The Evolving Dimensions of Consumer Protection.
Note: The information contained herein is only for informational purposes and is based on information derived from the public domain and does not constitute any legal opinion or advice or suggestion of any kind by and on behalf of Legal Minds LLP.
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India, in a trailblazing effort, enacted the Consumer Protection Act 1986 ("CPA 1986"). The CPA 1986 envisaged the promotion and protection of consumer rights and facilitated the establishment of quasi-judicial Consumer Courts at the District, State and National levels. The Consumer Courts dealt with consumer complaints related to defective goods and deficient services and afforded an economical and expeditious determination of such consumer disputes. However, the CPA 1986 lacked the aptitude to cope up with the globalisation-induced market transformation.
Globalisation has inescapably led to the emergence of international trade, global supply chain and e-commerce backed contemporary business models. This profound consumer markets transmutation has created new opportunities such as telemarketing, multi-level marketing, direct selling, e-tailing, and such opportunities pose unique difficulties to consumer protection. There existed a vacuity between the provisions of the CPA 1986 and the myriad emerging vulnerabilities to consumer interests. Therefore, the Indian legislature envisaged a revisionist instrument, like the Consumer Protection Act 2019 ("CPA 2019"), to protect consumers and to extend adequate devices to prevent unfair trade practices.
The CPA 2019 bore the approval of the President of India on the 9th August 2019. The most remarkable characteristic of the CPA 2019 is that it is in addition to the prevailing laws. The CPA 2019 prescribed the establishment of the Central Consumer Protection Authority ("CCPA"). The Salient Features of the CPA 2019 are (i) it facilitates the filing of e-complains; (ii) it envisages the reference of the dispute to mediation.
On 15th July 2020, the Government of India appointed 20th July 2020, as the date of which most of the provisions of the CPA, 2019 shall come into force. The information below aims to provide insight into the critical provisions of the CPA 2019, coming into force from 20th July 2020.
1. Expanded Objective. The objective CPA 2019 is to provide for the protection of the consumers' interests. Therefore, the CPA 2019 strives to establish authorities for the timely and effective administration and resolution of consumers' disputes and related matters.
2. Definitions. The CPA 2019 extends to newer concepts and expands the scope of a few definitions subsisting under the CPA 1986. The critical introductions are as follows:
Advertisements. The CPA 2019 extends to Advertisements and defines it to mean any audio or visual publicity, representation, endorsement or pronouncement made using specified means such as electronic media, print and internet. The inclusion of Advertisements under the CPA 2019 discourages misleading advertisements and endorsements.
Complainant. The CPA 2019 expands the scope of the complainant to include legal heirs or representatives of a deceased consumer and the parents or legal guardians of a minor consumer.
Complaint. The CPA 2019 expands the scope of a Complaint to include an unfair contract and a claim for product liability.
Consumer. The CPA 2019 expands the definition of a consumer to include any person who engages in offline and online transactions through electronic means or by teleshopping or direct selling or multi-level marketing. The expanded scope implies that every participant in the supply shall be bound by the CPA 2019.
Consumer Rights. The CPA 2019 expressly defines Consumer Rights to include the following: (a) the right to be protected against the marketing of goods or services which are hazardous to life and property; (b) the right to be well-informed about the products or services and to be protected against unfair trade practises; (c) the right to be assured and to have access to a variety of goods or services at a competitive price; (d) the right to be heard; (e) the right to seek redressal against unfair or restrictive trade practises or unscrupulous exploitation of consumer and (f) the right to consumer awareness.
Deficiency. The CPA 2019 expands the scope of deficiency. It includes any act of negligence by a person that causes loss or injury to the consumer and the deliberate withholding of relevant information from the consumer.
Electronic Service Provider. The CPA 2019 extends to electronic service providers that provide technologies or processes to enable a product seller to engage in advertising or selling goods or services to a consumer and include any online marketplace or auction sites.
Goods. The CPA 2019 tweaks the definition of goods to include every kind of movable property and includes food within the meaning of the FSSAI Act, 2006.
Endorsement. The CPA 2019 extends to endorsements and defines it to mean any message or depiction, which makes the consumers believe that it reflects the opinion, finding or experience of the person making such endorsement.
Misleading Advertisements. The CPA 2019 extends to advertisements that falsely describe or extend a false guarantee about its characteristics or deliberately conceals important information about goods or services.
3. New Grounds
The CPA 2019 bestows upon the State Consumer Dispute Redressal Commission the jurisdiction over complaints against unfair contracts wherein the value of goods or services is up to Rs. 10 crores. Further, if the amount exceeds Rs. 10 crores, then the National Consumer Dispute Redressal Commission shall assume authority over such unfair contracts.
