Consumer Protection Act 2019: Key Features and Changes

“Change is the law of life. And those who look only to the past or present are certain to miss the future.”

-Former U.S. President John F. Kennedy

Jago Grahak Jago was a widespread campaign promoted in India to make the consumers aware of their rights, The Consumer Protection Act, 1986 was the first legislation enacted to protect the rights of the consumers in India. It listed the 6 main rights of the consumers and provided a mechanism for consumers to address any defects in goods or deficiency on services provided to them and seek compensation for the same. The primary goal of the 1986 legislation was to safeguard the interests of the consumers.

As the years passed by, the advancements in technology ushered in the need for amendments in consumer protection laws. On one hand, while technology and digitalization made accessibility, payment, and the overall experience of purchasing goods and services more convenient for the consumers, on the other hand, several new challenges arose in the domain of consumer protection.

To address, the new set of challenges faced by the consumers in recent years, Parliament passed The Consumer Protection Bill, 2019. On August 9, 2019, the Consumer Protection Act, 2019 (New Act) obtained the President of India's assent and was published in the official gazette. This Act was notified on 15 July 2020 and it came into effect from 20 July 2020. The new Act intended to replace the Consumer Protection Act of 1986, which has been in effect for more than three decades.

Key Changes brought by the Consumer Protection Act, 2019

Some of the main changes brought by the Consumer Protection Act, 2019 include:

Inclusion of E-commerce transactions: 

Under the 2019 Act E-commerce transactions are included for adjudication under direct sales. “E-commerce" has been defined under the Act as buying or selling of goods or services including digital products over a digital or electronic network. This Act has widened the definition of a ‘consumer’ which now includes any person who "buys any goods" and "hires or avails any services", which may be either offline or online, transactions through electronic means, or by teleshopping or direct selling or multi-level marketing.

The previous Act did not expressly encompass e-commerce transactions, and the New Act fills that void.

Revised Pecuniary Jurisdiction of the Consumer Disputes Redressal Commissions

In comparison to the Consumer Protection Act of 1986, the Consumer Commissions pecuniary jurisdiction has been expanded.

Under the New Act, the District Commission has the jurisdiction to entertain complaints where the value of the goods or services does not exceed Rs 1 crore. On the other hand, the State Commission is now empowered to deal with complaints that exceed Rs. 1 crore but less than Rs 10 crore, and the National Commission can hear complaints exceeding Rs 10 crores.

Deposit for Appeal

Before filing an appeal, the opposing party must deposit 50% of the amount ordered by the lowed Consumer Commission, as compared to the previous maximum amount of Rs. 25,000.

Introduction of E-filing

The Consumer Protection Act, 2019 has introduced the provision of e-filing for consumer complaints. As per the provisions of the newly amended legislation, the complaint can be filed electronically and hearing and examination of parties may even be conducted through video-conferencing. Additionally, consumers can now file a complaint in a Commission within the jurisdiction of their place of residence or work, as opposed to the earlier requirement of filing a complaint where the opposite party carried out business or resided.

These new changes are intended to make the procedure easier for customers while also reducing annoyance and harassment.

Introduction of Mediation as a dispute settlement mechanism

The Consumer Protection Act 2019 has emphasized the use of alternative dispute resolution methods to resolve consumer disputes over litigation. Mediation has been introduced under the new Act as a method of ADR for consumer matters. Chapter V of the 2019 legislation lays down the procedure to be followed when mediation has opted. Further, Section 74 directs the State Governments to establish a consumer mediation cell to be attached to each of the District Commissions and the State Commissions of that State.

For mediation, the National Commission or the State Commission or the District Commission, as the case may be are required to prepare a panel of the mediators to be maintained by the consumer mediation cell attached to it, on the recommendation of a selection committee consisting of the President and a member of that Commission. Using mediation as a form of dispute settlement would ensure effective and quicker resolution of consumer disputes. It will also aid in reducing the burden of cases present in the Consumer Courts.

Establishment of a Central Consumer Protection Authority (CCPA)

The Act directs the Central Government to establish a Central Consumer Protection Authority (CCPA). The CCPA is a regulatory entity with the powers to levy penalties, recall products, compel service withdrawals, give refunds, and conduct investigations. It will also be responsible for safeguarding the rights of consumers as a class as well as ensuring that no one participates in unfair trade practices or makes misleading advertisements. The Act also establishes an investigative wing to be led by a director-general chosen to be appointed by the central government to undertake investigations following the CCPA's orders.

Unfair Trade Practices: 

The New Act provides a broad definition of Unfair Trade Practices that include disclosing personal information supplied in confidence by the consumer unless such disclosure is made in compliance with the rules of any other legislation.

