Consumer Protection Act 2019- An Overview

Many people want the Government to protect the consumer. A much more urgent problem is to protect the consumer from the Government” 

The Consumer Protection Act, 2019 (‘New Act’) received the assent of the President of India and was published in the official gazette on 9th August 2019. This New Act will replace the old Consumer Protection Act, 1986 (‘Old Act’). In exercise of the powers conferred by sub-section (3) of section 1 of the New Act, MINISTRY OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION (Department of Consumer Affairs) has issued a Notification No. S.O. 2351(E) dated 15th July 2020 (‘the Said Notification’) whereby the Central Government has appointed the 20th day of July, 2020 as the date on which various provisions of the said Act shall come into force. 

Introduction to Consumer Protection Act, 2019

The Consumer Protection Act, 2019 (‘New Act’) received the assent of the President of India and was published in the official gazette on 9th August 2019. This New Act will replace the old Consumer Protection Act, 1986 (‘Old Act’). In exercise of the powers conferred by sub-section (3) of section 1 of the New Act, MINISTRY OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION (Department of Consumer Affairs) has issued a Notification No. S.O. 2351(E) dated 15th July 2020 (‘the Said Notification’) whereby the Central Government has appointed the 20th day of July, 2020 as the date on which various provisions of the said Act shall come into force.

Salient Features of Consumer Protection Act, 2019

Consumer Protection Councils

Central Consumer Protection Authority (CCPA)

Simplified Dispute Resolution Process

Mediation

Product Liability

Rules on e-commerce and direct selling

Penalty for adulteration of products/spurious goods

Changes brought in by Consumer Protection Act 2019

The new provisions in the new Act are a step towards betterment of the consumer legal fraternity and strengthens the grips of law towards the consumers while filling up the gaping gaps of the Act of 1986. A lot will now depend on its implementation by the authorities as well as litigants.

1. E Commerce Companies

• Now E-Commerce Companies will fall under the ambit of a structured consumer redressal mechanism, which will be empowered to conduct investigations into violations of consumer rights.
• E-commerce platforms will now have to acknowledge the receipt of any consumer complaint within 48 hours and redress the complaint within a month from the date of receipt.
• Every E-Commerce Entity is required to provide information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism, payment methods, security of payment methods, charge-back options, etc., including country of origin, which are necessary for enabling the consumer to make an informed decision at the pre-purchase stage on its platform.
• Rules for prevention of unfair trade practice in E-Commerce
• The Consumer Protection (E-commerce) Rules, 2020 are mandatory and are not advisories.
• Sellers cannot refuse to take back goods or withdraw services or refuse refunds, if such goods or services are defective, deficient, delivered late, or if they do not meet the description on the platform.
• The rules also prohibit the e-commerce companies from manipulating the price of the goods or services to gain unreasonable profit through unjustified prices.

Read More at- Consumer Protection (E-Commerce) Rules, 2020

2. Consumer Complaints and Redressals

• A consumer can institute a complaint from where he resides and not at the place where the transaction took place.
• There will be no fee for filing cases up to Rs 5 lakh.
• There are provisions for filing complaints electronically, credit of amount due to unidentifiable consumers to Consumer Welfare Fund (CWF).

Read More at- Consumer Protection (Consumer Disputes Redressal Commissions) Rules, 2020

3. New Rules and Regulations

• Introduces the concept of product liability and brings within its scope, the product manufacturer, product service provider and product seller, for any claim for compensation.
• Timely disposal of cases and appeals.
• Provisions like Consumer Protection Councils, Consumer Disputes Redressal Commissions, Mediation, Product Liability and punishment for manufacture or sale of products containing spurious goods.
• Central Consumer Protection Council Rules, Consumer Disputes Redressal Commission Rules, Appointment of President & Members in State/District Commission Rules, Mediation Rules, Model Rules and E-Commerce Rules and Consumer Commission Procedure Regulations, Mediation Regulations and Administrative control over State Commission & District Commission Regulations.

4. Constitution and Adjudication

• The State Commissions will furnish information to central government on a quarterly basis on vacancies, disposal, pendency of cases and other matters, the release said.
• Empowerment of the State and District Commissions to review their own orders, enabling a consumer to file complaints electronically and file complaints in consumer Commissions that have jurisdiction over the place of his residence, videoconferencing for hearing and deemed admissibility of complaints if the question of admissibility is not decided within the specified period of 21 days.
• Alternate Dispute Resolution mechanism of Mediation has been provided, simplifying the adjudication process.
• A complaint will be referred by a Consumer Commission for mediation, wherever scope for early settlement exists and parties agree for it. Mediation will be held in the Mediation Cells to be established under the aegis of the Consumer Commissions. There will be no appeal against settlement through mediation.
• The Central Consumer Protection Council Rules are provided for constitution of the Central Consumer Protection Council, an advisory body on consumer issues, headed by the Union Minister of Consumer Affairs, Food and Public Distribution with the Minister of State as Vice Chairperson and 34 other members from different fields.
• The Central Consumer Protection Council, which has a three-year tenure, will have Minister-in-charge of consumer affairs from two States from each region- North, South, East, West, and NER. There is also provision for having working groups from amongst the members for specific tasks.
  

