency for the protection of consumer rights, however the amendment has provided for formation of CCPA, (Central Consumer Protection Authority). [7] This set up aims at protecting, promoting and enhancing consumer rights. Its headquarter shall be in NCR with regional offices across all the states. The investigation wing headed by the Director general. This organisation will be committed to working for protecting consumers against deficiencies of goods and services as well as defective products and unfair trade practices. They would also be empowered to stop circulation of products and services if in their opinion they find it unsafe or hazardous for the mass consumption. or even striking down of misleading advertisements.  Also, they are empowered to issue safety guidelines as they deem fit and necessary and also punitive powers to impose monetary fines on people deviating from the proposed guidelines. They also can file Suo moto cases, to adjudicate on any seller, in case they feel that the protocols are being breached.

Besides every district and state would have district and state councils respectively which are going to act as aiding institutions to such organisations.

Alterations in the Pecuniary jurisdiction: – The pecuniary jurisdictions at each hierarchical level has got their pecuniary limits been raised. Accordingly, as per that, District Consumer Courts has its limits raised to Rs 1 crore, State Consumer Courts can handle cases up to Rs, 10 crores, whereas national courts could go to an amount greater than 10 crores. The reason why this improvement should be appreciated is the fact that the state and district courts are greatly empowered to handle issues with grater pecuniary value. This in a way adds to the ease of the customers as well as balances the workload of courts at various hierarchical levels.

Structural reforms:[8]

  • DISTRICT FORUM: Composition- 1 President and at least 2 members
  • STATE COMMISSION: Composition – 1 President and at least 4 members
  • NATIONAL COMMISSION: Composition -1 President and at least 4 members

 

  • Product Liability: Under the new Act, the Manufacturer, Product Service Provider, and Product Seller are all responsible for damage caused as a result of their products that results in the consumer’s injury or death. Under such circumstances the liability on the part of the manufacturer would be greater. This also applies to e-commerce outlets. It is important to note that the harm, injury or mental agony should be as a result of the defective goods. Along with physical injuries, which was there in the old act, the new act includes the terms mental agony or emotional distress that the consumer experiences as a reasonably conceivable harm, caused due to the product.  Definitely the nature of harm should be legal injury and not just mere economic loss.

Unfair Contracts trading practices: As a result of any breach of Contractual obligation between the customer and the manufacturer, trader, service provider etc. inflicts or violates the rights of the consumer, it is called as unfair contract. Such Contracts would be void and complaints can be filed at various commissions depending on its pecuniary value.

The concept of unfair trade practices has been revised under the new act. The biggest threat that online practices have brought in is the threat to the privacy of the consumers by leaking their personal data. The act criminalizes the leaking of consumers private data to any third party or entity or unfairly using it for financial gains without the consent of the consumer[9] .Eg. when these online giants leak the submitted data of the consumers such as phone number, email address, amount spent on specific products etc.  to third party retailers for attracting customers towards them for increased sale of their product. The recent controversy on WhatsApp’s private policy would definitely amount to unfair trade practice.

Misleading advertisements: In simple words, it means false representation of products or concealing the real or actual information about the product. And this liability is not only of the manufacturers, or online retailers but also of the endorsers and promoters of the product. The celebrity advertisers also own a responsibility of their statements and endorsements due to their influential capacity. This has been greatly highlighted under the new act. According to the new act, the fine to be charged on the endorser of the misleading advertisements is 10 lac rupees which can go up to 50 lac rupees and /or liable for 2 years’ imprisonment. [10]Celebrities can equally be held liable for featuring in advertisements, making falsified and   vague claims about the product.

Mediation: The new act provides for alternative dispute resolution techniques, which can be undertaken on the voluntary will of the grieved consumers, the aim is to make the process easier, simpler and help with faster settlement of cases. The CMC or the Consumer Mediation Cell shall be setup at district, state as well as national levels. Also, the orders passed through mediation process can be reviewed by the associated state or district commission to ensure transparency and unbiased manner of delivering justice.

E – Commerce platforms – Ecommerce platforms would also have to comply with the standards of the quality of goods and services and all laws under the CPA Act are applicable on the platforms. They would also be mandated to disclose some of their identification information such as contact details, email id, official website to the buyers.  Also, explicit information of the product should be furnished which includes warrantee /guarantee provided on the product, shipment details, colour, size, material of the product etc. Also be specific about their returning and refunding policies.[11] There would be zero tolerance policy towards breach of data privacy of the consumers, selling products which are below normal standards, fake and duplicate products, phishing, etc.

