New protections offered by the Consumer Protection Act of 2019
Aranmula, July 31, 2019
“A customer is the most important visitor on our
premises. He is not dependent on us. We are dependent on him. He is not an
interruption of our work. He is the purpose of it. He is not an outsider of our
business. He is part of it. We are not doing him a favour by serving him. He is
doing us a favour by giving us the opportunity to do so.”
Quote attributed to Mahatma Gandhi in 1890
Customer-centric thinking needed: The idea of consumer protection
flows naturally when one remembers the customer’s place in the economic order.
History is replete with examples of failed companies who played fast and
footloose with their customers. By taking them for granted and not holding their
best interests to heart, these companies lost the respect, love and commercial
loyalty of the customer.
The Advertising Guru, “David Ogilvy in his book, “Confessions
of an Advertising Man” even went so far as to say, “Good Advertising will kill
a bad product or poor service faster.” By bad product we mean one that does not live up to its
claims.
Indian thought leaders have always
known this and from the Manu Smriti era (800-600 BC) have taken steps to
protect the consumer. For a brief note on the evolution of consumer protection,
please refer our companion article by clicking on the link below:
Given the plethora of choices
available to the consumer these days, and the power of media, it is
particularly important to regulate commercial behavior. The Consumer Protection
Act of 2019 is a repackaging of an elaborate process that already exists but is
an improvement on its predecessors even though most of its provisions are
already available in the Consumer Protection Acts of 1986 and 1993.
Refurbished Customer Protection: The Bill establishes what it
calls “a Central Consumer Protection Authority” (which already exists in
similar form at the National, State and District levels) for efficient and
speedier disposal of consumer grievances.
The Authority is vested with
regulatory and Suo moto powers (acting on its own cognizance) to investigate
violations of consumer rights. An aggrieved party in response to any order
passed by the new Central Consumer Protection Authority can appeal to the
National Commission. The Bill also confers advisory powers on the existing
Consumer Protection Councils and supports the establishment of these Councils
at district, state and national level.
New Customer Protections Built into the Act:
The
Consumer Protection Act of 2019 will
widen the scope of the previous Act to include new protections for the following:
- Telecommunications consumers, and also protect types of purchases
including those made online, while teleshopping, etc.) BJP MP Rajiv Pratap has reqested that the Act also cover issues like dropped calls and utility outages.
- -- Purchasers of housing.
-
- Consumers who are swayed by celebrity endorsements (celebrities
will need to be much more careful when endorsing a product). The endorser and even
the publishers of such misleading advertisements are now liable under the law
which provides a penalty of up to Rs 50 Lakh and ban up to three years on a
subsequent offence.
There is also provision in the Act for a
manufacturer or service provider to be punished for making misleading
statements that hurt consumer interests.
- Customers now need not make a complaint to receive protection
as the Central Consumer Protection authority is now recognized as a bona fide complainant.
- New concepts such as 'product liability' have been
introduced.
In the words of Gaurav Dani, writing for “Business Today:”
“Perhaps the introduction of 'product liability'
provision is one of the most important features of the Bill. The existing Act
has no provision in relation to 'product liability' which allows a complainant
to make a claim of product liability against a product manufacturer or service
provider for any deficiency in a service or defect in the product.
The product manufacturer shall be liable in a product
liability action if the product contains a manufacturing defect, is defective
in design, deviates from the manufacturing specifications or express warranty,
or does not contain adequate instructions for usage.”
Just as in various International consumer protection
laws, the product manufacturer can be held liable even if he proves that he was
not negligent or fraudulent in making the express warranty of a product.
This is an area where many are calling Internationally for “Tort reform” as in
the 1992 case of the woman who was awarded $3 million dollars after she
carelessly spilt hot coffee from McDonalds in her lap.
The Act also provides for liability for those who may
only market a product manufactured by others. This is vital in India as many
large marketing companies (including multinationals, outsource their
manufacturing to smaller units).
