2. The Consumer Protection Bill,
2019 was proposed in the
Parliament by Mr. Ram Vilas
Paswan, the Minister of
Consumer Affairs, Food and
Public Distribution.
The 2019 bill was enacted by the
Lok Sabha on 30th July 2019 and
subsequently by the Rajya Sabha
on 6th August 2019. The bill was
passed in order to repeal the 1986
Act i.e. Consumer Protection Act,
3. On 9th August 2019, the President of India gave his
assent to the Consumer Protection Act, 2019 (‘2019 Act’).
The 2019 Act was adopted with the intention of ensuring
effective and productive regulation and settlement of customer
conflicts and relevant matters.
In general, the Act’s intent is “to provide for the protection of
the interests of consumers and for the said purpose, to
establish authorities for timely and effective administration and
settlement of consumers’ disputes and for matters connected
therewith or incidental thereto”.
4. Instead of bringing an amendment to the 1986 Act, the
government introduced a new law itself to offer better security for
customers in comparison to existing approaches, taking into
account the growing e-commerce sector and emerging ways
of distributing products and services such as online sales,
teleshopping, direct selling, and multi-level marketing.
5. Flaws in the 1986 Act
The Consumer Protection Act of 1986 consisted of several major
procedural defects which are proposed to be resolved in by the 2019
Law.
In order to further boost public protection, the 2019 Act introduces a
series of steps and tightens current laws contained in the 1986 Act.
The Consumer Protection Act 2019 brings about fundamental changes
to the existing 1986 Act; however, it also envisages a Central
Consumer Protection Authority and vests power and control in this
authority without proposing adequate administrative safeguards
6.
7. Salient Features of Consumer Protection
Act 2019
Definition of Consumer
The concept of ‘consumer’ has been generalized to involve individuals
engaged in offline or online purchases through electronic means or through
teleshopping or direct sales or multi-level marketing.
A consumer is defined as a person who buys any good for consideration or
makes use of a service. It does not involve any individual who obtains a good
for commercial purposes for resale or a product or service. This includes
purchases across all forms, including offline, and online, through electronic
media, teleshopping, multi-level marketing, or direct sales.
As per the act; a person is called a consumer who takes advantage of
the services and purchases any good for self-use.
It does not include anyone obtaining goods or availing services without
consideration.
8. Section 2 (7) of the Act, defines Consumer as follows:
1.buys any goods for a consideration which has been paid or promised or partly paid and
partly promised, or under any system of deferred payment and includes any user of such
goods other than the person who buys such goods for consideration paid or promised or
partly paid or partly promised, or under any system of deferred payment, when such use is
made with the approval of such person but does not include a person who obtains such
goods for resale or for any commercial purpose; or
2.hires or avails of any service for a consideration which has been paid or promised or partly
paid and partly promised, or under any system of deferred payment and includes any
beneficiary of such service other than the person who hires or avails of the services for the
consideration paid or promised, or partly paid and partly promised, or under any system of
deferred payment, when such services are availed of with the approval of the first-mentioned
person, but does not include a person who avails of such service for any commercial purpose.
‘Telecom’ has been added to the definition of ‘services’ to bring telecom service providers
within the purview of the 2019 Act.
9. Rights of consumers
Six consumer rights have been defined in the Act, including the right to:
•To be secured from the selling of life and property-threatening goods,
products or services;
•To be notified, as required, of nature, quantity, efficacy, consistency, value,
and price of goods, products or services, so as to protect the customer
from unfair trading practices;
•To be assured exposure to a range of commodities, products or services
at fair rates whenever possible;
•To be recognized and to be assured that the concerns of customers would
be provided due consideration at sufficient forum;
•And pursue relief from unfair commercial practices or unreasonable
trading policies or the unscrupulous exploitation of consumers; and
•To consumer awareness
10. As a Regulator
Central Consumer Protection Authority
The CCPA shall conduct the following duties which include:
1.investigating and pursuing infringements of consumer rights at the
required forum;
2.issuing orders for recall or removal of dangerous products, a
refund of the price charged and discontinuation of deceptive trade
practices as specified in the Bill;
3.issuing guidance to the individual concerned;
4.imposing penalties, and;
5.issuing safety notices to consumers against unsafe goods and
services.
