On 06.08.2019, Parliament adopted the Consumer Protection Bill, 2019 to replace the Consumer Protection Act, 1986 (“1986 Act”). On 09.08.2019, the President of India gave his assent to the Consumer Protection Act, 2019 (“2019 Act”) and the same will come into effect on the day the central government notifies him. The 2019 Act was adopted with the intention of ensuring effective and efficient administration and settlement of customer disputes and related matters.
Instead of bringing an amendment to the 1986 Act , the government enacted a new Act altogether to provide enhanced protection for consumers in addition to traditional methods, taking into account the booming e-commerce industry and modern methods of delivering goods and services such as online sales, tele-shopping, direct sales and multi-level marketing.
The 2019 Act has introduced some major changes and provides for more consumer protection in parimateria with the earlier 1986 Act, which can be seen from the comprehensive definition of the terms ‘Consumer’ and ‘Unfair Trade Practice.’The 2019 Act expands the application of the consumer concept to include customers participating in online purchases and now it specifically includes e-commerce businesses within its framework. The 2019 Act also extended the definition of unfair trade practices in comparison with the 1986 Act, which now includes misleading advertisements online within its scope; the practice of not issuing bill / memo for goods and services; failure to recover defective goods or deactivate defective services and reimbursement of the amount within the period specified in the bill or memo or within 30 days.
The 2019 Act also introduced the principle of ‘unfair contract’ that covers certain contracts that benefit the producers or service providers and are contrary to consumers’ interests, such as contracts requiring a customer to make manifestly unreasonable security deposits to satisfy contractual obligations, The enforcement of any penalty on the customer for violation of the contract which is entirely disproportionate to the damage incurred by such violation on the other party to the contract; the failure to allow early repayment of the debts after payment of the relevant penalty; the right of the party to the contract to terminate the contract arbitrarily, without fair cause; the authorisation or impact of permitti. Such unfair consumer contracts are now covered by the 2019 Act, and a consumer can now file a complaint in that respect. This will help keep a check on companies like banks and e-commerce sites that take advantage of their market supremacy and allow vulnerable customers to sign such unjust contracts and accept their standard terms before selling products or offering services to them.
One of the most relevant amendments to the 2019 Act is the plan to set up a National Consumer Protection Authority (“CCPA”) to control, protect and enforce consumer interest and unfair trade-related matters. CCPA has been given broad powers to prosecute, prosecute and take action against violations of the 2019 Act. Another significant power bestowed on the CCPA is the power to take action and enforce fines against misleading and false advertising as well as any sponsors of such advertising, which means that the CCPA will now take action against those celebrities who have supported these misleading and false advertisements if such celebrities have failed to carry out due diligence beforehand. For a false or misleading advertisement, the CCPA may impose a penalty of up to Rs.10 Lakhs for first violation and up to Rs.50 Lakhs for any subsequent breach on a manufacturer or endorser. Additionally such manufacturer or endorser may be sentenced to up to two years ‘ imprisonment. The CCPA has also been given the authority to initiate suo-moto infringement proceedings; pass directions for recalling products or discontinuing services and providing reimbursement to consumers; and file class action suits on behalf of multiple consumers that make it an effective tool for curbing mass violation of consumer interest.
Another significant addition to the 2019 Act is the principle of Product Liability which covers the product maker, product service provider and product seller for any claim for compensation within its scope. The term ‘product liability’ is established by the 2019 Act as the obligation of any product or service related to a product producer or product seller to compensate for any harm caused to a customer by a defective product produced or sold or by defects in services related to the product. Furthermore, since the product seller is now specified to include a person involved in placing the product for a commercial purpose and as such will also include e-commerce platforms. Hence, the ground widely held by e-commerce websites that they are simply functioning as ‘platforms’ or ‘aggregators’ would no longer be tenable in court. Compared to product service providers and product sellers, there are increased liability risks for manufacturers, given that manufacturers will be liable under the 2019 Act in product liability actions even if they successfully demonstrate that they were not negligent or fraudulent in making a product’s express warranty. However, certain exceptions were made from liability claims under the 2019 Act, such as that the seller of the product will not be liable where the product has been misused, altered or modified.
Certain key changes have been brought by the 2019 Act such as:-
1. Territorial Jurisdiction – The 2019 Act also offers an additional benefit for customers by calling for the filing of complaints where the plaintiff lives or works for personal gain as opposed to the 1986 Act , which allows only for the filing of complaints where the opposing party lives or operates. It would help to reduce the challenges customers face in finding redress of their complaints against corporations that do not have an office or branch in their own state.
2. Pecuniary Jurisdiction – The 2019 Act, respectively, also changed the pecuniary jurisdiction for the District , State and National Commissions. In the 1986 Act, the pecuniary limit for the District Commission was increased to Rs.1 Crore from Rs.20 Lakhs; for the State Commission it was increased to Rs.10 Crores from Rs.1 Crore; and for the National Commission the pecuniary jurisdiction was increased to more than Rs.10 Crores as against Rs.1 Crore. In addition, the 2019 Act has also modified the manner in which pecuniary authority for filing the Petition is to be decided. Now the pecuniary jurisdiction will be determined on the basis of the value of the goods or services paid as consideration against the 1986 Act, in which the pecuniary jurisdiction was determined according to the value of the goods and services as well as the claimed compensation. This would help to eliminate the practice of inflating the claimed compensation to bring the complaint into state or national commission jurisdiction.
3. Alternate Dispute Resolution – Another clause adopted by the 2019 Act to ensure that conflicts are resolved easily is to allow for referral of conflicts to mediation. The Consumer Forum shall refer the matter to mediation on written consent of both parties, in accordance with the 2019 Act. To this end, the 2019 Act also provides for the establishment by the respective State Governments of a consumer mediation cell in each District Commission and State Commission, as well as by the Central Government at the National Commission.
4. E-Complaints — The 2019 Act also provides for complaints to be filed electronically before the District Forums, in accordance with the rules that the Government has yet to prescribe.
Compared to the 1986 Act, the Consumer Protection Act, 2019 reveals that it allows for better protection of consumer rights in the light of the new era of digitization. The 2019 Act also deals with the industry’s technical advances, allows for simpler complaint filing and also places strict liability on companies, including endorsers, for infringing consumer interests. However, the test of time will prove the fate of the 2019 Act as and when it is notified by the Central Government, which, prima-facie, appears to be much more consumer friendly than the 1986 Act, and also includes current e-commerce industry trends.
Author: AVI SHRIVASTAVA,
Jagran Lakecity University, Bhopal 1st Year