New consumer rights law

GOVERNANCE/ SOCIETY

Topic: General Studies 2 

• Mechanisms, laws, institutions and Bodies constituted for the protection and betterment of people 
• Statutory, regulatory and various quasi-judicial bodies. 

New consumer rights law

Context: 

The Consumer Protection Act, 2019 which replaces the Consumer Protection Act, 1986, comes into force on 20th July 2020. 

Did You Know? 

• December 24 is observed as National Consumer Day as the Consumer Protection Act, 1986 received the assent of the President on this day. 

Issues with Consumer Protection Act 1986 

• Not aligned with digital age: It was not equipped to deal with digital-age problems, where e-commerce and direct sellers get away with infractions. 

• Lacked Regulator: It had no regulator to secure consumers’ rights 
• Lacked effective implementation: Large number of pending consumer complaints in consumer courts across the country 

Some of the key provisions of 2019 Act are: 

1. Definition of a Consumer

• 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, and online through electronic means, teleshopping, multi-level marketing or direct selling 

2. Establishment of the Central Consumer Protection Authority (CCPA)

• CCPA will protect, promote and enforce the rights of consumers.  
• The CCPA will regulate cases related to unfair trade practices, misleading advertisements, and violation of consumer rights.  
• The CCPA will have the right to impose a penalty on the violators  
• It can pass orders to recall goods or withdraw services, discontinuation of the unfair trade practices and reimbursement of the price paid by the consumers. 
• It will have an investigation wing to enquire and investigate such violations.  

3. Consumer Rights 

• The right to be protected against the marketing of goods, products or services which are hazardous to life and property; 
• The right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, so as to protect consumers from unfair trade practices 
• The right to be assured, wherever possible, access to a variety of goods, products or services at competitive prices; 

• The right to be heard and to be assured that consumer’s interests will receive due consideration at appropriate fora 
• The right to seek redressal against unfair trade practice or restrictive trade practices or unscrupulous exploitation of consumers; 
• The right to consumer awareness 

The 1986 also had same rights but was limited to goods. But the 2019 act expanded the scope by inclusion of services 

4. Penalties for misleading advertisement: 

• The CCPA may impose a penalty on a manufacturer or an endorser of up to Rs 10 lakh and imprisonment for up to two years for a false or misleading advertisement.  

5. Consumer Disputes Redressal Commission

• CDRCs will be set up at the  

• District level: Complaints where value does not exceed Rs one crore. 
• State Level: Complaints where value is between Rs 1-10 crore 
• National levels: Complaints where value exceeds 10 crore 

• Final appeal will lie before the Supreme Court. 

6. 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 

7. Consumer Friendly

• It is the right of a consumer to sue a company at the place of her residence and not where the company specifies.  
• The consumer can also request attendance/hearings via video conference, which will cut the cost of litigation 

Challenges 

• Without a strong tort law ecosystem, the consumer will likely not get a fair deal.  

• Parts pertaining to separate Consumer Protection Authority for advertisements, rules for e-commerce websites, accountability for celebrity endorsements are yet to be notified.  

Way Forward 

Class action will make a stronger case for the court to impose a pinching penalty on errant firms, which would then perhaps ensure that the consumer is not taken for granted 

Connecting the dots 

• Judicial Backlogs in India and the reasons for it 
• Lok Adalats