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PROJECT REPORT ON CONSUMER PROTECTION & CONSUMER OBLIGATIONS Submitted for Partial Fulfillment for the Award of the

Degree of



Submitted by

AnkitPandey Enrollment no.: - 16719103190


This is to certify that the Project Report titled Consumer Protection & Consumer Obligation is an original work submitted by AnkitPandey. Enrollment No. 16719103910, MBA I semester student of Gitarattan International Business School (GIBS) for the partial fulfillment of Master of Business Administration (MBA) program of Guru Gobind Singh Indraprasth University under the guidance of Ms. SandeepaKaur& the same has not been submitted to any other University or Institute for award of any Degree/Diploma.

Ms. SandeepaKaur Professor Project guide

Dr. S.S. Narula Director Gitarattan International Business School


I, Mr. AnkitPandey, Enrollment no. 16719103910, MBA I Semester hereby declare that, the project report titled Consumer Protection & Consumer Obligation is an original work done by me under the guidance of Ms. SandeepaKaur& has not been submitted to any other university or institute for the award of any degree or diploma or fellowship.

Dated: 24th October, 2010

Mr. AnkitPandey Enrollment No. 16719103910


Research is a venture that requires cooperation of many people. I feel pleasure in taking this opportunity to express my sincere regards to my supervisor Ms. SandeepaKaur, Profesor, Gitarattan International Business School, New Delhi. Without her guidance, valuable suggestions, constructive criticism & encouragement throughout the course of the project the present shape of work would not have been possible. I wish to place on record my gratitude to Dr. S.S. Narula, Director & Mr. Rajesh S. Pyngavil, Program Coordinator, Gitarattan International Business School, New Delhi for their continuous encouragement & advice which were of immense help to me. I am also thankful to all teachers, non teaching staff & all my friends of the institute for their kind help. During the planning of this work the most difficult job was the stage of data collection.

AnkitPandey Enrollment No. 16719103910

INTRODUCTION The process of development along with the expanding globalisation and liberalisation process has increased the number of consumer related issues. Consumer protection has earned an important place in the political, economic and social agendas of many nations. In India, the Government has taken many steps including legislative, to protect consumers.

Education is a life long process of constantly acquiring relevant information, knowledge and skills. Consumer education is an important part of this process and is a basic consumer right that must be introduced at the school level. Consumers by definition include all citizens who are, by and large the biggest group, who are affected by almost all government, public or private decisions. The most important step in consumer education is awareness of consumer rights. However, consumer education is incomplete without the responsibilities and duties of consumers, and this influences individual behaviour to a great extent. Consumers play a vital role in the economic system of a nation because in the absence of effective demand that emanates from them, the economy virtually collapses. Mahatma Gandhi said, "A consumer is the most important visitor on our premises. He is not dependent on us, we are on him. He is not an interruption to our work; he is the purpose of it. We are not doing a favor to a consumer by giving him an opportunity. He is doing us a favor by giving us opportunity to serve him. But, of late, unfortunately cheating by way of overcharging, black marketing, misleading advertisements, etc has become the common practice of greedy sellers and manufacturers to make unreasonable profits. In this context, it is the duty of the government to confer some rights on consumers to safeguard their interests.

To know further about the consumer protection and consumer obligation we have to first define What is the meaning of a Consumer ? A Consumer can be defined as:
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One who buys goods and hire services for consideration. One who uses the goods or hire services with approval of the buyer or the hirer of the service.

One who uses the goods or services to earn livelihood by self-employment.

What is consumer protection?


It refers to the protection of consumers against the anti-consumer trade practices by producers or traders.

These anti-trades include adulteration, substandard quality, overcharging, making misleading claims in advertisements, etc.

The essence of consumer protection is curbing such practices through legislative and other measures. To know what is consumer obligation first we have to know about consumer awareness which is an important part of consumer duties or obligation What is consumer awareness? y

NEED FOR CONSUMER PROTECTION Consumer protection means safeguarding the rights and interests of consumers. It includes all the measures aimed at protecting the rights and interests of consumers. Consumers need protection due to the following reasons:

Illiteracy and Ignorance - Consumers in India are mostly illiterate and ignorant. They do not understand their rights. A system is required to protect them from unscrupulous businessmen.

Unorganized Consumers - In India, consumers are widely dispersed and are not united. They are at the mercy of businessmen. On the other hand, producers and traders are organized and powerful.