11. E-commerce
E-commerce was described as the buying or selling of goods or services through the
internet or electronic network, including digital items.
The central government has been allowed to take steps and draft guidelines to
discourage discriminatory e-commerce activities.
In the case of goods being offered by internet portals, the availability of services
requires to be ascertained without paying any fees separately..
The new Act empowers the central government to make laws, to take appropriate
steps to discourage unfair trading practices and to protect customers’ privileges and
interests.
12. Grounds to File Complaints
Although the CPA 1986 regulations specified six main grounds for filing complaints, the CPA
2019 expanded the count to seven, and also significantly altered one of the current grounds
for filing complaints as provided for in Section 2(c)(i) of CPA 1986. These include:
1.Introduction of Unfair Contracts & expansion of Unfair Trade Practices – Under previous
law, a complaint should only be filed where any dealer or service supplier has adopted an
unreasonable trading practice or a discriminatory trading practice. Now “unfair contract” has
also been added which further expands the ground for complaints and allows consumers to
challenge unfair, unilateral, and unreasonable contracts.
13. 2. While CPA 1986 had listed six types of unfair trade practices, three
types of additional unfair trade practices have now been added to the
2019 Act, which includes:
1.failure or non-issuance of a bill or a cash memo;
2.refusal to take back or withdraw defective goods or withdrawal or
discontinuance of deficient services or refusal to refund the
consideration amount paid within the period as stipulated in the bill
or cash memo or receipt or in the absence of such stipulation,
refusal to withdraw or refund goods or services within thirty (30)
days;
3.disclosure of consumer’s personal information to any other person
unless such disclosure is made in accordance with the provisions
of any law for the time being in force or in the public interest
14. Product Liability
This is major and important incorporation of the Act. The New Act stipulates stringent legal requirements
on traders. A product manufacturer, product service provider, and product retailer may be held
responsible for any harm done by a faulty product made by the supplier, serviced by the service provider,
or sold by the product seller, as the case may be. The extent of their liability is collectively specified under
section 84, section 85 and section 86 of the New Act. The chapter, dealing with product liability, applies to
any claim for compensation under a complainant’s product liability action for any harm caused by a
defective product manufactured by a product manufacturer or served by a product service provider or
sold by a product seller.
Product liability means a product manufacturer, service provider, or seller’s obligation for compensating a
customer for any damage or accident incurred by a damaged item or defective service. To claim liability,
a customer must show all of the fault or malfunction factors, as laid forth to the Act.
Section 2 (34) of the Act, defines “product liability” as the responsibility of a product manufacturer or
product seller, of any product or service, to compensate for any harm caused to a consumer by such
defective product manufactured or sold or by a deficiency in services relating thereto. Whereas section 2
(35) of the Act defines “product liability action” as a complaint filed by a person before a District
Commission or State Commission or National Commission, as the case may be, for claiming
compensation for the harm caused to him.
15. Consumer Disputes Redressal Commission
The New Act empowers the respective governments to establish a National
Commission for the Redress of Consumer Disputes, a State Commission for the
Redress of Consumer Disputes, and a District Consumer Disputes Redressal
Commission. The role of these commissions formed under the New Act is
equivalent to that of the commissions set up under the Old Act. They have the
authority to handle concerns from customers about certain products or services.
The New Act also grants the SCDRC and the NCDRC, an authority to consider
grievances about unfair contracts.
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 offering of goods or services for sale which may be hazardous to life and
safety.
16. Nevertheless, the pecuniary authority, i.e. the monetary value of the grievances which can be
pursued has been considerably expanded for each of these commissions to minimize the
pressure on the State and National Commissions by allowing customers to approach the District
Commission for grievances worth up to Rupees 1 Crore.
The 2019 Act provides the right of judicial review, which will require Consumer Commissions to
reconsider their decisions, thus reducing the pressure imposed by chosen petitions to rectify
obvious irregularities in front of the record. In sharp contrast to the 1986 Act, it is now necessary
to make appeals from the State Commission to the National Commission even if they raise
serious legal issues.
The National Commission’s challenges to the Supreme Court can only be made against
allegations that arise within the National Commission. In addition, to reinforce the noose on the
early submission of appeals, the timeframe for preferred appeals has also now been rendered
stricter. 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. The final appeal will lie before the Supreme Court.
