Consumer Protection Act, 2019

• Consumer Protection Act 2019 replaces more than three decades old Consumer Protection Act, 1986.
• The new Consumer Protection Act, 2019 came into force on 20^th July 2020 and it will empower consumers and help them in protecting their rights through its various notified rules and provisions.
• The new act will be swift and less time consuming compared to the older Consumer Protection Act, 1986 in which single-point access to justice was given making it a time-consuming exercise.
  • The old act provided for a three-tier consumer dispute redressal machinery at the National (National Consumer Disputes Redressal Commission), State and District levels.
• Over 20,304 cases at national, 1,18,319 cases pending at state level and 3,23,163 cases are pending at the district level in the country.

Definition of a Customer

• 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:
  • Offline
  • Online through electronic means
  • Teleshopping
  • Multi-level marketing
  • Direct selling.
• Six consumer rights have been defined in the act, including the right to:
  • Right to Safety.
  • Right to be Informed.
  • Right to Choose.
  • Right to be heard.
  • Right to seek Redressal.
  • Right to Consumer Education.

Central Consumer Protection Authority (CCPA)

• The Central Government will set up a Central Consumer Protection Authority (CCPA).
• Purpose of CCPA is 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.
• It will have an investigation wing, headed by a Director General, which may conduct inquiry or investigation into such violations.
• CCPA would be given wide-ranging powers.
  • The CCPA will have the right to take suo-moto actions, recall products, order reimbursement of the price of goods/services, cancel licenses, impose penalties and file class-action suits.
  • The CCPA will have an investigation wing to conduct independent inquiry or investigation into consumer law violations.

Functions of CCPA

• Inquiring into the violations of consumer rights, investigating and launching prosecution at the appropriate forum.
• Passing orders:
  • To recall goods or withdraw services those are hazardous.
  • Reimbursement of the price paid.
  • Discontinuation of the unfair trade practices.
• Issuing directions to the concerned trader, manufacturer, endorser, advertiser to either discontinue a false or misleading advertisement, or modify it.
• Imposing penalties.
• Issuing safety notices to customers against unsafe goods and services.

Penalties for Misleading Advertisements

• The Consumer Protection Act, 2019 draws more attention for the fact that celebrity endorsements are a huge part of the advertising industry.
• The provisions penalties for Manufacturers, Endorser and Publisher/Advertiser have been revised and made more stringent.

Punishment for Manufacture or Sale of Adulterated/Spurious Goods:

• In case of the first conviction, a competent court may suspend any licence issued to the person for a period of up to two years and in case of second or subsequent conviction, may cancel the licence permanently.

Consumer Dispute Redressal Commissions

• 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 charging 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 levels.
• Appeals from a District CDRC will be heard by the State CDRC.
  • Appeals from the State Consumer Disputes
  • Redressal Commissions will be heard by the National CDRC.
  • Final appeal will lie before the Supreme Court.

Alternate Dispute Resolution Mechanism of Mediation:

• A complaint will be referred by a Consumer Commission for mediation, wherever scope for early settlement exists and parties agree for it.
• The mediation will be held in the Mediation Cells which will be established under the aegis of the Consumer Commissions.
• There will be no appeal against settlement through mediation.

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, consumer has to prove that any of the conditions for defect or deficiency, as given in the Act.

Five New Rights We Now Get as a Customer

• Right to file complaint anywhere.
• Right to seek compensation under product liability.
• Right to protect consumer as a class.
• Right to seek a hearing through video conferencing.
• Right to know why a complaint was rejected.

Other Rules and Regulations

• As per the Consumer Disputes Redressal Commission Rules, there will be no fee for filing cases up to Rs. 5 lakh.
• The credit of the amount due to unidentifiable consumers will go to the Consumer Welfare Fund (CWF).
• State Commissions will furnish information to the Central Government on a quarterly basis on vacancies, disposal, the pendency of cases and other matters.
• Apart from these general rules, there are Central Consumer Protection Council Rules, provided for the constitution of the Central Consumer Protection Council (CCPC).
  • It will be an advisory body on consumer issues, headed by the Union Minister of Consumer Affairs, Food and Public Distribution with the Minister of State as Vice Chairperson and 34 other members from different fields.
  • It will have a three-year tenure and will have Minister-in-charge of consumer affairs from two States from each region- North, South, East, West, and North-East Region.

Positive Aspects of Consumer Protection Act, 2019

• Creates consumer-friendly ecosystem and provides more awareness about consumer rights.
• Seeks to enlarge the scope of the existing law and makes it more effective and purposeful.
• Proposes strict action against the advertiser in case of misleading advertisements.
• Holds celebrities accountable for false and misleading advertisements of products they endorse.
• Product liability provision deters manufacturers and service providers from delivering defective products or deficient services.
• The entire batch would be examined, if a product is found faulty unlike earlier method of individual product examination.
• Seeks to bring in e-commerce under the regulatory provisions.
• Allows consumers to file their complaint from anywhere. It is a desired move considering the rise in e-commerce purchases, where the seller could be located anywhere.
• Enables the consumers to seek a hearing through video conferencing, saving them both money and time.
• Increased the pecuniary jurisdiction.
• Establishment of CCPA creates a regulatory structure on par with advanced global jurisdictions like the U.S. and the U.K.
• CCPA can file a Class Action Suit, if required and would take immediate action on any consumer complaint.
• Scope for early disposal of cases through mediation by an Alternate Dispute Resolution (ADR) mechanism.

Concerns of Consumer Protection Act, 2019

• Does not address the fundamental problem of protracted and complicated litigation, the bane of consumer forums constituted under the Consumer Protection Act of 1986.
• Certain issues such as the appointment of mediators to settle disputes are contentious as this would lead to arm-twisting of the weaker parties and may encourage corruption.
• Onus is on the consumer to prove defect or deficiency of the products or services to claim compensation.
• Hierarchical system of Consumer courts may end up in piling up of cases.
• Government had dropped health care from the bill.
• Disputes Redressal Forums proposed in the bill does not have members from judiciary.
• State’s powers to frame rules have been snatched away, as per critics.
• The bill has not been drafted in a “simple language” for the benefit of consumers, says critics.
• Unfair trade practices as defined by the Bill and punitive measures thereof, are also being dealt by the Competition Commission. It may lead to complexity and create conflict of interest.
• It challenges federalism as members of the state and district forums will be appointed in consultation with the Central Government.

Consumer Protection Act, 1986 Vs. Consumer Protection Act, 2019