Key Changes – (new) Consumer Protection Act, 2019
Why the new Consumer Protection Act, 2019?
The Indian market has undergone drastic changes in past few decades with the advent of digital technologies, development of E-commerce, smartphones etc. but the old Consumer Protection Act, 1986 being a 33 years old consumer protection legislation had become obsolete and redundant to cover these emerging complexities in the market. In the light of this situation the Parliament had passed the Consumer Protection Act 2019 which has received the assent of the President on 9th August 2019. As such the new Act has repealed the old Consumer Protection Act, 1986.
This Consumer Protection Act 2019 is socio-economic legislation whose objective is to protect and promote the interests of consumers and establishing authorities for expeditious administration and settlement of consumer disputes. It has introduced myriad of provisions in this regard and is expected to benefit consumers in numerous ways.
The Key Changes are:-
- Covering E-Commerce Transactions
Before this there was no clear and express law to protect the interests of the consumers to cover their online purchases. Even the old Consumer Protection Act, 1986 did not specifically had any provisions to cover online transactions, although purchasing through online platforms was in practice for a pretty long time and has been legally recognized by The Information Technology Act, 2000. As such the economic interest of online consumers was being adversely affected. Consumers had complained of getting products which are counterfeit, lacks desired quality, late delivery etc. In Loreal v. Brandworld & Anr., CS (OS) 3127/2014, it was held by the Delhi High Court that counterfeit Loreal products were being sold by the online platform Shopclues.com. As per UNCTAD, only 52% countries in the world have online consumer protection legislation.
The new Act has overcome this by covering buying of goods, hiring or availing of any services via any electronic mode, teleshopping, direct selling or even multi-level marketing, thus widening the definition of consumer under section 2(7) of the Act as anyone who buys goods or hires services by these means is a consumer under the Act. Any purchase by these channels is amenable to the provisions of the Act and a complaint in re the same can be filed if the grounds provided in the Act exists. Expressly encompassing transaction through e- platforms in this digital era will be instrumental in addressing contentions arising out of online purchases and extending the protection law to the consumers online.
- Establishment of Central Consumer Protection Authority –
Now a regulatory body known as Central Consumer Protection Authority, or Central Authority has been established under the new Act under Section 10 to protect, promote and enforce the rights of consumers as a class and to regulate matters related to violation of consumer rights, false and misleading advertisements and unfair trade practices which are prejudicial to consumer interests. The Central Authority will conduct investigation into any of these matters on the basis of complaint alleging any such act. The central Authority can also initiate an investigation Suo Motto or on the directions of Central Government as well.
For the purpose of investigation the Central Authority will have an “Investigation Wing” headed by Director-General. If after investigation the Central Authority is satisfied on the basis of the evidence that the alleged acts have been prima facie committed it can pass appropriate orders under section 20 and 21 of the Act which inter alia includes order to recall of goods, reimbursement of price, discontinuation of practice, or discontinuance of such advertisement etc. The party aggrieved by the orders of the Central Authority can make an appeal against such order under section 24 in the National Commission within 30 days from the date of receipt of such order. The Central Authority will provide a fast track alternative so that justice reaches the consumer immediately as earlier the only remedy was to approach Consumer Forums. Also, it will alleviate the burden on Consumer forums and assist them in disposing pending cases effectively.
- Mediation
The preamble of the Act provides for “Timely” and “Effective” settlement of Consumer disputes. However as per of NCDRC there at present more than 488009 cases pending collectively in all consumer forums. This indicates that the actual position is far away from the desired objective. The supreme court in Bijoy Sinha Roy v. Biswanath Das and Ors has held that to achieve the objectives of the Consumer Protection Act there is need for devising mechanism for speedy trial and to adopt an Alternative Dispute Resolution Mechanism.
The new CPA, 2019 has adopted an Alternative Dispute Resolution Mechanism by providing for mediation in consumer dispute settlement. Chapter V of the Act deals with the Mediation process. The Mediation process is new to Consumer Protection law in India thereby incorporating speedy access to justice.
Section 74 provides that the Central and the State government shall set up mediation cells in National, State and District Commissions where the mediation will take place. The Consumer Dispute Redressal Commissions by the virtue of section 37, 49, and 59 of the Act can refer any matter to mediation at any stage on the concurrence of both the parties if there exists an element of settlement. This will certainly lead to swift disposal of cases and foster the dispute redressal process.
