Summary: The Consumer Protection Act, 2019, effective from July 20, 2020, replaced the 1986 Act, introducing significant changes to consumer rights and dispute resolution. It broadens the definition of “consumer” to include online transactions and direct selling, and expands “unfair trade practices” to cover non-issuance of bills and refusal to take back defective goods. The Act defines “consumer rights,” “goods” (including food), “e-commerce,” and introduces “unfair contracts” to protect consumers from unreasonable terms. A key feature is the establishment of the Central Consumer Protection Authority (CCPA) to regulate unfair practices, misleading ads, and enforce consumer rights. The Act also allows complaints to be filed at the consumer’s place of residence or work, and permits video conferencing for hearings. The pecuniary jurisdiction of consumer commissions at district, state, and central levels has been enhanced. The introduction of product liability allows consumers to seek compensation from manufacturers, service providers, or sellers for harm caused by defective products or services. Finally, the Act imposes penalties on manufacturers, endorsers, advertisers, and publishers for misleading advertisements, with the CCPA having the authority to levy fines and prohibit endorsements.
Introduction: The Consumer Protection Act, 2019 (“the New Act”) received accent from the President on 9th August 2019. The New Act, when enforced will replace a more than 3 decade’s old act, The Consumer Protection Act, 1986 (“the Old Act”). As per the notification dated 15.07.2020, the following provisions shall come into force w.e.f. 20.07.2020:
| Chapter | Sections |
| I | Section 2 [Except clauses (4), (13), (14), (16), (40)] |
| II | Sections 3 to 9 (both inclusive) |
| IV | Sections 28 to 73 (both inclusive)
[Except sub-clause (iv) of clause (a) of sub-section (1) of section 58.] |
| V | Sections 74 to 81 (both inclusive) |
| VI | Sections 82 to 87 (both inclusive) |
| VII | Sections 90 and 91; [Except sections 88,89,92 & 93] |
| VIII | Sections 95, 98, 100,
-Section101 [Except clauses (f) to (m) and clauses (zg), (zh) and (zi) of sub –section 2 ]. -Sections 102, 103, 105, 106, 107 [ Except sections 94, 96,97,99, 104] |
The major changes brought by the New Act are:
Changes in definitions and introduction of new definitions –
Broadening the definition of ‘consumer’- An explanation has been inserted under definition of term ‘consumer’ in the New Act which states that terms “buys any goods” or “hires or avails any services” also includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing. This means that Consumer is a person who buys any goods or hires or avails any service through offline or online transactions including electronic means or by teleshopping or direct selling or multi-level marketing. This will provide remedy to the consumers against the middle level sellers in addition to the manufacturers of goods or service providers.
Expansion of the definition of ‘unfair trade practice’- The definition in New Act has included following as unfair trade practice – (i) not issuing of cash memo or bills or receipts of the sold goods or services in the prescribed manner; (ii) refusing to exchange, to take back or withdraw any defective goods or services and return the consideration thereof, within the time specified in the receipt or bill or within a period of 30 days, in absence of stipulated time in the bill or receipt; (iii) disclosing of any personal information of the consumer given in confidence to any third person unless the same is done as per the provisions of any law for the time being in force.
Definition of ‘consumer rights’- The definition of consumer rights includes – (i) the right to be protected against the marketing of goods, products or services which are hazardous to life and property; (ii) 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; (iii) the right to be assured, wherever possible, access to a variety of goods, products or services at competitive prices; (iv) the right to be heard and to be assured that consumer’s interests will receive due consideration at appropriate fora; (v) the right to seek redressal against unfair trade practice or restrictive trade practices or unscrupulous exploitation of consumers; and (vi) the right to consumer awareness.
Definition of ‘goods’ – The definition of goods covers every kind of movable property and includes ‘food’ as defined under Food and Standards Act, 2006. Under the Old Act, goods had the same meaning as defined under the Sales of Goods Act and did not covered ‘food’.
Definition of ‘e-commerce’ –It includes buying and selling of goods or services including digital products over digital or electronic network. Any goods purchased or services availed by usage of electronic means shall come under the purview of this act.
Definition of ‘unfair contracts’ – The term is defined as a contract between a manufacturer or trader or service provider on one hand, and a consumer on the other, having such terms which cause significant change in the rights of such consumer, including the following, namely:— (i) requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations; or (ii) imposing any penalty on the consumer, for the breach of contract thereof which is wholly disproportionate to the loss occurred due to such breach to the other party to the contract; or (iii) refusing to accept early repayment of debts on payment of applicable penalty; or (iv) entitling a party to the contract to terminate such contract unilaterally, without reasonable cause; or (v) permitting or has the effect of permitting one party to assign the contract to the detriment of the other party who is a consumer, without his consent; or (vi) imposing on the consumer any unreasonable charge, obligation or condition which puts such consumer to disadvantage. Under Old law, complaints can only be filed if there was any unfair or restrictive trade practice adopted by manufacturer or the service provider but under New Act, the consumers can protect themselves from unfair, unreasonable and unilateral contracts of manufacturers or service providers.
Establishment of Central Consumer Protection Authority (‘CCPA’) –
The New Act requires the Central Government to establishment, by notification, a CCPA to be called “Central Authority”, with an objective of regulating the matters related to volition of consumer rights, false and misleading advertisements, unfair trade practices, which are detrimental to the interest of general public and to protect, promote and enforce the consumer rights as a class.