Spurious Goods - There is an increasing supply of duplicate products. It is very difficult for an ordinary consumer to distinguish between a genuine product and its imitation. It is necessary to protect consumers from such exploitation by ensuring compliance with prescribed norms of quality and safety.

Deceptive Advertising - Some businessmen give misleading information about quality, safety and utility of products. Consumers are misled by false advertisement and do not know the real quality of advertised goods. A mechanism is needed to prevent misleading advertisements.

Malpractices of Businessmen- Fraudulent, unethical and monopolistic trade practices on the part of businessmen lead to exploitation of consumers. Consumers often get defective, inferior and substandard goods and poor service. Certain measures are required to protect the consumers against such malpractices.

Freedom of Enterprise- Businessmen must ensure satisfaction of consumers. In the long run, survival and growth of business is not possible without the support and goodwill of consumers. If business does not protect consumers' interests, Government intervention and regulatory measures will grow to curb unfair trade practices.

Legitimacy for Existence- Business exists to satisfy the needs and desires of consumers. Goods are produced with the purpose of selling them. Goods will, in the long run, sell only when they meet the needs of consumers.

Trusteeship - Businessmen are trustees of the society's wealth. Therefore, they should use this wealth for the benefit of people.

Growth with Social Justice We are a secular country and growth with social justice is the cornerstone of our economy. Exploitation of consumers is against the directive principles of State Policy laid down by the Constitution of India.

Ethical ObligationsFirms that adapt ethical values, attain glories in the business world. Business without ethical values is nothing but a criminal activity and no civil society will tolerate a business without ethical values.

RIGHTS OF CONSUMER y Right to safety-Consumers have a right to be protected from marketing of goods which are injurious to health and life. As a consumer if you are conscious of this right, you can take precautions to prevent the injury or if injury is caused in spite of precaution, you have a right to complain against the dealer and even claim compensation. For example, if you buy any medicine, the pharmacy selling it can be held responsible if the medicine Proves harmful.

Right to be informed-Consumers also have the right to be informed about the quantity, quality, purity, standard or grade and price of the goods available so that they can make proper choice before buying any product or service. Also, where necessary, the consumer must be informed about the safety precautions to be taken while using the product to avoid loss or injury. Taking the example of gas cylinder, the supplier must inform the user to stop the flow of gas with the help of the regulator when it is not in use.

Right to choose- Every consumer has the right to choose the goods needed from a wide variety of similar goods. Very often dealers and traders try to use pressure tactics to sell goods of poor quality. Sometimes, consumers are also carried away by advertisements on the TV. These possibilities can be avoided if consumers are conscious of this right.

Right to be heard- This right has three interpretations. This right means that consumers have a right to be consulted by Government and public bodies when decisions and policies are made affecting consumer interests. Also, consumers have a right to be heard by manufactures, dealers and advertisers about their opinion on production and marketing decisions. Thirdly, consumers have the right to be heard in legal proceedings in law courts dealing with consumer complaints.

Right to seek redressal-If and when any consumer has a complaint or grievance due to unfair trade practices like charging higher price, selling of poor quality or unsafe products, lack of regularity in supply of services etc. or if he has suffered loss or injury due to defective or adulterated products, he has the right to seek remedies. He has a right to get the defective goods replaced or money refunded by the seller or dealer. He also has the right to seek legal remedies in the appropriate courts of law. Through this right the

consumers are assured that their complaints will receive due attention. This right also provides for due compensation to consumers if they have suffered a loss or are put to inconvenience due to the fault of the supplier. y Right to consumer education-To prevent market malpractices and exploitation of consumers, consumer awareness and education are essentially required. For this purpose, consumer associations, educational institutions and Government policy makers are expected to enable consumers to be informed and educated about (a) the relevant laws which are aimed at preventing unfair trade practice; (b) the ways in which dishonest traders and producers may try to manipulate market practices to deceive consumers; (c) how consumers can protect their own interest; and (d) the procedure to be adopted by consumers while making complaints. (vii) Right to basic needs: It is the right to receive the eight basic necessities that are required to survive and lead a dignified life. These needs include food, clothing, shelter, health care, sanitation, education, energy and transportation. (viii) Right to healthy environment: It is the right to be protected against environmental pollution and environmental degradation so as to enhance the quality of life of both the present and future generation.