- Product Liability
CPA, 2019 has incorporated the concept Product liability. It is defined under section 2(34) of the Act as the responsibility of the “Product manufacturer” or “Product Seller” or “Product Service Provider” to compensate for any harm or injury caused to the consumer by any defective product sold or manufactured or any deficiency in service.
It has been observed that e-platforms generally takes the plea that they are mere intermediary between the buyer and the actual seller and serves as a platform between the buyer and the selling company.
Chapter VI of the Act contains the provisions dealing with Product liability. If a consumer has suffered any harm or injury attributed to defective product or deficient service, he can file a complaint for product liability action against the product manufacturer or product service provider or product seller, as the case may be. The specific grounds regarding the same are given under section 84, 85 and 86 respectively It makes the product seller responsible even if he has not himself manufactured the defective product. This will allow the consumer to file claims against e-commerce platforms who merely acts as a selling platform.
Section 2(6)(vii) of the Act has specifically provided that a claim for product liability action can be the ground for filing of complaint. As per section 82(2) of the Act a product manufacturer can be held liable in a product liability action even if it is proved that he was not negligent or fraudulent in making the express warranty of a product.
Countries like USA, China, Japan, Australia also have laws for product liability action.
- Unfair Trade Practices
The purview of unfair trade practices has also been expanded by adding clause vii, viii & ix in section 2(47) of the Consumer Protection Act 2019. Consequently, non-issuance of bill or receipt for goods sold and services provided to the consumer or any refusal to withdraw deficient services, refusal to take back any defective product and returning the consideration paid for such goods or services, disclosing any personal information of the consumer to any person other than consumer himself, making any false statement regarding the product by electronic means will amount to unfair trade practice and is a ground for filing a complaint.
Classifying these activities as unfair trade practices will definitely act as a bulwark and protect consumers from exploitation and will deter the sellers from endeavor such undesirable actions in an avarice of reaping profit.
- Penalties For Misleading Advertisements
Misleading advertisements characterize the quality, quantity, character or substance and so forth. of a product or service falsely in order to influence the buyer’s choice. In India regardless of varied regulatory bodies like ASCI, TRAI, IRDA etc. there has not been any substantial control on these advertisements. These commercials are sometimes endorsed by celebrities having a profound influence on consumer’s financial behaviour.
The Act has launched penalties for the advertisement which are false or misleading under section 21 of the Act. If any advertisement is discovered as false or misleading the same could be ordered to be discontinued, in addition to this, a penalty upto 10 lakh rupees may be imposed on manufacturer or endorser and such penalty can go upto 50 lakh rupees on subsequent contraventions. The endorser of false or deceptive advertisement could also be prohibited from endorsing any product for a period upto 1 year. This Act is first of its type which imposes legal responsibility on the endorser also. These provisions will have knock on effect on use of false or misleading advertisements.
- Pecuniary Jurisdiction of Consumer Forums
The Act has augmented the pecuniary jurisdiction Consumer forums. District Commission under section 34(1) of the Act can now entertain cases where the value of goods and services does not exceed 1 crore rupees. State Commission under section 47(1) where the value of goods and services exceeds 1 crore rupees but does not exceed rupees 10 crores and National Commission under section 58(1) where the value of goods and services paid as consideration exceeds rupees ten crores.
This has increased consumer’s convenience as under the precursory law this limit was 25 lakh, 1 crore and above 1 crore for District, State and National commission respectively.
For assessing this value the amount actually paid by the consumer as consideration will be taken into account and not the price of such goods or services. Also, the Act has provided a massive relief as the complaint can now be filed even at the place of residence of the complainant under section 34(1)(d) of the Act. Earlier the complaint could be filed only where the cause of action arose or where the opposite party resides.
- Admissibility of Complaint
The Act provides that if any complaint is filed in any consumer forum, such complaint shall either be admitted or rejected within 21 days from the date of filing of a complaint, however, if such complaint is neither accepted nor rejected within this specified time, it will be deemed to have been admitted.
The Act has also eased the filing of the complaint by providing for e-filing of complaints this will make the filing process more convenient and consumer-friendly for this purpose government has also launched a mobile app known as “ Consumer App” where a consumer can file his complaint which will be disposed in the maximum 60 days.