Food safety and standards Act , 2006  – It is worth mentioning that the definition of “food” as put forth in Food and Standards Act , 2006  has been included within the ambit of this act .[12] Food aggregators that provide  home delivery of food by giving online  access to many restaurants come under this  definition and would have to  follow the protocols as in the act and bring in  liability if the consumer rights are breached . Example: Swiggy, Zomato, Food- Panda etc.

Filing of Complaints –The filing of the Complaint can be done by the consumer as well his parents and legal guardian. The new act allows the consumer to file a complaint at the place where the person resides or works. There are also provisions for filing online complaints and getting the cases heard through video conferencing.

Other progressive moves incorporated include extension of limitation period for filing appeals to the orders of the district forum in the state forum   from 30 days to 45 days. Also, the victim can bring in a second appeal before the National Consumer Disputes Redressal Commission in case of dissatisfaction with the redressal granted.

CHAPTER 4:

THE CUMULATIVE EMPOWERING OF THE CONSUMERS:

  • The new act will provide a push to the Consumer driven businesses to refrain from unethical and unfair trade practices, hence providing checks to the e-commerce market that is projected to grow to a market size of USD 200 billion dollars by 2025.[13]
  • The e- commerce platform would have to acknowledge the online complains within 48 hours and dispose it off within a month.
  • The new act has provided with simplified techniques to resolve disputes, which if implemented properly will assure quick disposal of cases. Eg. Alternative dispute redressal mechanism and mediations.
  • The provisions have tagged liability on the endorsers including celebrities and brand ambassadors and hence protecting a million masses from being wrongly influenced.
  • The introduction of concept of product liability will provide checks on the quality of the goods manufactured and services delivered.
  • The expanded scope of pecuniary jurisdiction, allowing filing of the complaints from the closest jurisdiction as well as hearings through video conferencing will ensure more consumers filing complaints, at a crucial stage when the e-commerce giants are broadening their base.

CHAPTER 5.

IMPORTANT CASE LAWS:

One of the important judgements being the Horlicks Ltd. vs Zydus Wellness Products Ltd ,2020,[14] which was a case of misleading advertisements. In this case, Zydus in its advertisement   which was promoting ‘Horlicks’ showed a comparison between Horlicks and ‘Complain’ and hence depicted that their product was better than their rival product. Based on the precedence of various judgements passed on the false, deceptive and unfair advertising practices, this advertisement could not be protected under article 19 1(a) of the Constitution and was asked to bring down the advertisement. The comparison if at all made should not directly be misleading, disparaging or untruthful. This has the potential of deceiving the consumers and in a false competitive spirit.

Connaught Plaza Restaurants Ltd .Kapil Mitra, 2020[15]

In this case, the complainant had participated in a contest organised by Mc Donald’s franchise “Mc Donald’s Mein Khao Har Bar Prize le Jao”. The franchise was located in the Connaught Plaza Restaurants Ltd, had cheated the contesting customers by not giving them assured prizes and the terms and conditions for claiming the prizes were concealed before the customers. After they won, they were told of the extra mandatory purchase they had to make and also send two SMS to the assigned number (the cost being Rs 3 per SMS). The NCDR did claim that the carried-out practise was unfair. The commission ordered the authorities to compensate the complainant and also other customers who had not come been deceived by such misleading practices.  Such frauds often flash in our inbox and mail accounts, which actually loot consumers by bluffing their eyes with misleading advertisements and claims. All this would surely be taken care under the act.

 

 

CHAPTER 6.

CHALLENGES AND THE CORRESPONDING RECOMMENDATIONS:

  • As per the Consumer Protection Act, 2019, the Ministry of Consumers Affairs will codify conduct for the advertisers and the agencies with respect to unfair practices and misleading advertisements, which will also stipulate the penalty for the violation. But there have been concerns that working of such policies would be more federated rather regulatory.
  • Besides the ground reality being that there are a lot of vacancies at the various commissions. Inadequate workforce could do no good in implementing the act. Hence it becomes mandatory that the vacancies be immediately filled with due process followed with competent and skilled officials.
  • The e-commerce entities as per the guidelines are not allowed to manipulate the prices of goods and services that is provided on their platform in order to gain unfair profits and stay in tuned with the market conditions. This would also mean that they cannot adopt lower the prices below a limit, which could be a part of their bulk selling strategies.
  • Further e-commerce companies cannot even put cancellation charges on customers, which can cause loss to their resources.
  • Also, stricter guidelines have been imposed on them pertaining regarding setting up redressal mechanism for the customers on their websites. The operational market size being of sum close to 25 billion dollars in a heavily populated Indian market of 1.3 billion.[16] This is definitely mandatory but the government should have suggested  with some governmental assistance to these giants, to keep their interests up in our market. If the proposal becomes loss bearing for them, they might reduce investments in our country, which could greatly affect Indian economy and its people.
  • Also, one of the most important tasks is to educate the masses by making them aware of the following important things
  • The basic rights provided to them as a consumer
  • The extended protective measures incorporated under Consumer Protection Act 2019, especially on online platforms
  • To educate them of the facility of online filing of cases and the method of doing it.
  • All this can be done by the School and college students by creating awareness drives. This would make every Indian consumer a ‘satark-grahak’ and this would mean 50 % success of the amended act.