17. Penalties for false or misleading advertisements
CCPA also is allowed to take measures against inaccurate or deceptive
advertising.
For each subsequent breach, CCPA will levy a penalty of up to INR1 million and
up to INR 5 million.
It is important to note that such penalties can be imposed on endorsers too,
thereby bringing actors/actresses in the scope of penalty.
Nevertheless, if he/she specifies that they conducted due diligence to validate the
veracity of the statements before accepting the same, the endorser will be
protected from any liability.
Therefore, before signing up for any ads, endorsers/actors/celebrities would
always have to perform a comprehensive due diligence/research.
Mediation
The CPA 2019 also provides for the settlement of disputes by way of mediation in
case there is a likelihood of compromise at the acceptance point of the complaint
or at some further date, provided the parties consent. For accelerated settlement,
18. Comparative Analysis of 1986 Act and 2019 Act
While judicial pronouncements have been issued bringing the purchases
made through online methods within the consumer ambit. The 2019 Act
specifically protects customers from purchasing products or services digitally.
The act has since made endorsers responsible for fraudulent or deceptive ads
in relation to the incorporation of internet sales. In the 1986 Act, it was just the
suppliers and the service providers that were liable for this. Under section
21(2) of the 2019 Act, even after obtaining a notice from the customer, the
commission may impose a fine of fifty lakhs if the endorser continues to
advertise false information about the products.
19. Under the act, disclosure of personal information given during the
transaction is also considered an offense. The Act also proposes
product liability provision whereby the manufacturer must not only
compensate for the defective goods but must also compensate for
any loss or injury caused to the complainant by the defect. For
example, if a bike is sold to you and the break is loose, resulting in
an accident, the manufacturer must compensate for the defect and
also compensate you for the accident that you faced due to the
defect.
The Act also proposes the establishment of an independent
regulator, the Central Authority for Consumer Protection (CCPA).
Although this body does not respond to customer complaints or
resolve lawsuits, it will take regulatory action to counter unfair trading
practices, etc.
20. CONSUMER PROTECTION ACT OF 1986 CONSUMER PROTECTION ACT OF 2019
1. No separate regulator 1. CCPA to be formed to consider grievance on unfair
contracts.
2. All goods and services for consideration, while free
and personal services are excluded.
2. 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.
3. Includes six types of such practices, like false
representation, misleading advertisements
3. The 2019 Act adds three types of practices to the list,
namely: failure to issue a bill or receipt; refusal to accept a
good returned within 30 days; and disclosure of personal
information given in confidence, unless required by law or
in the public interest. Contests/ lotteries may be notified as
not falling under the ambit of unfair trade practices.
4. No Provision for product liability. 4. Claim for product liability can be made against a
manufacturer, service provider, and seller. Compensation
can be obtained by proving one of the several specified
conditions in the Act.
8. No Provision for unfair contracts 8. Unfair contracts are defines as contracts that cause a
significant change in consumer rights. Lists six contract
terms that may be held as unfair.
21. 5. No Provision for Alternate dispute redressal
mechanism
5. Mediation cells will be attached to the District,
State, and National Commissions.
6. No Provision for E-commerce 6. E-commerce defines direct selling, e-commerce,
and electronic service providers. The central
government may prescribe rules for preventing
unfair trade practices in e-commerce and direct
selling.
7. Central Protection Councils promote and protect
the rights of consumers. They are established at the
district, state, and at the national level.
7. The 2019 Act makes CPCs advisory bodies for
promotion and protection of consumer rights.
Establishes CPCs at the District, State, and
National levels.
8. No Provision for unfair contracts 8. Unfair contracts are defines as contracts that
cause a significant change in consumer rights. Lists
six contract terms that may be held as unfair.
24. What is the role of the Central Consumer Protection Authority?
One of the important provisions of the new act is the proposal to set up a Central Consumer Protection
Authority (CCPA) by the Central Government. The stated purpose of CCPA would be ‘to promote, protect
and enforce the rights of the consumers.’
An investigative wing headed by a Director General would conduct inquires and investigations into any
violations relating to consumer rights, unfair trade practices and misleading advertisements. The earlier
Consumer Protection Act, 1986 did not have any such provision for a regulator.
The important functions of CCPA would include:
Inquiring into consumer rights violations.
