The Consumer Protection Bill, 2019 was proposed in the Parliament by Mr. Ram Vilas Paswan, the Minister of Consumer Affairs, Food and Public Distribution. The 2019 bill was enacted by the Lok Sabha on 30th July 2019 and subsequently by the Rajya Sabha on 6th August 2019. The bill was passed in order to amend the 1986 Act i.e. Consumer Protection Act, 1986. On 9th August 2019, the President of India gave his assent to the Consumer Protection Act, 2019 (‘2019 Act’). The 2019 Act was adopted with the intention of ensuring effective and productive regulation and settlement of customer conflicts and relevant matters. In general, the Act’s intent is “to provide for the protection of the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers’ disputes and for matters connected therewith or incidental thereto”.
Instead of bringing an amendment to the 1986 Act, the government introduced a new law itself to offer better security for customers in comparison to existing approaches, taking into account the growing e-commerce sector and emerging ways of distributing products and services such as online sales, teleshopping, direct selling, and multi-level marketing.
This article aims to provide insight into new provisions, analyze the nature, extent, and impact of new provisions and include a comparative overview of some of the main provisions of CPA 2019 vis-à – vis CPA 1986.
Flaws in the 1986 Act
The Consumer Protection Act of 1986 consisted of several major procedural defects which are proposed to be resolved in by the 2019 Law. In order to further boost public protection, the 2019 Act introduces a series of steps and tightens current laws contained in the 1986 Act. The Consumer Protection Act 2019 brings about fundamental changes to the existing 1986 Act; however, it also envisages a Central Consumer Protection Authority and vests power and control in this authority without proposing adequate administrative safeguards.
Salient Features of Consumer Protection Act 2019
Definition of Consumer
The concept of ‘consumer’ has been generalized to involve individuals engaged in offline or online purchases through electronic means or through teleshopping or direct sales or multi-level marketing. A consumer is defined as a person who buys any good for consideration or makes use of a service. It does not involve any individual who obtains a good for commercial purposes for resale or a product or service. This includes purchases across all forms, including offline, and online, through electronic media, teleshopping, multi-level marketing, or direct sales. As per the act; a person is called a consumer who takes advantage of the services and purchases any good for self-use. It does not include anyone obtaining goods or availing services without consideration.
Section 2 (7) of the Act, defines Consumer as follows:
- buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person but does not include a person who obtains such goods for resale or for any commercial purpose; or
- hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such service other than the person who hires or avails of the services for the consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first-mentioned person, but does not include a person who avails of such service for any commercial purpose.
‘Telecom’ has been added to the definition of ‘services’ to bring telecom service providers within the purview of the 2019 Act. But surprisingly, such inclusion has not been worded as ‘telecommunication service’ defined under the Telecom Regulatory Authority of India Act, which would have included internet, cellular, and data services.
Rights of consumers
Six consumer rights have been defined in the Act, including the right to:
- To be secured from the selling of life and property-threatening goods, products or services;
- To be notified, as required, of nature, quantity, efficacy, consistency, value, and price of goods, products or services, so as to protect the customer from unfair trading practices;
- To be assured exposure to a range of commodities, products or services at fair rates whenever possible;
- To be recognized and to be assured that the concerns of customers would be provided due consideration at sufficient forum;
- And pursue relief from unfair commercial practices or unreasonable trading policies or the unscrupulous exploitation of consumers; and
- To consumer awareness
Central Consumer Protection Authority
The CCPA shall conduct the following duties which include:
- investigating and pursuing infringements of consumer rights at the required forum;
- issuing orders for recall or removal of dangerous products, a refund of the price charged and discontinuation of deceptive trade practices as specified in the Bill;
- issuing guidance to the individual concerned;
- imposing penalties, and;
- issuing safety notices to consumers against unsafe goods and services.
E-commerce was described as the buying or selling of goods or services through the internet or electronic network, including digital items. The central government has been allowed to take steps and draft guidelines to discourage discriminatory e-commerce activities. In the case of goods being offered by internet portals, the availability of services requires to be ascertained without paying any fees separately. Whether off-shore e-commerce would also be covered and eventual enforcement of CPA 2019 qua these entities is not clear.
The new Act empowers the central government to make laws, to take appropriate steps to discourage unfair trading practices and to protect customers’ privileges and interests.