- Contracts between corporates and consumers are deemed “unfair”
provided:
o It causes “significant” change in the rights of
consumers.
o Requires “excessive” deposits.
o Imposes a “disproportionate” penalty for breach of
contract.
o Disallows early payment of debts.
o Terminates a contract without “sufficient cause”
o Transfers a contract to a third party to the detriment
of the consumer.
Under the Act, both State and National Commissions can
act on these issues
and declare the provisions of a contract unfair.
The Union Food & Consumer
Affairs Minister, Ram Vilas Paswan introduced the Bill as a means of protecting
the consumer through a national Consumer Disputes Redressal Commission that
functions at the national, state and district levels.
As before, consumers
(as a first step) can file their complaints online at
https://consumerhelpline.gov.in/ after registering. The public can also
access the Consumer Helpline toll free at 1800114000 or 14404. The portal is
described as an Integrated Grievance Redressal Mechanism. The web site
explains the redressal process thus;
Any (consumer)
grievance received either through online registration or call center is entered
in the portal and a unique docket number is generated and
given. Grievances received are sent to the concerned company / agency /
regulator / ombudsman, as the case maybe, for speedy redress. Action taken is
updated on real time basis by the concerned agency. As a follow up action,
these agencies are reminded at stipulated intervals.
The
Consumer Protection Act has also broadened the scope of the term "unfair
trade practice" to include the following:
- - Non-issuance
of a receipt
- - Refusing
to refund goods or services within 30 days of sale
- - A
complaint as to the violation of consumer rights or misleading advertisements
which are against consumers as a class may be made to one of the consumer
dispute redressal authorities.
Finally, the Act also empowers
the government to make rules for preventing unfair trade practices in
e-commerce, direct selling and to protect the interest and rights of the
consumers. This will result in effective resolution of issues arising out of
online transactions and emerging e-commerce market.
The following material has been culled from a previous article on consumer protection, written and published on CitizenzNews, several months ago:
If the Consumer Helpline fails to
solve the problem, you can contact the "National Consumer Disputes Commission
which according to their web-site has 35 State offices. State Office addresses
are available at http://ncdrc.nic.in/statelist.html. There are also
District offices in each state. All disputes are subject to the provisions of
the Consumer Protection Act of 1986.
Consumer cases can be filed at the National, State or District level.
Each District Forum is headed
by a person who is or has been or is eligible to be appointed as a District
Judge and each State Commission is headed by a person who is or has been a
Judge of High Court. The National Commission is usually headed by a sitting or
retired Judge of the Supreme Court.
It should be noted that people who
obtain goods and services free or for re-sale are not covered by the provisions
of the Consumer Protection Act of 1986.
This redressal system has been disposing off cases effectively since 1988:
4,885, 877 case have been filed
since 1988 at the National, State and District level. Not surprisingly, the
districts have processed many more cases.
In conclusion, the Consumer Protection Act of 2019 is an improvement on the provisions of the Consumer Protection Act of 1986 and 1993. A review of the performance of these consumer courts several months ago (as of 2018) provides the following insights:
-
National cases represent only 2.54
percent of the total with an 84.45 percent disposal rate.
-
State cases represent only 16.62 percent
of the total with an 85.77 percent disposal rate.
-
District cases represent
a whopping 80.83 percent of cases with a 92.32 percent disposal.
Strong consumer
protection laws are an indicator of a maturing economy as India continues to
grow. The people of India will also need to rise to the occasion and utilize
the provisions of this legislation by holding errant companies to account
For an outline of the evolution of Consumer protection in India, please click on the link below:
https://www.citizenznews.com/2019/07/a-very-brief-history-of-consumer.html
Another useful article
ReplyDeleteThanks Raj, would love to see an article from you on Public Health?
DeleteVery informative
ReplyDeleteThanks Geetha Ji, any chance of an article from you on some of the new legislation coming our way?
DeleteVery informative
ReplyDelete