CONSUMER PROTECTION ACT, 2019 COMES INTO EFFECT: KEY HIGHLIGHTS

The Consumer Protection Act, 2019 which came into effect on July 20, 2020 was passed on August 6, 2019 replacing the more than 3-decade old Act of 1986. The new Act is aimed at empowering consumers and helping them in protecting their rights. With the change in consumer needs and demands, the new Act aims to eradicate the lacunae that existed in the previous Act. The new concepts as well as the polished old ones are discussed here.

Jurisdiction

In the earlier Act, complaint could be filed in the consumer court where the seller’s office is located while the new Act states that complaint can be filed in a consumer court where the complainant resides or works. It also enables consumers to file complaints electronically. Further, the parties can hear the case through video conferencing.

Pecuniary Limit

- The District Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration does not exceed one crore rupees (USD 1,33,559).

- The State Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration exceeds one crore USD (1,33,559) but does not exceed ten crore rupees (USD 13, 35, 592).

- The National Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration exceeds rupees 10 crore USD 13, 35, 592.

Product Liability

A manufacturer or service provider or seller is liable to compensate for injury or damage caused by his defective products or deficient services. An action for liability can be brought if there is a manufacturing defect, design defect, deviation from manufacturing specifications, not conforming to express warranty, failing to contain adequate instructions for correct use or service provided is faulty, imperfect or deficient. It is to deter the manufacturers and service providers from delivering such defective products or deficient services.

Unfair Trade Practices

The Act has broadened the definition of “unfair trade practices” which refers to a trade practice which, for the promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including - making false statements about products, false representations of the seller, misleads the public w.r.t. price of the product, misleading advertisements, disclosing personal information given by the consumer without consent in accordance with the provisions of any other law, refusing to take back defective goods, not issuing receipts for goods sold or services rendered, giving guarantee/warranty of the performance, efficacy or length of life of a product, luring customers with offers without the intention of fulfilling them, etc.

The CCPA

The Act provides for the establishment of the Central Consumer Protection Authority (CCPA) which is a body to promote, protect and enforce the rights of consumers as a class. The CCPA regulates matters relating to the violation of consumer’s rights, unfair trade practices, and false or misleading advertisements. Among other things, it has the authority to refer instances of violations of consumer rights or unfair trade practices to investigating authorities, and pass orders to recall goods or withdraw services that are dangerous or hazardous, ensure reimbursement of the price for such goods or services to the purchasers, and discontinue practices that are unfair or prejudicial to consumers’ interests.

Central Consumer Protection Council

The Consumer Protection Act, 2019, provides for the setting up of the Central Consumer Protection Council as an advisory body on consumer issues. It will be headed by the Union Minister of Consumer Affairs with the Minister of State as Vice Chairperson and 34 other members from different fields. The council, which has a three-year tenure, will have Minister-in-charge of consumer affairs from two states from each region- North, South, East, West, and North East.

Punishment for the sale of spurious goods

It provides for punishment by a competent court for the manufacture, sale, storage or distribution of spurious goods. The court may, in case of the first conviction, suspend any license issued to the person for a period of up to two years, and in case of second or subsequent conviction, cancel the license.

E-Commerce

This is the biggest lacuna that existed in the previous Act as it did not cover e-commerce transactions. While the new Act covers the same not only with the attached Rules but also finds its place in the definition of consumer which now includes any person who buys any goods, whether through offline or online transactions. The Consumer Protection (E-Commerce) Rules, 2020 are mandatory and are not merely advisory in nature. All rules that were earlier only applicable to direct selling will now apply to e-commerce marketplace as well.

Every E-commerce entity is required to provide information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism, payment methods, security of payment methods, charge-back options, etc. including ‘country of origin’ which are necessary for enabling the consumer to make an informed decision at the pre-purchase stage on its platform. Further, the platform will have to acknowledge the receipt of any consumer complaint within 48 hours and redress the complaint within one month from the date of receipt. They will also have to appoint a grievance officer for consumer grievance redressal. Lastly, the Rules prohibit the e-commerce companies from manipulating the price of the goods or services to gain unreasonable profit through unjustified prices.

Mediation

A court can refer settlement through mediation. Alternate Dispute Resolution mechanism of Mediation has been provided in the new Act. This will simplify the adjudication process. A complaint will be referred by a Consumer Commission for mediation, wherever scope for early settlement exists and parties agree for it. Mediation will be held in the Mediation Cells to be established under the aegis of the Consumer Commissions. There will be no appeal against settlement through mediation.

Relaxation in filing fee

As per the Consumer Disputes Redressal Commission Rules, there will be no fee for filing cases up to ₹5 lakh. There are provisions for filing complaints electronically, credit of amount due to unidentifiable consumers to Consumer Welfare Fund (CWF). The State Commissions will furnish information to Central Government on a quarterly basis on vacancies, disposal, pendency of cases and other matters.

Injury to Consumer

In cases where the consumer is injured, the fine to the manufacturer, seller or distributor could be up to Rs 5 lakh along with up to seven years imprisonment. If the case pertains to the death of the consumer, then a minimum fine of Rs 10 lakh and seven years in prison, extendable to life imprisonment, can be imposed.

Misleading advertisements

The new Act poses heavy fines with a possibility of jail term for manufacturers of misleading advertisements. The authority will have the power to impose a penalty of up to Rs 10 lakh and imprisonment for up to two years for a false or misleading advertisement. Though there is no provision for jail for celebrities, they could be banned for endorsing products if it is found to be misleading.

A Plethora of Rules

Besides general rules, there are Central Consumer Protection Council Rules, Consumer Disputes Redressal Commission Rules, Appointment of President & Members in State/District Commission Rules, Mediation Rules, Model Rules and E-Commerce Rules and Consumer Commission Procedure Regulations, Mediation Regulations and Administrative control over State Commission & District Commission Regulations.

Conclusion

The new Consumer Protection Act is directly aimed to provide procedural ease and reduce inconvenience and harassment for the consumers. It has kept up with the latest consumer needs, especially with regard to the e-commerce marketplace and the introduction of product liability provisions. Provisions on misleading advertisements will act as a tough deterrent. Finally, the Act has holistically engaged every aspect of the old Act and more and updated it for a better consumer experience.