Grounds to File Complaints
Although the CPA 1986 regulations specified six main grounds for filing complaints, the CPA 2019 expanded the count to seven, and also significantly altered one of the current grounds for filing complaints as provided for in Section 2(c)(i) of CPA 1986. These include:
- Introduction of Unfair Contracts & expansion of Unfair Trade Practices – Under previous law, a complaint should only be filed where any dealer or service supplier has adopted an unreasonable trading practice or a discriminatory trading practice. Now “unfair contract” has also been added which further expands the ground for complaints and allows consumers to challenge unfair, unilateral, and unreasonable contracts.
- While CPA 1986 had listed six types of unfair trade practices, three types of additional unfair trade practices have now been added to the 2019 Act, which includes:
- failure or non-issuance of a bill or a cash memo;
- refusal to take back or withdraw defective goods or withdrawal or discontinuance of deficient services or refusal to refund the consideration amount paid within the period as stipulated in the bill or cash memo or receipt or in the absence of such stipulation, refusal to withdraw or refund goods or services within thirty (30) days;
- disclosure of consumer’s personal information to any other person unless such disclosure is made in accordance with the provisions of any law for the time being in force or in the public interest.
This is major and important incorporation of the Act. The New Act stipulates stringent legal requirements on traders. A product manufacturer, product service provider, and product retailer may be held responsible for any harm done by a faulty product made by the supplier, serviced by the service provider, or sold by the product seller, as the case may be. The extent of their liability is collectively specified under section 84, section 85 and section 86 of the New Act. The chapter, dealing with product liability, applies to any claim for compensation under a complainant’s product liability action for any harm caused by a defective product manufactured by a product manufacturer or served by a product service provider or sold by a product seller.
Product liability means a product manufacturer, service provider, or seller’s obligation for compensating a customer for any damage or accident incurred by a damaged item or defective service. To claim liability, a customer must show all of the fault or malfunction factors, as laid forth to the Act.
Section 2 (34) of the Act, defines “product liability” as the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by a deficiency in services relating thereto. Whereas section 2 (35) of the Act defines “product liability action” as a complaint filed by a person before a District Commission or State Commission or National Commission, as the case may be, for claiming compensation for the harm caused to him.
Consumer Disputes Redressal Commission
The New Act empowers the respective governments to establish a National Commission for the Redress of Consumer Disputes, a State Commission for the Redress of Consumer Disputes, and a District Consumer Disputes Redressal Commission. The role of these commissions formed under the New Act is equivalent to that of the commissions set up under the Old Act. They have the authority to handle concerns from customers about certain products or services. The New Act also grants the SCDRC and the NCDRC, an authority to consider grievances about unfair contracts.
A consumer can file a complaint with CDRCs in relation to:
- unfair or restrictive trade practices;
- defective goods or services;
- overcharging or deceptive charging;
- the offering of goods or services for sale which may be hazardous to life and safety.
Nevertheless, the pecuniary authority, i.e. the monetary value of the grievances which can be pursued has been considerably expanded for each of these commissions to minimize the pressure on the State and National Commissions by allowing customers to approach the District Commission for grievances worth up to Rupees 1 Crore.
The 2019 Act provides the right of judicial review, which will require Consumer Commissions to reconsider their decisions, thus reducing the pressure imposed by chosen petitions to rectify obvious irregularities in front of the record. In sharp contrast to the 1986 Act, it is now necessary to make appeals from the State Commission to the National Commission even if they raise serious legal issues. The National Commission’s challenges to the Supreme Court can only be made against allegations that arise within the National Commission. In addition, to reinforce the noose on the early submission of appeals, the timeframe for preferred appeals has also now been rendered stricter. Complaints against an unfair contract can be filed with only the State and National Appeals from a District CDRC will be heard by the State CDRC. Appeals from the State CDRC will be heard by the National CDRC. The final appeal will lie before the Supreme Court.
Penalties for false or misleading advertisements
CCPA also is allowed to take measures against inaccurate or deceptive advertising. For each subsequent breach, CCPA will levy a penalty of up to INR1 million and up to INR 5 million. It is important to note that such penalties can be imposed on endorsers too, thereby bringing actors/actresses in the scope of penalty. Nevertheless, if he/she specifies that they conducted due diligence to validate the veracity of the statements before accepting the same, the endorser will be protected from any liability. Therefore, before signing up for any ads, endorsers/actors/celebrities would always have to perform a comprehensive due diligence/research.
