Originated as a response to facilitate recognition and protection of the rights of a consumer, consumer protection has become multi-faceted, requiring consistent upgradation to protect the interests of the consumer in view of the advancing times. The advent of digitization has ushered in a new era of commerce and has consequentially paved the way for the evolution of consumer protection. While digitization has introduced an element of ease in a number of cumbersome activities and presented a plethora of options at our fingertips, it also added a new facet to the concept of consumer protection.
The concept of the protection of consumers against unscrupulous, unfair and unethical malpractices, for safeguarding the interest of consumers, plays a vital role in the regulation of practices in the market. The Consumer Protection Act seeks to provide effective protection to consumers. Consumers need to be able to obtain accurate, unbiased information about the products and services they purchase. The Consumer Protection Act of 1986 was introduced with the aim to provide an effective, speedy, affordable justice system for the consumers, in order to provide redressal of their grievances efficiently. The implementation of the Act paved the way for a rise in awareness of consumer rights. This awareness enables them to make the best choices based on their interests and prevents them from being mistreated or misled by businesses. Consumer protection policies, laws and regulations help increase consumer welfare by ensuring that businesses can be held accountable.
Consumer protection took a toll as service providers, manufacturers, endorsers were able to exploit consumers due to inadequacies of the Act with the progression of time. The Consumer Protection Act of 2019 came into effect mid-August 2019, effectively repealing the former Consumer Protection Act of 1986. The 2019 Act strives to strengthen consumer interests and Act strives to provide a robust grievance redressal mechanism for consumers. In pace with the changing economy, the 2019 Act now covers e-commerce platforms within its ambit.
The new Consumer Protection Act of 2019 brings into effect some much needed reliefs for the consumer, in light of the evolving commercial conditions. The new Act proposes a slew of measures and tightens the existing rules to further safeguard consumer rights. Some of the key highlights of the new Act are outlined below:
The scope of the term ‘consumer’, as defined in Section 2(7), has been broadened to include persons who engage in ‘offline or online transactions through electronic means or by tele-shopping or direct selling or multi-level marketing’.1 The earlier Act did not specifically include e-commerce transactions, and this lacuna has been addressed by the New Act. The amended definition now not only includes online purchasers in its ambit, but also provides the consumers with a remedy in case of multi-level marketing. The seller at each level of multi-level marketing can now be exposed to liability under the Act, not restricted to only the manufacturer but all entities involved at various stages of production and marketing.
The new Act further clarifies that a consumer is 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.
E-commerce has been defined under Section 2(16) as ‘buying or selling of goods or services including digital products over digital or electronic network’. Section 94 of the Act authorizes the Central Government to undertake necessary measures to prevent unfair trade practices in e-commerce.
The 2019 Act has substantially increased the pecuniary jurisdiction of the Consumer Dispute Redressal Commissions, by effect of which, consumers can now approach the District Commission with complaints valued up to Rs. One Crore. The State Commission can entertain complaints where the value exceeds Rs. One crore but is less than Rs. Ten Crores and the National Commission can be approached for complaints exceeding Rs. Ten Crores. The increase in the pecuniary jurisdiction of all three commissions is an encouraging step as it should attract lesser number of claims in appellate commissions to an extent, thereby ensuring swifter disposal of cases.
The new Act also allows consumers to file complaints in the District Commission where they ‘reside or work for gain’.4 This move comes as a relief to the consumers, as earlier they were compelled to file complaints place of purchase or where the seller has its registered office address. In addition to this, the New Act enables consumers to file complaints electronically, and for hearing and/or examination parties via video-conferencing, striving to provide procedural ease to the consumers.
The addition of ‘product liability’ is one of the most significant additions to the new Act. Section 2(35) of the Act allows the consumer to file a complaint against a product manufacturer or product seller, of any product or service, for compensation resulting from any harm caused by ‘such defective product manufactured or sold, or by deficiency in services’. There are increased liability risks for manufacturers, considering that under the New Act, manufacturers will be liable in product liability action even where he proves that he was not negligent or fraudulent in making the express warranty of a product. Furthermore, the impact of this provision will extend to e-commerce platforms as well, because it includes ‘product seller’ under its ambit. Under this provision, ecommerce platforms cannot escape liability as aggregators anymore.
Section 10 of the 2019 Act, provides for the establishment of a Central Consumer Protection Authority ‘to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers’. The CCPA will conduct inquiry and investigate matters of consumer law violations.
The new Act empowers the CCPA, under Section 89, to impose penalties on a manufacturer or endorser of up to Rs. 10 lakh plus 2-year imprisonment for false or misleading advertisements; subsequent offence of this nature are punishable with imprisonment which may extend to five years along with fine which may extend to Rs. 50 lakh. An additional onus has been placed on endorsers, apart from manufacturers and service providers, to prevent false or misleading advertisements. The Act fixes liability on the endorsers in consideration of the fact of numerous instances of unfair trade practices wherein the consumer falls prey under the influence of celebrities endorsing the product or service.
The 2019 Act provides for reference of consumer disputes mediation as a means of alternative dispute resolution, at the first hearing of the complaint after its admission, or at any later stage, if ‘there exists elements of a settlement which may be acceptable to the parties’.5
The Consumer Protection Act of 2019 introduces some significant and cardinal amendments in the erstwhile Act of 1986, in view of the advancing times and the varying needs of the consumers. The new Act has greatly broadened the scope of the consumer protection regime in India. The new Act grants protection to the interests of the consumers against undue exploitation at the hands of sellers, manufacturers, service producers, as well as endorsers and holds them accountable for the unfair practices. Additionally, the Act also seeks to introduce an element of ease in the process of grievance redressal and fasten the process for the same.
The effectiveness of the new Act can only be judged with time, but in contrast to the earlier position, the Act seeks accountability from everyone involved in any transaction with the consumer. The new Act comes during a much-needed period wherein the idea of a consumer centric economy is gaining traction.
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