 

CONCLUSION:

Consumer Protection Act, 2019 which was conceptualized and whose process of drafting began in the year 2010 was among the sincere steps taken by the Centre in order to uphold consumer rights and meting out speedy justice to the aggrieved party. By incorporating this act, the government has taken consumers grievances seriously.  This act would make the manufacturers, sellers and service providers more vigilant and cautious about being bound to the protocols. This up gradation would go long way in safeguarding the rights of the consumers as well as people can now more confidently shop on those online websites.  And expanding the scope of online transactions although cannot be regarded to be absolutely safe but it has lot of advantages to add to the Indian commerce market. However, the most challenging part after formulation of law is its correct implementation and this stage itself would actually determine the success rate of the newly formulated act.

 

 

 

REFERENCES:

1) Sheetal Kapoor, Consumer Protection Act ,2019 – a new act empowering consumers, University of Delhi, August ,2020.

2) Aggarwal, V.K, Consumer Protection: Law and practice, Bharat Law House, Delhi ,2015.

3) The Consumer Protection Act, 1986 (Bare Act).

4) The Consumer Protection Act, 2019 (The Gazette of India)

5) Ganesan G and Sumathy M, Globalisation and Consumerism: Issues and challenges, Regal Publications, 2012.

6) Vipin Kumar, Adya Sharma, Strengthening Consumer Rights: the advent of Consumer Protection Act ,2019. Vol.156 (2).2019 at p .7.

7) https://www.statista.com/topics/2454/e-commerce-in-india.

8) http://egazette.nic.in/WriteReadData/2019/210422.pdf.

9) https://pib.gov.in/newsite/PrintRelease.aspx?relid=192499.

10) Horlicks Limited vs. Zydus Wellness Products Limited, 2020 SCC Online Del 873.

11) Connaught Plaza Restaurants Ltd.Kapil Mitra ,2020, SCC Online NCDRC 192

[1] https://pib.gov.in/newsite/PrintRelease.aspx?relid=192499

[2] The Consumer Protection Act, 1986 (Bare Act)

[3] Sheetal Kapoor, Consumer Protection Act ,2019 – a new act empowering consumers, University of Delhi, August ,2020.

[4] Aggarwal, V.K, Consumer Protection: Law and practice, Bharat Law House, Delhi ,2015.

[5] Ganesan G and Sumathy M, Globalisation and Consumerism: Issues and challenges, Regal Publications, 2012.

[6] Aggarwal, V.K, Consumer Protection: Law and practice, Bharat Law House, Delhi ,2015.

[7] The Consumer Protection Act, 2019 (The Gazette of India)

[8] http://egazette.nic.in/WriteReadData/2019/210422.pdf

[9] Vipin Kumar, Adya Sharma, Strengthening Consumer Rights: the advent of Consumer Protection Act ,2019. Vol.156 (2).2019 at p .7

[10] http://egazette.nic.in/WriteReadData/2019/210422.pdf

[11] http://egazette.nic.in/WriteReadData/2019/210422.pdf.

[12] The Consumer Protection Act, 2019 (The Gazette of India)

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

[14] Horlicks Limited vs. Zydus Wellness Products Limited ,2020 SCC Online Del 873.

[15] Connaught Plaza Restaurants Ltd.Kapil Mitra ,2020, SCC Online NCDRC 192.

[16] Ganesan G and Sumathy M, Globalisation and Consumerism: Issues and challenges, Regal Publications, 2012.

 

*The views in this article are author’s point of view. BSK Legal may or may not subscribe to the views of the author. This article is not intended to substitute legal advice. Any portion or part of this article can be reproduced, copied or used, in whole or in part, after giving due credit to the publisher. The Copyright of the article is with the author.

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