The CPA 2019 also provides for the settlement of disputes by way of mediation in case there is a likelihood of compromise at the acceptance point of the complaint or at some further date, provided the parties consent. For accelerated settlement, a mediation cell would be attached to each city, state, and national commission and its regional benches.
Comparative Analysis of 1986 Act and 2019 Act
While judicial pronouncements have been issued bringing the purchases made through online methods within the consumer ambit. The 2019 Act specifically protects customers from purchasing products or services digitally. The act has since made endorsers responsible for fraudulent or deceptive ads in relation to the incorporation of internet sales. In the 1986 Act, it was just the suppliers and the service providers that were liable for this. Under section 21(2) of the 2019 Act, even after obtaining a notice from the customer, the commission may impose a fine of fifty lakhs if the endorser continues to advertise false information about the products.
Under the act, disclosure of personal information given during the transaction is also considered an offense. The Act also proposes product liability provision whereby the manufacturer must not only compensate for the defective goods but must also compensate for any loss or injury caused to the complainant by the defect. For example, if a bike is sold to you and the break is loose, resulting in an accident, the manufacturer must compensate for the defect and also compensate you for the accident that you faced due to the defect.
The Act also proposes the establishment of an independent regulator, the Central Authority for Consumer Protection (CCPA). Although this body does not respond to customer complaints or resolve lawsuits, it will take regulatory action to counter unfair trading practices, etc.
|Consumer Protection Act of 1986||Consumer Protection Act of 2019|
|1. No separate regulator||1. CCPA to be formed to consider grievance on unfair contracts.|
|2. All goods and services for consideration, while free and personal services are excluded.||2. All goods and services, including telecom and housing construction, and all modes of transactions (online, teleshopping, etc.) for consideration. Free and personal services are excluded.|
|3. Includes six types of such practices, like false representation, misleading advertisements||3. The 2019 Act adds three types of practices to the list, namely: failure to issue a bill or receipt; refusal to accept a good returned within 30 days; and disclosure of personal information given in confidence, unless required by law or in the public interest. Contests/ lotteries may be notified as not falling under the ambit of unfair trade practices.|
|4. No Provision for product liability.||4. Claim for product liability can be made against a manufacturer, service provider, and seller. Compensation can be obtained by proving one of the several specified conditions in the Act.|
|5. No Provision for Alternate dispute redressal mechanism||5. Mediation cells will be attached to the District, State, and National Commissions.|
|6. No Provision for E-commerce||6. E-commerce defines direct selling, e-commerce, and electronic service providers. The central government may prescribe rules for preventing unfair trade practices in e-commerce and direct selling.|
|7. Central Protection Councils promote and protect the rights of consumers. They are established at the district, state, and at the national level.||7. The 2019 Act makes CPCs advisory bodies for promotion and protection of consumer rights. Establishes CPCs at the District, State, and National levels.|
|8. No Provision for unfair contracts||8. Unfair contracts are defines as contracts that cause a significant change in consumer rights. Lists six contract terms that may be held as unfair.|
Consumer Protection Act 2019 has incorporated some improvements to the previous CPA 1986. CPA 2019 broadened the reach of India’s consumer protection regime. The amendments introduced vide CPA 2019 tend to further motivate customers by exploiting liabilities not just on their peers, i.e., retailers, suppliers, service providers, but also on certain endorsers of these items. It also attempts to address issues that CPA 1986 did not fully address, such as consumer interests as a class, etc. The new Act focuses on topics such as mediation and e-commerce that were not open to the world in 1986. It was also necessary to amend the act as digitalization transformed the manner in which a customer performs electronic purchases and shopping mode has moved from offline to online. The 2019 Act definitely marks a significant step in improving, expanding, and strengthening consumer protection.
CPA 2019 has aimed to simplify and fasten the customer dispute resolution process by growing the commissions’ pecuniary authority, adding mediation cells, raising commission members, imposing higher fines, etc.
This article was written and submitted by Shashi Anand Choudhary. Mr. Shashi is a corporate attorney based in Pune, Maharashtra.