False and Misleading Advertisements-Establishment of Central Consumer Protection Authority – Sec 10(1)

The Central Government is now empowered to set up a Central Consumer Protection Authority (‘CCPA’) to promote, protect and enforce the rights of consumers. The authority thus notified will be focusing on regulating the matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers as a class.

Functions of Central Consumer Protection Authority

• To investigate, recall, refund and impose penalties.
• To promote, protect and enforce the rights of consumers.
• To regulate matters related to violation of consumer rights, unfair trade practices, and misleading advertisements.
• Class action law suits for ensuring that rights of consumers are not infringed upon.
• The authority will have the power to impose a penalty on a manufacturer or an endorser of up to Rs 10 lakh for a false or misleading advertisement.
  

What is Misleading Advertisement? 

As per Section 2(28) of the New Act, “misleading advertisement” in relation to any product or service, means an advertisement, which—

(i) falsely describes such product or service; or

(ii) gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or

(iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or

(iv) deliberately conceals important information;

Constitution of the Central Authority formulated

As per Section 15(1) of the New Act, the Central Authority shall have an Investigation Wing headed by a Director General for the purpose of conducting inquiry or investigation under this Act as may be directed by the Central Authority.

Procedure of filing a complaint by consumer against any misleading advertisement

A consumer can file a complaint with the Central Consumer Protection Authority against any advertisement which gives or conveys false description of a product or service or contains a representation constituting an unfair trade practice etc.

1. Mode of complaint– a complaint may be forwarded either in writing or in electronic mode.
2. Complaint to whom– to any one of the authorities, namely, the District Collectoror the Commissioner of regional office or the Central Authority.

Action against complaint received

• The District Collector may inquire into or investigate complaints regarding violation of rights of consumers as a class, on matters relating to violations of consumer rights, unfair trade practices and false or misleading advertisements, within his jurisdiction.
• He will submit his report to the Central Authority or to the Commissioner of a regional office, as the case may be.[Section 16 of the New Act].
• Where the Central Authority is satisfied after investigation that any advertisement is false or misleading and is prejudicial to the interest of any consumer or is in contravention of consumer rights, it may, by order, issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such advertisement or to modify the same in such manner and within such time as may be specified in that order.

Penalties & Prohibition

• If the Central Authority is of the opinion that it is necessary to impose a penalty in respect of such false or misleading advertisement, by a manufacturer or an endorser, it may, by order, impose on manufacturer or endorser a penalty which may extend to ten lakh rupees:
• For every subsequent contravention by a manufacturer or endorser, impose a penalty, which may extend to fifty lakh rupees.
• It may, by order, prohibit the endorser of a false or misleading advertisement from making endorsement of any product or service for a period which may extend to one year.
• For every subsequent contravention, prohibit such endorser from making endorsement in respect of any product or service for a period which may extend to three years.
• If any person is found to publish, or is a party to the publication of, a misleading advertisement, it may impose on such person a penalty which may extend to ten lakh rupees.

Appeal against the order of Central Authority

As per Section 24 of the New Act, a person aggrieved by any order passed by the Central Authority under sections 20 and 21 may file an appeal to the National Commission within a period of thirty days from the date of receipt of such order. 

Other Key Points

Product Liability

• A manufacturer or product service provider or product seller will be held responsible to compensate for injury or damage caused by defective product or deficiency in services
• Basis for product liability action:
• Manufacturing defect.
• Design defect.
• Deviation from manufacturing specifications.
• Not conforming to express warranty.
• Failing to contain adequate instructions for correct use.
• Service provided-faulty, imperfect or deficient.
  

Punishment for Manufacture or Sale of Adulterated/Spurious Goods:

In case of the first conviction, a competent court may suspend any licence issued to the person for a period of up to two years and in case of second or subsequent conviction, may cancel the licence permanently.

Conclusively, the Consumer Protection Act, 2019 when compared with the 1986 Act shows that it provides for greater protection of consumer interests taking into consideration the current age of digitization.