Unfair Contracts: 

The Consumer Protection Act 2019 has also introduced the concept of unfair contracts. An "unfair contract" means a contract between a manufacturer or trader or service provider on one hand, and a consumer on the other, having such terms which may lead to a significant change in the rights of such consumer.

These terms would include:

(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 in a disadvantageous position.

Product Liability

Yet another novel concept introduced by the 2019 Consumer Act is the concept of product liability. Section 2(34) defines ‘product liability as ‘the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by a deficiency in services relating thereto.’ Thus, the product manufacturer, product service provider, and product seller have been brought within its scope to claim compensation.

The term 'product seller' is defined to encompass anybody participating in keeping a product for a commercial purpose, which is e-commerce platforms. The argument that e-commerce platforms only serve as "platforms" or "aggregators" shall not be accepted. Manufacturers have more liability risks than product service providers and product dealers since, under the New Act, manufacturers will be responsible for product liability actions even if he shows that he was not negligent or dishonest in making the express warranty of a product.

1. Section 84 of the Act holds a product manufacturer responsible if the product has a manufacturing fault, is defective in design, does not comply with manufacturing requirements, does not conform to the implied warranty, and does not provide appropriate instructions for proper product usage.

2. Section 85 of the Act addresses the service provider's liability in a product liability claim. To be liable under this section, the service provided must be deficient, faulty, inadequate, or imperfect, as well as an act or negligence withholding any information responsible for the harm caused, lacking adequate warnings and instructions, and failing to conform to express warranty or contractual terms.

3. Under Section 86, A product seller is responsible for a product liability claim if he or she has considerable influence over the product's manufacture, testing, design, labeling, or packaging. The damage ought to be caused by a significant alteration or modification. Other instances would include when a product seller provided an express warranty that differed from the manufacturer's warranty or he/she failed to maintain, assemble, or examine the product with reasonable care.

The New Act, however, includes some exceptions to liability claims. For instance, a product manufacturer shall not be liable for failure to instruct or warn about a danger that is obvious or commonly known to the user or consumer of such product or which, such user or consumer, ought to have known, taking into account the characteristics of such product.

Misleading Advertisements

Stringent provisions have been incorporated to deal with misleading advertisements. A misleading advertisement has been defined as ‘"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.

If the Central Authority is satisfied after an investigation that any advertisement is false or misleading and is prejudicial to the interests of any consumer or violates consumer rights, it may, by order, direct the concerned trader, manufacturer, endorser, advertiser, or publisher, as the case may be, to discontinue or modify the advertisement in the manner and within the time specified in the order.

Any manufacturer or service provider who causes a false or misleading advertisement to be made which is prejudicial to the interest of consumers may be punished with imprisonment for a term which may extend to two years and with a fine which may extend to ten lakh rupees. In case of any subsequent offence, the fine may extend to Rupees Fifty lakhs and imprisonment up to a term of 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.

It is pertinent to note that in light of several cases in the past wherein innocent consumers were subjected to unfair trade practices due to the influence of celebrities serving as brand ambassadors for the given product. Hence, it was noted that an endorser must assume certain responsibilities and ensure necessary care to check the validity of the statements stated in the advertisement to counter any liability claims.

Rules for E-commerce businesses

In exercise of the powers conferred by sub-clause (zg) of sub-section (1) of section 101 of the Consumer Protection Act, 2019 (35 of 2019), the Central Government made several rules in 2020, known as the Consumer Protection (E-Commerce) Rules, 2020.

Every e-commerce entity must provide crucial information in a clear and accessible manner on its platform which has to be displayed prominently to its users. This would include the legal name of the e-commerce entity, principal geographic address of its headquarters and all branches, and contact details of customer care as well as of grievance officer.

Further, information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism, and any other similar information which may be required by consumers to make informed decisions have to also be provided clearly.

Under this Act, e-commerce platforms must acknowledge receipt of any consumer complaint within 48 hours and resolve the issue within one month of receipt.

Conclusion

The Consumer Protection Act of 2019 is truly a step forward in the development and reform of consumer legislation in India. It has imposed responsibilities on the product manufacturers, sellers as well as endorsers. Consumers must be aware of their rights and must not shy away from claiming and fighting for the same. Being aware of one’s rights and liabilities can truly bring empowerment in our lives. It is high time that product manufacturers and vendors realize that they can no longer take the consumers on an unfair ride.

As Mahatma Gandhi had emphasized the importance of consumers in the following words:

“Customers are the most important visitor on our premises, they are not dependent on us, we are dependent on them. They are not an interruption in our work. They are the purpose of it. They are not outsiders in our business. They are part of it; we are not doing them a favor by serving them. They are doing us a favor by allowing us to do so.”

~Authored by Anusha Almeida