METHODS OF CONSUMER PROTECTION There are four main methods of protecting the interests of consumers: 1. Business Self-regulation: The business community itself can help in achieving consumer protection and satisfaction through self -discipline. Businessmen can regulate their own behavior and actions by adopting higher ethical standards. Trade associations and chambers of commerce can check unfair trade practices used by some businessmen. 2. Consumer Self-help: Every consumer must be alert as self-help is the best help. He should educate himself and know his rights. He should not allow unscrupulous businessmen to cheat him. 3. Consumers' Associations: Consumers should form voluntary associations. These associations can educate and awaken consumers. They can take organized action and put pressure on businessmen to adopt fair trade practices. 4. Government Regulations: The State can ensure consumer protection through legislative, executive and judicial actions. The laws enacted by the Government must be strictly enforced by the executive. Government of India has enacted several laws to protect the interests and rights of consumers. Some of these laws are as follows: o The Essential Commodities Act, 1955 which aims to regulate and control the production, supply and distribution and prices of essential commodities. o The Prevention of Food Adulteration Act, 1954 which aims to check adulteration in food items and eatables. o The Drugs and Cosmetics Act, 1940 which seeks to ensure purity and quality in drugs and cosmetics.

o The Standards of Weights and Measures Act, 1956 which aims at ensuring that consumers get the right weight and measurement in products. o The Household Electrical Appliances (Quality Control) Order, 1976 which seeks to ensure safety and quality in the manufacture of electrical appliances. o The Consumer Protection Act, 1986 which seeks to provide speedy and inexpensive redressal to the grievances of consumers.

WAYS AND MEANS OF CONSUMER PROTECTION IN INDIA y Lok Adalats: The Consumer can approach the Adalat with his grievance. The issue is discussed and decision is taken on the spot. This saves time and money. Lok Adalat has become a speedy, effective and economical redressal system. Indian Railways, Delhi Transport Corp, Delhi Development Authority, Delhi Vidhyut Board, etc hold Lok Adalat from time to time to sort out problems faced by users.

Publicity Measures: 15th March is celebrated as World Consumer Right Day. In 1995 this day was organized at Vigyan Bhawan, New Delhi. In addition, the Ministry with the help of DAVP undertook a massive outdoor publicity program such as displaying hoardings, banners, bus panels, etc. Telecasting on consumer protection is also done by Doordarshan on a fortnightly basis.

Public Interest Litigations:

The Indian legal system does not provide legal services to large segments of the population such as the poor, environmentalists, consumers, minorities, etc. Thus the Public Interest Litigations legally represents such groups with the result that any individual or organization can approach the court for remedial action for effective implementation of the law, environmental protection or any other social evils like bonded labor, etc.

Environmentally Friendly Products:

The Ministry of Environment and Forests has introduced an EcoMark scheme. It is a label that has a symbol of an earthen pitcher. If this label appears on a product, it means that the manufacturer has satisfied the conditions laid down regarding the production processes and used environmental friendly materials. This scheme has been started with consumer items like soap, detergents, paints, food items, edible oil, etc. This scheme is consumer oriented so that people manufacture, use and dispose off products which are least harmful to the environment.

Redressal Forums & Consumer Protection Councils:

Under the Consumer Protection Act 1986 a judicial machinery such as theDistrict Forums, State and National Commissions have been set up to providespeedy, effective and economical redressal of consumer grievances anddisputes.

National Youth Award on consumer protection:

To encourage consumers and youths to participate in the field of consumerprotection, every year the Union Ministry gives two national awards National Award on Consumer Protection and National Youth Award onConsumer Protection. The Ministry also gives a National Woman Award toinvolve women in outstanding work in the field of consumer protection.

Consumer Welfare Fund :

The Revenue Department of the Union Ministry of Finance has passed theCentral excise and Customs laws (Amendment) Act 1991. According to thisAct, a consumer welfare fund is created and the excess amount ofexcise/custom duties which is not refundable to manufacturers or importers iscredited into this fund and used for:Promoting the welfare of the consumers, Community based rural awareness projects, Setting up a consumer guidance bureau to handle complaints,counseling and guidance and Setting up consumer product testing laboratories.





The responsibility to be more alert and questioning about the price and quality of goods and services we consume.

