India: Consumer Protection Act, 2019: Key Takeaways

The Consumer Protection Act, 1986 is repealed after three decades and replaced by the Consumer Protection Act, 2019. The Consumer Protection Act, 2019 has been enacted with a view to widen the scope of consumer rights and cover the field of e-commerce, direct selling, tele-shopping and other multi levels of marketing in the age of digitization.

The Act came into force on 20^th July 2020. This act aims at revamping the settlement and administration process by imposing stricter penalties. 

Comprehensive Definitions and More Protection to Consumers

Who is a 'Consumer' under the 2019 Act?

As per Section 2(7) of the 2019 Act, consumer is any person who buys goods or avails any service for a consideration and includes any user except for the person who has availed such services or goods for the purpose of resale or commercial use. The explanation to the definition specifically states that the expression "buys any goods" and "hires or avails any services" includes all online transactions conducted through electronic means or direct selling or teleshopping or multi-level marketing. Online transactions is an exclusive feature of this act and added keeping in mind the growing e-commerce business and advancement in technology.

What is an 'Unfair Trade Practice' under the 2019 Act?

Section 2(47) of the Consumer Protection Act, 2019 defines 'unfair trade practice'. The definition of 'unfair trade practice' has been broadened to include practices such as:

1. manufacturing or offering spurious goods for sale or adopting deceptive practices for providing service,
2. not issuing proper cash memo or bill for the services rendered and the good sold,
3. refusing to withdraw, take back or discontinue defective goods and services and refund the consideration taken thereof within the time period stipulated in the bill or within 30 days if there is no such provision in the bill,
4. disclosing personal information of the consumer to any other person not in accordance with the prevailing laws.

The repealed Act of 1986 did not include online misleading advertisements in the definition of unfair trade practice that were added in the 2019 Act.

Concept of Unfair Contract

The 2019 Act has also introduced the concept of unfair contract. 'Unfair Contract' is defined under Section 2(46) and it refers to any contract between a consumer and a manufacturer or service provider or trader whose terms brings about a significant change in the consumer rights under the Act. These terms are namely such as:

1. requirement of excessive security deposits by the consumer in for facilitating the performance of obligations under the contract;
2. imposing penalty for breach of contract on the consumer which is not in proportion with the loss suffered due to such breach;
3. not accepting early debt repayment along with the applicable penalty;
4. allowing one of the parties to terminate the contract without any reasonable cause or unilaterally;
5. entitling one party to assign the contract to the detriment of the consumer and without his consent;
6. imposing unreasonable condition, obligation or charge on the consumer that puts him in a disadvantageous position;

Consumer Rights

Under the Act, consumers have six main rights, which are listed as follows:

• 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, as the case may be, so as to protect the consumer against 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; and
• the right to consumer awareness;¹

Establishment of Central Consumer Protection Authority

Under the Act of 2019, a Central Consumer Protection Authority (CCPA) was established with a view to regulate matters involving violation of consumer rights, misleading or false advertisements, unfair trade practices and enforcement of consumer rights. The Central Government will appoint the members of the CCPA. The authority will consist of a Chief Commissioner along with other such prescribed members.

The 2019 Act specifies the functions of the CCPA and who will appoint its members. However, there is ambiguity as to how the CCPA will perform its functions and what methods will it adopt to achieve its functions. There is also no specification of qualification for the recruitment of the members of the CCPA. Further, the appointment of members of the CCPA by the Central Government will affect the independence of the authority. The consumer may be at a disadvantage in a dispute where the government has provided deficient services.

Penalties for Misleading Advertisement

Misleading and false advertisements is one of the many aspects that were introduced by the 2019 Act. The repealed Act did not deal with the concept of misleading and false advertisements. Misleading advertisement is defined under Section 2(28) of the Act and includes any advertisement, which gives false description of a product or service, gives false guarantee misleading the consumers, conveys express representation constituting unfair trade practice and deliberately not revealing essential information about the product.

