Consumer Protection Act, 2019 – at a glance

I. Consumer Protection Act, 2019- The new Consumer Protection Act, 2019 has come into force on 20th July, 2020. The key features include:

• Broadening of the definition of Consumer by including any person who buys any goods or avails any services through offline or online transactions, electronic means, teleshopping, direct selling or multi-level marketing. This means that e-commerce has now been included in the fold.

• Consumer Rights- The new Act has provided six rights to consumers:

1. the right to be protected against the marketing of goods, products or services which are hazardous to life and property;
2. the right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be, so as to protect the consumer against unfair trade practices;
3. access to a variety of goods and services at competitive prices
4. the right to be heard and to be assured that consumer’s interests will receive due consideration at appropriate fora;
5. the right to seek redressal against unfair trade practice or restrictive trade practices or unscrupulous exploitation of consumers; and
6. the right to consumer awareness;

• Goods and Services- The definition of “goods” has been expanded to include “food” as defined in Section 3 (1) (j) of the Food Safety and Standards Act, 2006. This would bring the food delivering platform into the fold. The definition of Services has been expanded to include “telecom” which would bring telecom service provide within the scope of the new act.

• Unfair Trade Practice- The new Act u/s 2(47) provides a broad definition of ‘unfair trade practice’ i.e. adopting unfair method or deceptive practices which includes inter alia misinformation, false claims, misleading statements regarding goods and services for the purpose of promoting their sale, use or supply. Giving preference to consumers Right to Privacy, the disclosure of any personal information given in confidence is also made an unfair trade practice unless such disclosure is made in accordance with the provisions of any law for the time being in force.

• Product Liability- The concept of Product liability has been introduced, which brings within its scope, the product manufacturer, product service provider as well as the product seller. Consumers now can claim compensation under a product liability action for any “harm” caused by a defective product. For the purposes of the New Act, the liability of the product manufacturer would be greater than the others as he will be liable even if he proves that he was not negligent or fraudulent in making the express warranty of a product.

• A product seller would be liable in a product liability action when he has exercised substantial control in designing, testing, etc of the product or has made express warranty independent of any warranty made by manufacturer, or the whereabouts of the manufacturer is not known or has failed to provide reasonable warnings to the buyer as provided by the product manufacturer.

• Jurisdiction- The New Act has brought changes both in the territorial and pecuniary jurisdiction of the consumer forums.

a) Pecuniary Jurisdiction- the District Commission would entertain complaints where the value of goods and services paid as consideration does not exceed Rs. 1 Crore, the State Commission’s would entertain complaints where such value exceeds Rs. 1 Crore but less than Rs. 10 Crores and the National Commission would entertain disputes where such value exceeds Rs. 10 crores.

b) Territorial jurisdiction- Consumers can now file complaints in the Consumer Commissions within the local limits of which they reside or personally works for gain.

• E-filing of Complaints and Video Conferencing- Sec 35 of the new Act provides that consumer complaints can now be filed electronically in such manner as may be prescribed and the matters can be taken trough video conferencing for hearing/examining parties so as provide expeditious disposal of the complaints.

• Power of Judicial Review- Section 40, 50 and 60 of the new Act provides the District Commission, State Commission and National Commission respectively, the power to review any of the order passed by them if there is an error apparent on the face of the record, suo moto or an application made by the parties within 30 days of passing of such order.

• Appeals- The National Commission would only entertain appeal from any order passed in appeal by any State Commission if the matter involves a substantial question of law. Also, the State Commission and the National Commission would not entertain any appeal if the appellant hasn’t deposited 50% of the amount he is required to pay in terms of the order for which he sought the Appeal.

• Unfair Contracts- Contract between a manufacturer or trader or service provider on one hand and a consumer on the other hand containing such terms which causes significant changes in the rights of consumers is now termed as “unfair contracts” under section 2 (46) of the new Act. The State Commission u/s 47 (ii) and National Commission u/s 58 have the jurisdiction to entertain complaints against unfair contracts subject to their pecuniary jurisdiction.
• Mediation – For the speedy disposal of consumer matters, the Act provides mediation as an Alternative Dispute Resolution mechanism and in regard of which a mediation cell is to be attached to every Consumer Commission.

• Penalty for false or misleading advertisement- The Act provides imprisonment upto two years and fine upto Rs. 10 Lacs and for subsequent offence, imprisonment upto 5 years and fine upto Rs. 50 Lacs to a manufacturer or service provider who causes a false or misleading advertisement to be made which is prejudicial to consumer’s interest.

II. Establishment of Central Consumer Protection Authority (CCPA)-

• The CCPA also known as Central Authority is established by the Central government under the New Act with its head quarters at New Delhi, with effect from 24.07.2020.
• It is established 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 as a class.
• It has the power to inquire or investigate into matter leading to violation of consumer rights or unfair trade practices either suo moto or on a complaint made by Central Government; to intervene in any proceedings before the Consumer Commissions; file complaints before the Consumer Commissions; recall products; order reimbursement of the price of goods/services; cancel licenses etc.
• It would have an Investigation Wing headed by a Director-General for the purpose of conducting inquiry or investigation under the New Act.
• The provision of Sec 17 provides consumer to file complaints before the Central Authority against any false or misleading advertisement which gives or conveys false description of a product or service or contains a representation constituting an unfair trade practice etc.

III. The Consumer Protection (E-Commerce) Rules, 2020-

• The said rules have been framed by the Central Government in exercise of powers conferred by Section 101(1)(zg) of the new Act.
• These rules shall apply to all goods and services bought or sold over e-commerce platforms, all models of e-commerce, all e-commerce retail and all forms of unfair trade practices across all models of e-commerce.
• These rules would also apply to e-commerce entity which is not established in India but offers goods or services to Indian Consumers.
• It will be the duty of the e-commerce entity to provide in a clear and accessible manner on its platform, its legal name, principal geographic address of its headquarters and all branches, name and details of its website and necessary contact details.
• Every e-commerce company would establish an adequate grievance redressal mechanism and appoint an officer to deal with the same.
• The e-commerce entity would not manipulate the price of goods and services so as to have unreasonable profit and they would also not discriminate between consumers of the same class or make any arbitrary classifications of consumers.
• The e-commerce entities are also liable to provide relevant information about the sellers from which the consumers are buying the products.
• The sellers also are responsible for not adopting any unfair trade practices. They should not falsely represent themselves as consumers and post reviews about their products, they should not refuse to take back goods or refuse to refund the consideration paid if the goods are defective, deficient or spurious. They should provide all relevant details regarding their products in a clear and accessible manner.