Investigating these violations and proceeding with prosecution as appropriate
Pass orders to recall any goods or withdraw services that are deemed to be hazardous
Issue orders in regard to reimbursement of the price paid by customers for such services
Issues directions to the appropriate personnel in regard to any false or misleading advertisement to
either discontinue or modify it
Imposing penalties in respect to any violations
Issues notices to educate consumers in regard to unsafe goods and services.
25. - Enhancement of Pecuniary Jurisdiction: Revised pecuniary limits have been fixed under the New
Act. Accordingly, the district forum can now entertain consumer complaints where the value of goods or
services paid does not exceed INR 10,000,000 (Indian Rupees Ten Million). The State Commission can
entertain disputes where such value exceeds INR 10,000,000 (Indian Rupees Ten Million) but does not
exceed INR 100,000,000 (Indian Rupees One Hundred Million), and the National Commission can
exercise jurisdiction where such value exceeds INR 100,000,000 (INR One Hundred Million).
26. Then what about the Consumer Disputes Redressal Commissions?
Like in the case of the 1986 act, Consumer Disputes Redressal Commissions
(CDRCs) would be setup at various levels. The CDRCs would be set up at
multiple levels – district, state and national.
Consumers can file complaints with the CDRCs regarding any of the following.
Defective goods or services
Overcharging or deceptive charging on goods and services
Any unfair or restrictive trade practices
Offering services or sale of goods which can be hazardous to life or not safe
Complaints for all these can be filed in the district level CDRCs and all these
complaints can be made online (electronically).
27. Jurisdiction of CDRCs: Each of these levels of CDRCs have
varying jurisdiction based on the value of goods and services for
which the complaint is being made.
28. What is the appellate process?
The parties involved in the complaint have the right to appeal in the higher
forums in respect to any ruling provided in the respective CDRCs.
Any appeals from the district CDRC would be heard in the State CDRC.
Appeals from State CDRCs would be taken up in National CDRC.
The final appeal beyond National CDRC would be taken up by the
Supreme Court.
29. What about product liability?
Product Liability is a key aspect introduced in this bill that would benefit the
consumers. Under the provisions of this bill, a manufacturer or a service
provider would be required to compensate the consumer in case of any loss
or injury due to a manufacturing defect in the product or a poor service.
This differs from the existing provision where only the cost of the product
was compensated by the manufacturer or the service provider and not the
cost of the loss or injury as in the current proposal. The provision for seeking
compensation for the loss or injury was only through the civil courts, which
have been observed to take a long time to resolve.
30. E-Commerce would also be covered
E-Commerce has been gaining traction over the past few years and Consumer
Protection Act, 1986 does not have any provisions to deal with these
transactions. As per the new act, all the laws that apply for direct selling
would also be applicable for E-Commerce.
One of the key guidelines in this regard is that the E-Commerce platforms
(Amazon, Flipkart etc.) are required to disclose the details of the sellers.
Apart from the manufacturers, product liability would also include the sellers
as well as the service providers i.e. the e-commerce aggregators.
31.
32.
33.
34. Guidelines regarding Misleading advertising and Endorsers
The bill lays down guidelines for any misleading advertisements for a product or
service which effects the consumer. It could lead to a prison term of two years
and a fine which can be up to Rs. 10 Lakhs. Any subsequent offence could lead to
an imprisonment of up to 5 yeas and a fine extending to Rs. 50 Lakhs.
The new bill, has provisions which allow CCPA to fix the liability even on the
endorser of any misleading advertisement. It can also prohibit an endorser from
making endorsement for any product or service for a period of one year if found
necessary. Any subsequent violation could result in prohibition from endorsing
any product or service for a period of 3 years. This is expected to make the brand
ambassadors exercise due diligence on the veracity of the claims being made
about a product or a service before choosing brands to endorse.
35. The bill simplifies consumer litigation and takes cognizance of emerging
trends, but implementation remains a challenge
The electronic filing of complaints & permission to attend the hearing through
video conference are very important steps in simplifying the process of
complaints. Further, the idea of mediation could also help in quicker disposal of
cases. With the inclusion of E-commerce under the gambit of consumer laws,
the bill takes cognizance of the emerging trends in the marketplace.
However, it remains to be seen how all the new provisions will be implemented
since it will require augmenting the physical & human resources at every level
and that will require additional allocation of funds both by the Central & State
Governments.