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[Burning Issue] Consumer Protection

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Recently, in the exercise of provisions under the Consumer Protection Act, 2019, the Central Government has notified the Consumer Protection (Jurisdiction of the District Commission, the State Commission, and the National Commission) Rules, 2021.

The Government has notified these rules to prohibit all direct selling entities from promoting pyramid schemes or money circulation schemes, while also providing for a mechanism for redressal of consumer complaints.

What is consumerism?

  • Consumerism is a movement that promotes the interests of buyers of goods and services.
  • Its main aim is to protect the consumer from unsafe or low quality of products, fraudulent advertising, labeling, packing and business practices that limits competition.

Why consumerism is important?

  • Illegal price hike: It is the wholesalers and middlemen who indulge in illegal activities like dumping of goods to create artificial scarcity and raise the prices of commodities which will increase their profits.
  • Affects all sections of society: So, consumerism is a national problem affecting every section of the society such as men and women, young or old and youth or child.
  • Form of social Action: Hence, consumer protection is a form of social action which will be designed to achieve the well-being of the one or group within a society. There is a need to extend consumerism in India.

What are the Consumer Rights?

Consumer right is an insight into what rights consumer holds when it comes to the seller who provides the goods.

In general, the consumer rights in India are listed below:

(1) Right to Safety

  • Means right to be protected against the marketing of goods and services, which are hazardous to life and property.
  • The purchased goods and services should not only meet their immediate needs, but also fulfil long term interests.
  • Before purchasing, consumers should insist on the quality of the products as well as on the guarantee of the products and services. They should preferably purchase quality marked products such as ISI, AGMARK, etc.

(2) Right to be Informed

  • Means right to be informed about the quality, quantity, potency, purity, standard and price of goods so as to protect the consumer against unfair trade practices.
  • Consumer should insist on getting all the information about the product or service before making a choice or a decision.
  • This will enable him to act wisely and responsibly and also enable him to desist from falling prey to high pressure selling techniques.

(3) Right to Choose

  • Means right to be assured, wherever possible of access to variety of goods and services at competitive price. In case of monopolies, it means right to be assured of satisfactory quality and service at a fair price.
  • It also includes right to basic goods and services. This is because unrestricted right of the minority to choose can mean a denial for the majority of its fair share.

(4) Right to be Heard

  • Means that consumer’s interests will receive due consideration at appropriate forums. It also includes right to be represented in various forums formed to consider the consumer’s welfare.

(5) Right to Seek redressal

  • Means right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers. It also includes right to fair settlement of the genuine grievances of the consumer.
  • Consumers must make complaint for their genuine grievances. Many a times their complaint may be of small value but its impact on the society as a whole may be very large.

(6) Right to Consumer Education

  • Means the right to acquire the knowledge and skill to be an informed consumer throughout life.
  • Ignorance of consumers, particularly of rural consumers, is mainly responsible for their exploitation.

Consumer Protection Laws in India

(1) The Consumer Protection Act, 1986

  • It enforces rights of consumers and provides for redressal of complaints at the district, state and national level. Such complaints may be regarding defects in goods or deficiency in services.
  • The Act also recognises offences such as unfair trade practices, which include providing false information regarding the quality or quantity of a good or service, and misleading advertisements.
  • Over the years, there have been challenges in the implementation of the Act.

(2) The Consumer Protection Act, 2019

The latest Act provides a better mechanism to dispose of consumer complaints in a speedy manner and will help in the disposal of a large number of pending cases in consumer courts across the nation.

Key Features

1) Definition of consumer

  • A consumer is defined as a person who buys any good or avails a service for a consideration. 
  • It does not include a person who obtains a good for resale or a good or service for commercial purpose. 
  • It covers transactions through all modes including offline, and online through electronic means, teleshopping, multi-level marketing or direct selling.

2) Rights of consumers

The following consumer rights have been defined in the Act, including the right to:

  • be protected against marketing of goods and services which are hazardous to life and property;
  • be informed of the quality, quantity, potency, purity, standard and price of goods or services;
  • be assured of access to a variety of goods or services at competitive prices; and
  • seek redressal against unfair or restrictive trade practices 

3) Establishment of Central Consumer Protection Authority

  • The central government will set up a CCPA to promote, protect and enforce the rights of consumers. 
  • It is empowered to:
    1. conduct investigations into violations of consumer rights and institute complaints/prosecution,
    2. order recall of unsafe goods and services,
    3. order discontinuance of unfair trade practices and misleading advertisements
    4. impose penalties on manufacturers/endorsers/publishers of misleading advertisements
  • The CCPA will have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into such violations. 

4) Penalties for misleading advertisement

  • The CCPA may impose a penalty on a manufacturer or an endorser of up to Rs. 10 lakh and imprisonment for up to two years for a false or misleading advertisement. 
  • In case of a subsequent offence, the fine may extend to Rs. 50 lakh and imprisonment of up to five years. 
  • CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to one year.
  • For every subsequent offence, the period of prohibition may extend to three years.  