Action The responsibility to assert ourselves by acting to ensure that we get a fair deal As long as we remain passive consumers we will continue to be exploited and manipulated.



The responsibility to consider the impacts of our consumption patterns and lifestyles on other citizens especially the poor disadvantaged or powerless consumers whether they are in the local national or international community.



The responsibility to realize the environmental costs and consequences of our consumption patterns and lifestyles. We should recognize our individual and collective social responsibility to conserve natural resources and to preserve earth for present and future generations.

Solidarity The responsibility to come together and organize consumers in order to enhance the strength and influence required to promote and protect our interests. Apart from the above, following are also the responsibilities of the consumers:

Take responsibility for maximizing healthy habits, such as exercising, not smoking, and eating a healthy diet.

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Become involved in specific health care decisions. Work collaboratively with health care providers in developing and carrying out agreedupon treatment plans.

Disclose relevant information and clearly communicate wants and needs.

Use the health plan's internal complaint and appeal process to address concerns that may arise.

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Avoid knowingly spreading disease. Recognize the reality of risks and limits of the science of medical care and the human fallibility of the health care professional.

Be aware of a health care provider's obligation to be reasonably efficient and equitable in providing care to other patients and the community.

Become knowledgeable about his or her health plan coverage and health plan options (when available) including all covered benefits, limitations and exclusions, rules regarding use of information, and the process to appeal coverage decisions.

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Show respect for other patients and health workers. Make a good-faith effort to meet financial obligations. Abide by administrative and operational procedures of the health plans and health care providers.

Report wrongdoing and fraud to appropriate resources or legal authorities.

ROLE OF DIFFERENT ORGANIZATIONS IN CONSUMER PROTECTION Role of press in Consumer protection The press has been responding to consumer needs in several ways even much before the Consumer Protection Act was enacted. Besides publishing articles, columns etc. it has rescued harassed consumers. For example the Indian Express was the first newspaper to start a column on consumer complaints. It not only published the problems and grievances of consumers but also forwarded them to the concerned authorities for redress. In many cases the results were published and consumers were able to get their grievances settled. The success and popularity of the Indian Express column motivated other newspapers to follow suit and today almost all newspapers, including regional language newspapers, publish consumer complaints on a weekly basis.

Role of universities and schools in consumer protection Indira Gandhi National Open University (IGNOU) has developed a comprehensive syllabus, which provides the basic framework for other universities to develop a curriculum for consumer education. The Kakitaya University in Andhra Pradesh is offering a one-year post graduate course in consumer law. The Maharashtra Open University in Pune is offering courses in consumer education. CBSE has published a Teachers Manual on consumer education for students. Many other voluntary consumer organizations have mushroomed but due to lack of resources their contribution in this field has been insignificant. There is therefore an urgent need of an apex (main) Consumer Organization that will help to coordinate the activities of these voluntary organizations in India.

CONSUMER PROTECTION ACT, 1986 The Act provides following remedies to an aggrieved consumer: o Removal of defects in goods or deficiency in service. o Replacement of defective goods with new goods of similar description which shall be free from any defect. o Return of price paid by the consumer. o Payment of compensation for any loss or injury suffered by the consumer. o Discontinue the restrictive, or unfair trade practice, and not to repeat it. o Withdraw the hazardous goods from being offered for sale and not to offer them for sale. o Provide for adequate cost to the aggrieved party. The Consumer Protection Act provides for a three tier system of redressal agencies: one at district level known as District Forum, second at state level known as 'State Commission', and third at national level known as 'National Commission'. A complaint is to be made to the district forum of the concerned district where the value of goods and services and compensation, if any, is up to Rs 20 lakhs, to the 'State Commission' between Rs 20 lakhs and Rs 100 lakhs, and to the National Commission for more than Rs 100 lakhs. Interestingly, there is provision for appeals against the orders of a particular redressal forum by the aggrieved party before the next higher echelon and even from the findings of the National Commission before the Supreme Court.

