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Overview Of The New Consumer Protection Act 2019

History
In India, Despite the presence of plethora of laws to check the supply of poor-quality products, check overcharging and pursuing the industry and trade to take care of the consumers much could not be accomplished.

The origin of consumer movement can be rooted to the Landmark case Carlill V. Carbolic smoke ball company[1] where for the first time the minimum quality standards for the product was established, and to be taken care by the manufacturer to protect the consumer.

Later in 1932, another landmark case of Donoghue V. Stevenson[2], the manufacturer was held liable for the injury caused to the consumer which was a great deal in the era with a limited approach to the Consumer rights. The manufacturer owned a reasonable care towards the product was the main highlight stated in this case.

In 1986 the Consumer Protection Act (Hereinafter called CPA, 1986) was passed to provide for the better protection of the interest of consumers and for that purpose to make provisions for the development of consumer's councils and other authorities for the settlement of the dis­putes and issues of consumers.

The CPA,1986 provides for speedy and easy remedy to consumers under a three-tier quasi-judicial redressal agency at the District, State and National levels. The CPA,1986 has been amended from time to time to extend its coverage and scope and to strengthen the powers of the redressal machinery.

Thus the basic aim of the Act are to provide better protection to consumers, and to establish suitable machinery specially consumer councils to settle disputes. As the Act could not fully protect consumers after seven years in force the Act was thoroughly revised in 1993 which became effective from 18th June 1993. The most important change was to protect consumers
of services.

Consumer Protection Act, 2019

The Consumer Protection Act, 2019 (Hereinafter called the new act) is basically a call for the digital friendly consumers and highly digitalized population.

This Digitisation has provided simpler access, a large variety of choice, convenient payment mechanisms, improved services and shopping as per convenience. However, along the growth path it also created some challenges for consumer and thus, consumers were required to be protected.

Keeping this in mind and to address the new set of challenges faced by consumers in the phase of digitalisation, the Indian Parliament, on 6 August 2019, passed the landmark Consumer Protection Bill, 2019 which aims to provide the speedy and effective administration and settlement of consumer disputes. The New Act received the assent of the President of India and 9th August 2019 it was published in the gazette. The New Act has come into force from 20th July 2020. The New Act seeks to replace the more than 3 (three) decades old CPA, 1986.

Major Changes done in the New Act:

  • Wider Definition of a Consumer:

    The New Act has expanded the definition of 'consumer'. The definition now includes any person who buys any goods, whether through any mode of offline or online transactions, electronic means, teleshopping, direct selling or multi-level marketing. The previous Act did not included e-commerce transactions, and this lacuna has been addressed by the New Act.
     
  • Development of Central Consumer Protection Authority:

    The New Act provides for the establishment of a regulatory authority known as the Central Consumer Protection Authority (CCPA). The CCPA has been granted wide powers of enforcement like to take suo-moto actions, recall products, order reimbursement of the price of goods/services, cancel licenses and file class action suits, if a consumer complaint affects a group of people.
     
  • E-Filing of Complaints:

    The New Act provides flexibility to the consumer to file complaints with the jurisdictional consumer forum either located at the place of residence or work of the consumer. This is not the same as the current practice of filing the complaints at the place of purchase or where the seller has its registered office address. The New Act also has enabling provisions for consumers to file complaints electronically and for hearing and/or examining parties through video-conferencing. This is intended to reduce inconvenience and harassment faced by the consumers.
     
  • Product Liability & Penal Consequences:

    The New Act has introduced the concept of product liability and brings within its scope, the product manufacturer, product service provider and product seller, for any claim for compensation. The term 'product seller' is defined to incorporate a person who is involved in placing the product for a commercial purpose and as such would include e-commerce platforms as well.

    The e-commerce platforms cannot take the defense that they merely act as 'platforms' or 'aggregators' will not be accepted. The liability risks have increased for the manufacturers as compared to product service providers and product sellers, considering that under the New Act, manufacturers will be liable in product liability action even where he shows that he was not negligent or fraudulent in making the express warranty of a product. There exist certain exceptions which have been provided under the New Act from liability claims, such as, that the product seller will not be liable where the product has been modified, altered or misused.
     
  • Enhancement of Pecuniary Jurisdiction:

    Revision in pecuniary limits have been made under the New Act and are as follows:
    1. The district forum can now get consumer complaints where the value of goods or services in question does not exceed the value of INR 1,00,00,000 (One Crore).
    2. The State Commission can get disputes where such value is above INR 1,00,00,000 (One crore) to INR 10,00,00,000 (Ten Crores) and
    3. The National Commission can exercise its jurisdiction where such value of goods and services in question is above INR 10,00,00,000 (Ten Crore).

       
  • Unfair Trade Practices:

    The New Act introduces a specific wider definition of Unfair Trade Practices, which also includes sharing of personal information given by the consumer in confidence, unless such disclosure is made in conformity with the provisions of any other existing law.
     
  • Punishments for Misleading Advertisement:

    The CCPA may impose a penalty of up to INR 10,00,000 (Ten Lakhs) on a manufacturer or an endorser, for a false or misleading advertisement. The CCPA may also sentence them to imprisonment for up to 2 (two) years for the same. In case of a subsequent offence, the fine may extend to INR 50,00,000 (Fifty Lakhs) and imprisonment of up to 5 (five) years. The CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to 1 (one) year. For every subsequent offence, the period of prohibition may extend to 3 (three) years.

    The New Act fixes liability on endorsers considering that there have been numerous instances in the recent past where consumers have fallen prey to unfair trade practices under the influence of celebrities acting as brand ambassadors. In such cases, it becomes important for the endorser to take the onus and exercise due diligence to verify the veracity of the claims made in the advertisement to refute liability claims.
     
  • Inclusion of Alternate Dispute Resolution Mechanisms:

    The New Act provides for mediation as an Alternate Dispute Resolution mechanism, making the process of dispute adjudication simpler and quicker. This will help with the speedier resolution of disputes and reduce pressure on consumer courts, who already have numerous cases pending before them.

With the New Act all set to become the law, gone are the days, where the consumer was asked to beware. A consumer is now the one who assumes to be treated like a King. Hence, it is important for consumer driven businesses (such as, retail, e-commerce) to be mindful of the changes in the legal landscape and have robust policies dealing with consumer redressal in place. Consumer driven businesses must also strive to take extra precautions against unfair trade practices and unethical business practices.

Conclusion
Earlier in CPA, 1986 a single point access to justice was given, which is also time consuming. The new act has been brought into action after many amendments to give protection to buyers not only from traditional sellers but also from all the e-commerce sellers or platforms. Hence, the New Act is a welfare legislation that ultimately benefits all the consumers of India.
As noted above, New Act has made several changes to the erstwhile CPA, 1986.

New Act has widened the reach of consumer protection regime in India. The amendments made in New Act seem to further empower consumers by leveraging responsibilities not only on their counterparts, i.e., the sellers, manufacturers, service providers, but also the endorsers of such products. It also addresses the problems that were not comprehensively looked upon by CPA 1986 like interests of consumers as a class, etc.

New Act has also attempted to ease and simplify the process of consumer disputes resolution by increasing the pecuniary jurisdiction of the commissions, attaching mediation cells, increasing the members of the commissions, imposing higher penalties etc.

The Outcomes of New Act cannot be precisely gauged beforehand, as many new concepts have been introduced. However, what can definitely be said is that everyone involved in a transaction, other than the consumer, will have to be more careful and cautious than ever before.

End-Notes:
  1. 1893 (1) Q.B.256
  2. (1932) A.C.562

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