New Consumer Protection Act comes into force gives more power to Consumers

The Parliament of India passed the Consumer Protection Bill, 2019 on 06.08.2019 to replace the Consumer Protection Act, 1986 (“1986 Act”). The President of India gave assent to the Consumer Protection Act, 2019 on 09.08.2019. The Ministry of Consumer Affairs, Food and Public distribution, has issued a notification by which it appoints the July 20, 2020 as the date on which the Consumer Protection Act, 2019 shall come into force. The Government instead of bringing an amendment in the 1986 Act, enacted a new Act altogether so as to provide enhanced protection to the consumers taking into consideration the booming e-commerce industry and the modern methods of providing goods and services.

The new act ensures various changes related to Consumer Protection Councils, Consumer Disputes Redressal Commission, Mediation, the liability of services or products, the penalty for manufacturing, selling, distributing, etc spurious good or products which contain adulterant. The new provisions will enable the consumers to drag to court if manufacturers, sellers or distributors are found dealing with adulterated and spurious products. The Consumers can also file complaints in consumer commissions claiming compensation for the spurious or adulterated product from the consumer.

Definition of consumer

A consumer is defined as an individual who buys any good or avails a service for a consideration.  It does not include an individual who obtains goods for resale or goods or service for commercial purpose.  It covers transactions through all modes including offline, and online through electronic means, teleshopping, multi-level marketing or direct selling.

Territorial Jurisdiction

This new act will ensure that consumer complaints can be filed at a district or state consumer commission from the location where the complainant resides rather than from where the service or product was bought by consumers.

Enhancement of Pecuniary Jurisdiction

S.No.

CDRCs

Valuation of Goods and Services

1.

District CDRC

Less than Rs. 1 Cr.

2.

State CDRC

More than Rs. 1 Cr but does not exceed Rs. 10 Cr.

3.

National CDRC

More than Rs. 10 Cr.

Rights of consumers

The consumer rights have been defined under the new act as follows.

(i) Right to be protected against marketing of goods and services which are hazardous to life and property.

(ii) Right to be informed of the quality, quantity, potency, purity, standard and price of goods or services.

(iii) Right to be assured of access to a variety of goods or services at competitive prices.

(iv) Right to seek redressal against unfair or restrictive trade practices. 

Central Consumer Protection Authority

The Central Government of India will set up a Central Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers.  The CCPA 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. The 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 lakhs and imprisonment for up to two years for a false or misleading advertisement.  In case of a subsequent offence, the fine may extend to Rs 50 lakhs and imprisonment of up to five years. CCPA also can prohibit the endorser of a misleading advertisement from endorsing that specific product or service for a period of up to at least one year. For every subsequent offence, 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 offering of goods or services for sale which may be hazardous to life and safety. 

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.

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, consumers have to prove any one of the conditions for defect or deficiency, as given in the Bill. The defense that e-commerce platforms merely acting as ‘platforms’ or ‘aggregators’ won’t be accepted. There are increased liability risks for manufacturers as compared to product service providers and product sellers, considering that under the New Act, manufacturers are going to be liable in product liability action even where he proves that he wasn’t negligent or fraudulent in making the express warranty of a product.

Covers E-Commerce Transactions

The New Act has widened the definition of ‘consumer’. The definition now includes a person who buys any goods, whether through offline or online transactions, electronic means, teleshopping, direct selling or multi-level marketing. The earlier Act didn’t specifically include e-commerce transactions, and this lacuna has been addressed by the New Act. 

E-Filing of Complaints

The New Act provides flexibility to the consumer to file complaints with the jurisdictional consumer commission located at the place of residence or work of the consumer. This is unlike the current practice of filing it at the place of purchase or where the seller has its registered office address. The New Act also contains enabling provisions for consumers to file complaints electronically and for hearing and/or examining parties through video-conferencing. This is aimed to provide procedural ease and reduce inconvenience and harassment for the consumers. 

Unfair Trade Practices

The New Act introduces a specific broad definition of Unfair Trade Practices, which also includes sharing of personal information given by the consumer in confidence, unless such disclosure is made in accordance with the provisions of any other law. 

Provision for Mediation

The New Act provides for mediation as an Alternate Dispute Resolution mechanism, making the process of dispute adjudication simpler and quicker. This will help with the speedier resolution of disputes and reduce pressure on consumer courts, which already have numerous cases pending before them. As specified in the rules, mediation proceedings can be initiated in the following ways:

  • Where it appears to the Commission that there exist elements of a settlement.
  • Either of the parties wishes to settle the matter.

Penal Action

Under the new provisions of the Consumer Protection Act, 2019 which come into effect from 20th July, 2020. The Commission may be awarded up to 6 months in jail or a fine of up to Rs 1 lakh in cases where the consumer is not injured. In cases where the consumer is injured, the fine to the manufacturer, seller or distributor could be upto Rs 5 lakh and upto seven years in jail. If the case pertains to the death of the consumer then a minimum fine of Rs 10 lakh and seven years in jail which may be extended to life imprisonment can be imposed.

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