5) Consumer Disputes Redressal Commission

  • CDRCs will be set up at the district, state, and national levels. 
  • A consumer can file a complaint with CDRCs in relation to: unfair or restrictive trade practices; defective goods or services etc.
  • 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.  Final appeal will lie before the Supreme Court.

6) Jurisdiction of CDRCs

  • The District CDRC will entertain complaints where value of goods and services does not exceed Rs one crore. 
  • The State CDRC will entertain complaints when the value is more than Rs 1 crore but does not exceed Rs 10 crore. 
  • Complaints with value of goods and services over Rs 10 crore will be entertained by the National CDRC.

7) Product liability

  • Product liability means the liability of a product manufacturer, service provider or seller to compensate a consumer for any harm or injury caused by a defective good or deficient service. 
  • 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:
    1. manufacturing defect
    2. design defect
    3. deviation from manufacturing specifications
    4. Not conforming to express warranty
    5. failing to contain adequate instructions for correct use
    6. service provided-faulty, imperfect or deficient
  • To claim compensation, a consumer has to prove any one of the conditions for defect or deficiency, as given in the Act.

(3) Consumer Protection (E-Commerce) Rules, 2020

  • E-commerce entities are required to provide information to consumers, relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism, payment methods, and security of payment methods, charge-back options and country of origin.
  • These are necessary for enabling the consumer to make an informed decision at the pre-purchase stage.
  • These platforms will have to acknowledge the receipt of any consumer complaint within 48 hours and redress the complaint within one month from the date of receipt.
  • They will also have to appoint a grievance officer for consumer grievance redressal.
  • 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.

(4) Consumer Protection (Jurisdiction of the District Commission, the State Commission, and the National Commission) Rules, 2021

Pecuniary Jurisdiction

  • The Consumer Protection Act, 2019 promulgates a three-tier quasi-judicial mechanism for redressal of consumer disputes namely district commissions, state commissions and national commissions.
  • As per the existing provisions of the Act, District Commissions have jurisdiction to entertain complaints where the value of the goods or services paid as consideration does not exceed one crore rupees.
  • State Commissions have jurisdiction to entertain complaints where the value of the goods or services paid as consideration, exceeds 1 crore rupees, but does not exceed 10 crore rupees and
  • National Commission has jurisdiction to entertain complaints where the value of goods or services paid as consideration exceeds 10 crore rupees.
  • But the existing provisions relating to pecuniary jurisdiction of consumer commissions were leading to rising in pendency and delay in disposal of cases.

Changes in Consumer Protection Rules, 2021

  • District Commissions shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration does not exceed 50 lakh rupees.
  • State Commissions shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration exceeds 50 lakh rupees but does not exceed 2 crore rupees.
  • National Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration exceeds 2 crore rupees.

Time for disposal of Complaint

It may be mentioned that the Consumer Protection Act, 2019 stipulates that every complaint shall be disposed within a period of 3 months from the date of receipt of notice by the opposite party where the complaint does not require analysis or testing of commodities and within 5 months if it requires analysis or testing of commodities.

e-Filing of complaint: E-Daakhil Portal

  • The Act also provides consumers with the option of filing complaints electronically.
  • The Central Government has set up the E-Daakhil Portal, which provides a hassle-free, speedy and inexpensive facility to consumers to conveniently approach the relevant consumer forum.
  • E-Daakhil has many features like e-Notice, case document download link & VC hearing link, filing written response by the opposite party, filing rejoinder by complainant and alerts via SMS/Email.
  • Presently, the facility of E-Daakhil is available in 544 consumer commissions, which includes the National Commission and consumer commissions in 21 states and 3 UTs.
  • So far, more than 10,000 cases have been filed using the E-Daakhil Portal and more than 43000 users have registered on the portal.

Mediation

  • To provide a faster and amicable mode of settling consumer disputes, the Act also includes a reference of consumer disputes to Mediation, with the consent of both parties.
  • This will not only save time and money for the parties involved in litigating the dispute but will also aid in reducing the overall pendency of cases.

Way Forward

  • Misleading ads, tele-marketing, multi-level marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive intervention to prevent consumer detriment.
  • Arm-twisting of weaker parties: Certain issues such as the appointment of mediators to settle disputes are contentious as this would lead to arm-twisting of the weaker parties and may encourage corruption.
  • Need to strengthen CCPA: Addressing these issues is necessary to ensure that the new amendments bring about definitive improvements in the CCPA.
  • Need to fill vacancies at the district commission level: The existing vacancies at the district commission level would undermine the effective implementation of the Act.
  • Guidelines for celebrity endorsements: Countries such as the UK, Ireland and Belgium have specifically banned celebrity endorsement of unhealthy foods. The impact of such restrictions has been reported to be significant.

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