Under Section 21(4) of the Act, any person who publishes false and misleading advertisements may be punished with imprisonment or a penalty that may extend up to ten lakh rupees. Further, Section 21 (3) states that the CCPA can prevent the endorser of any such misleading and false advertisements from endorsing any other products or services for a period of one year. The issuer of any misleading advertisements shall also be liable to neutralise the effect of such advertisements.

Product Liability

Product Liability is one of the remarkable and significant steps incorporated in the 2019 Act. An entire chapter under the Act is dedicated to deal with this concept.

A complainant can bring a product liability action against any product manufacturer or service provider or a seller in case any harm is suffered by him due to a defective product or service.  

1. A product manufacturer will be held liable under Section 84 of the Act in case the product has a manufacturing defect, defective in design, does not follow the manufacturing specifications, does not conform to implied warranty and does not contain adequate instructions for proper usage of the product.
2. Section 85 of the Act discusses the liability of the service provider in a product liability action. To be liable under this section, the service provided shall be deficient, faulty, inadequate or imperfect, an act or negligence withholding any information responsible for the harm caused, without adequate warnings and instructions and without conformation to express warranty or contractual terms.
3. A product seller will be liable in a product liability action if there is exercise of substantial control over manufacturing, testing, designing, labelling or packaging of the product. There was substantial alteration or modification responsible for the harm caused. The product seller made express warranty that does not conform to the warranty made by the manufacturer. The product seller failed to take reasonable care in maintaining, assembling or inspecting the product.

Exceptions

There are certain exceptions to product liability action as well. These exceptions are discussed in Section 87 of the 2019 Act. Any consumer who himself misuses, alters or modifies the product and suffers harm as a result, cannot file a product liability claim.² A consumer cannot bring product liability action in case the product manufacturer has given adequate warnings for use of the product, the product purchased was used as a part of another product and the end use caused damage, the product was supposed to be used under an expert's supervision or the product was used under alcohol influence.³ A product manufacturer will not be liable for not warning about any danger that is commonly known or obvious.

Consumer Dispute Redressal Forums

Jurisdiction

1. Territorial Jurisdiction: A complainant can now file a complaint where he resides or works. The repealed Act only allowed the complainant to file a complaint where the opposite party carries out business or resides. This caused a lot of difficulties to the complainants.
2. Pecuniary Jurisdiction: The pecuniary jurisdiction will now be determined on the basis of the consideration paid for the value of goods purchased and services availed, rather than the compensation claimed as per the repealed Act of 1986. The pecuniary jurisdiction limit has also been increased for the various commissions under the 2019 Act. The District Commission will now deal with cases of up to Rs. 1 Crore, up from Rs. 20 lakhs as per the repealed Act. The State Commission's pecuniary jurisdiction limit has been fixed between Rs. 1 Crore to Rs. 10 Crores and the National Commission will deal with cases with pecuniary limit of Rs. 10 Crores or more.

Alternate Dispute Resolution

If it appears to the Consumer Dispute Redressal Forum that the consumer dispute can be settled by way of mediation, it may refer the parties to mediation with their consent.⁴ For the purpose of mediation, the State Government shall establish a consumer mediation cell for each District Commission and State Commission.⁵ The Central Government shall establish a consumer mediation cell attached to the National Commission.⁶ The consumer mediation cell will be responsible for maintaining a list of empanelled mediators, cases handled by the cell, record of proceeding and other information by specified regulations.⁷ The cell also has to submit a quarterly report to the commission it is attached to.⁸

E-Complaints

Section 17 of the Act provides that a complaint regarding unfair trade practice, violation of consumer rights or misleading and false advertisements can be filed in electronic mode also to the District Collector, the Regional Office Commissioner or the Central Authority.

In spite of certain lacunas in the Act, the Consumer Protection Act, 2019 is a positive step towards development and reformation of consumer laws in the country.

Footnotes