The qualifications and procedure of appointment of the officials of the authority and remuneration thereof shall be as prescribed by the central government from time to time. An investigation wing should be created as a part of CCPA for conducting inquiries and investigation as per the provisions of New Act. CCPA may conduct a preliminary inquiry on its own or after receiving a complaint or any information regarding violations of provisions of the New Act.
The provisions of New Act also gives a power to a District Collector to inquire or investigate complaints regarding violations of consumer rights or matters related to any unfair trade practices or misleading advertisements, and more on a reference made by Central Authority or on receiving a compliant, in this respect.
Major functions of Central Authority are:
- inquiring into violations of consumer rights, investigating and launching prosecution at the appropriate forum;
- passing orders to recall goods or withdraw services that are hazardous, reimbursement of the price paid, and discontinuation of the unfair trade practices, as defined under the relevant provisions of New Act;
- issuance of directions to the concerned trader/ manufacturer/ endorser/ advertiser/ publisher to either discontinue a false or misleading advertisement, or modify it;
- imposition of penalties, and;
- issuance of safety notices to consumers against unsafe goods and services and guidelines to prevent unfair trade practices;
- spread and promote awareness and research on consumer rights and;
- recommend adoption of international covenants and best international practices on consumer rights to ensure effective enforcement of consumer rights.
Filing of Complaints to Authorities –
Under Old Act, the consumer was required to make a complaint to the jurisdictional consumer forum that was located at the place of registered office of the seller or at the place of purchase of goods.
Provisions of New Act allows the consumer to file a complaint with the jurisdictional consumer forum located at the place or work or residence of the consumer. It further provides that the complaint can either be filed in writing or by electronic means and the hearings through video conferencing can also be allowed on making an application for the same.
Enhancement of Pecuniary Jurisdiction –
Redressal commissions established by the government at district, state and central level are responsible to entertain the complaints made by aggrieved customer and providing them proper redressal. New Act has increased the pecuniary jurisdiction of these commissions.
| Commission | Old Act – Could entertain complaints where the value of goods or services paid as consideration | New Act- Can entertain complaints where the value of goods or services paid as consideration |
| District | Does not exceed 2,500,000 INR | Does not exceed 10,000,000 INR |
| State | Above 2,500,000 INR but does not exceed 10,000,000 INR | Above 10,000,000 INR but does not exceed 100,000,000 INR |
| Central | Above 10,000,000 INR | Above 100,000,000 INR |
Establishment of Consumer Mediation Cell–
The New Act have open ways to resolve the complaints filed under the act by way of mediation if the same can be settled both at the time of admission of complaint or any later stage, if the same is acceptable to both the parties. A mediation cell is required to be attached to each district, state and central commission and their regional benches for timely and quick resolutions of consumer complains.
Introduction of Product Liability–
Under Old Act, there were no provisions regarding product liability claims. However, under new act, a consumer can file a complaint against product service provider or product manufacturer or a product seller and claim compensation if any harm is caused to him on account of the defective product or service sold to him.
The product manufacturer can be held liable if:
1.Manufacturing defect in the product;
2.Defect in design of product;
3.Deviation from manufacturing specifications;
4.Product does not confirm to the express warranty; or
5.When product fails to provide adequate usage instructions or provides inadequate instructions to prevent any harm or warning regarding incorrect usage.
The product service provider can be held liable if:
1.The service provided was imperfect, faulty or inadequate in quality as required to be provided under any law for the time being in force;
2.There was an act of omission or negligence or conscious withholding of any information casing harm;
3.The service does not confirm to express warranty; or
4.The service provider fails to provide adequate instructions or warnings to prevent harm.
The product seller can be held liable if:
1.Exercise of extensive control over designing, packaging, or labelling the product that results in causing harm;
2Alteration or modification of the product which results in causing harm;
3.Failure in confirming the express warranty, independent of any express warranty made by the manufacturer, resulting in causing harm;
4.The product has been sold by him and the identity of product manufacturer of such product is not known, or if known, the service of notice or process or warrant cannot be effected on him or he is not subject to the law which is in force in India or the order, if any, passed or to be passed cannot be enforced against him; or
5.Failure in exercising reasonable care in assembling, inspecting or maintaining such product or passing on the warnings or instructions of the product manufacturer regarding the dangers involved or proper usage of the product while selling such product and such failure resulting in harm.
However, it should be noted that product liability claim cannot be raise against product seller if the harm is caused because of misusing, altering or modification of the product at the part of the consumer.
Penalties for Misleading Advertisements –
CCPA is being authorized to impose penalty on a manufacturer or endorser or advertiser or publisher, if it is satisfied that any advertisement is false or misleading. The penalty imposed on the manufacturer or endorser of such false or misleading advertisements can be up to INR 1,000,000, which may exceed to INR 5,000,000 for every subsequent contravention.
CCPA can also prohibit the endorser from making endorsements of other products or services for a period of up to 1 year which may extend to 3 years, for every subsequent offence. The endorser can defend himself by proving that due diligence to verify the veracity of the claims made in the advisement was exercised by him.
Similarly, penalty which may extend to INR 1,000,000 may be imposed on a person who publishes or is a party to the publication of any false or misleading advertisement. The publisher can protect himself from the liability by proving that such publication was arranged in the ordinary course of his business, however, this defence could not be used if he had previous knowledge of the order passed by the CCPA for withdrawal or modification of such advertisement.
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