The CPA 2019 defines unfair contracts to mean an agreement between a manufacturer or trader or service provider and a consumer, having such terms which affect the rights of the consumer. The definition provides an exhaustive list of the determination of unfair contract. The list includes:
conditions that require excessive security deposits;
the imposition of disproportionate penalties on the consumer;
the refusal to accept early repayment of debts despite the payment of the applicable penalty;
the inclusion of the right to terminate contracts unilaterally;
the integration of the right to assign the agreement (without consent) to the detriment of the other party; and
the imposition of unreasonable charges, obligations or conditions that may be detrimental to the consumer. The definition, however, fails to lay down the principles required to determine the unfairness of an agreement.
Further, the CPA 2019 expands the scope of unfair trade practises to include electronic records and introduces newer unfair trade practises such as (a) the non-issuance of bills, cash memo, the receipt for the goods sold or services provided; (b) the refusal of accept the return of defective products or discontinuation of deficient services and refunding the consideration thereof and (c) the disclosure of the customer's personal information except under the provisions of the law.
The provision intending to protect the customer personal information fails to clarify the role of customer's consent and leaves scope for ambiguous interpretation.
4. Consumer Protection Councils.
The CPA 2019 provides for the establishment of a three-tier (Central, State and District) Consumer Protection Councils. The Consumer Protection Councils shall be an advisory committee to render advice on the improvement and protection of consumers' rights under this Act.
5. Consumer Dispute Redressal Commission.
Like the CPA 1986, the CPA 2019 similarly provides for the establishment of three-tier (Central, State and District Level) Dispute Redressal Commission. Unlike the CPA 1986, the CPA 2019 improves the monetary jurisdiction of the Commissions.
The CPA 2019 confers upon the District Consumer Dispute Redressal Commission the authority over grievances involving goods or services up to Rs. 1 crore in value. The CPA 2019 confers upon the State Consumer Dispute Redressal Commission the jurisdiction over District Commissions and the power over complaints involving products or services valued more than Rs. 1 crore but less than Rs. 10 crores and over appeals from the orders of the District Commission. The CPA 2019 confers upon the National Consumer Disputes Redressal Commission the jurisdiction over State Commissions and the power over complaints involving products or services valued more than Rs. 10 crores and over appeals from the orders of the State Commission.
The CPA 2019 enlarges the scope of punishments for non-compliance with the Commission's Orders. The CPA 2019 prescribes imprisonment for a term between one month and three years or with a fine between Rs. 25,000 to Rs. 1,00,000 or with both.
The CPA 2019 conceives a reference to mediation if there appear grounds/elements for settlement of the dispute. Part 5 of the CPA 2019 provides for the establishment of consumer mediation cells attached to the District, State and National Commission. The CPA 2019 envisages a the settlement of consumer disputes with adequate consideration to the virtues and responsibilities of the Parties and the Principles of Natural Justice. Further, if the difference between the Parties persists, then the discord shall be referred back to the concerned Commission. It appears that the introduction of mediation intends to facilitate a more simplistic resolution process.
7. Product Liability.
Chapter 6 of the CPA introduces the concept of Product Liability. CPA 2019 provides grounds for a product liability action for any harm caused by a defective product manufactured or serviced by a product service provider.
A Product manufacturer shall be liable if the Product Liability action proves any of the following:
That there is a manufacturing defect with the Product, or
That there is a defect in the design of the Product, or
That there is a deviation from manufacturing specifications, or
That the Product does not conform to the express warranty, or
That the Product fails to provide sufficient usage instructions.
Likewise, a Product Service provider shall be liable if the Product Liability action provides any of the following:
That the service provided was faulty or imperfect and in violation of any law or contract or otherwise, or
That there was an act of omission or commission or negligence or the conscious withholding of vital information, or
That the service provider did not issue adequate instructions, or
That the service did not adhere to the express warranty.
The CPA 2019 has notched up higher in providing for Product Seller liability. However, such liability follows if the Product Seller has exercised substantial control over the designing or manufacturing process or has altered or modified the Product or has made an express warranty independent of the manufacturer warranty. Further, the Product Seller shall be liable if the Products sold by him are procured from an unidentified manufacturer or if the Product Seller has failed to exercise reasonable care in selling such Product.
The CPA 2019 prescribed specific conditions to protect from a Product Liability Action. For example, Product Liability immunity entails if the Product that caused harm is misused, altered or modified at the time of such injury.
8. Offences & Penalties.
The CPA 2019 provides punishment for the sale or manufacture of (i) adulterated Products and (ii) Spurious Goods. The quantum of the prescribed punishment depends upon the gravity of the injury caused by adulterated products. If such products cause grievous hurt or death, then it would amount to a cognisable and non-bailable offence. It appears that the CPA 2019 has felt the urgent need for poignant provisions to prevent contamination of Products.
CPA 2019 introduces several phenomenal concepts and changes with the predominant objective of expanding the scope of consumer protection and advocacy. CPA 2019 facilitates consumer empowerment by promoting a higher degree of responsibility for the supply chain participants. The CPA 2019 arrives to live up to its aspirations of timely and effective resolution of consumer disputes by fusing the several nuances of the contemporary business models, mediation and enhanced monetary jurisdictions.