IN CASE IF THINGS GO WRONG If there is something wrong with what you buy, tell the seller as soon as possible. If you are unable to return to the shop within a few days of making the purchase, it is a good idea to telephone to let it know about your complaint. Make a note of the conversation and to whom you spoke. If you tell the seller promptly that the goods are faulty and you do not want them you should be able to get your money back. As long as you have not legally accepted the goods you can still reject them - that is, refuse to accept them. One of the ways you accept goods is by keeping them, without complaint, after you have had a reasonable time to examine them. What is reasonable is not fixed; it depends on all the circumstances. But normally you can at least take your purchase home and try it out. If, however, you delay in examining what you have bought, or in telling the seller about a fault, then you may lose your right to reject. Note that if you signed an acceptance note on receiving goods this does not mean you have signed away your right to reject. You still have a reasonable time to examine them. Letting the seller try to put faulty goods right also has no effect on your rights - if the repair fails, you still have any right to reject that you had when you agreed to the repair. Once you have, in the legal sense, accepted goods, you lose your right to a full refund. You can only claim compensation, and you have to keep your claim to a reasonable minimum. Normally you have to accept an offer to put the goods right, or the cost of a repair. But if the goods are beyond economical repair you are entitled to a replacement, or the cash value of a replacement if none is offered. Some goods have manufacturers' guarantees. These are useful when your statutory rights no longer apply. Claiming under guarantees often results in fewer quibbles than relying on your statutory rights, provided you complain within the guarantee period. Use this link for more

information on guarantees. Do not be put off by traders trying to talk their way out of their responsibilities.

The law says it is up to the seller to deal with complaints about defective goods or other failures to comply with your statutory rights. So do not accept the excuse that "it's the manufacturer's fault". But you may have additional rights against the manufacturer under a guarantee.

You have the same rights when you buy sale goods as at any other time; the seller cannot get away with notices saying there are no refunds on sale goods. Think twice before you buy from a trader who displays a notice like this. It is against the law, and local authorities can prosecute the trader. You have the same rights even if you lose your receipt. A receipt, however, is useful evidence of where and when you bought the goods.

You may be able to claim compensation if you suffer loss because of faulty goods; for example, if a faulty iron ruins your clothes.

Following action can be taken if the things are faulty: Presents If you received the faulty goods as a present, you may have to ask the person who bought them to complain for you, or to authorize you in writing to complain on his or her behalf. Only the buyer has the statutory rights described earlier. Returning goods You are not legally obliged to return faulty goods to the seller at your own expense. If an item is bulky and would be difficult or expensive to return to the shop, ask the seller to collect it. But this does not apply where you complain about faults after having accepted the goods, or if you got the goods as a present. Private sales & auctions You have fewer rights if you buy privately that is, not from a trader - or at an auction. But if you are injured by defective goods, or they cause property damage costing you 275 or more, you

have certain rights regardless of how they were bought or whether they were a gift. If in doubt seek further advice. You have no real grounds for complaint if you:
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were told about the fault; examined the item when you bought it and should have seen the fault; did the damage yourself; made a mistake when purchasing the item; simply changed your mind about the item.

Under these circumstances you are not entitled to anything, but many shops will help out of goodwill. It is always worth asking.

CONSUMER SAFETY It is an offence for a supplier to sell goods unless they are safe. This applies to both new and second-hand products, but not to antiques or to goods needing repair or reconditioning, providing you were clearly informed of this fact. If you believe you have bought unsafe goods, you should contact the trading standards department of your local authority. Prompt action may help prevent accident or injury to other customers. Following are the different criminal offenses performed by a supplier: Misleading Prices: It is a criminal offence for traders to make misleading price claims about goods or services. For example, "Was 120 Now 99.99" is misleading if the goods or services have never been provided at the higher price. It is also misleading if a trader fails to show hidden extras, or to make it clear when a price is conditional on, say, another purchase. If you consider that you have been seriously misled about a price tell your local trading standards department and ask it to investigate. Untrue Claims It is a criminal offence for a trader to say or write something which is untrue about goods or (in some circumstances) services. For example, if a car is said to have run only 20,000 miles, or the dry cleaner offers a 24 hour service, these statements must be true. If you feel you have been seriously misled, tell your local trading standards department. Estimates & Quotations When you need or want to have a service done, find out in advance what it will cost by getting an estimate or a quotation. An estimate is generally a rough price, while a quotation is normally a

fixed price Make sure you know which you are getting and ask for it to be put in writing. Check whether prices quoted include VAT.

Goods on order from a shop If you order something not in stock or which requires delivery, such as a new suite of furniture, you may agree a date by which you must have it. It is a good idea to get this in writing. If the goods do not arrive on time you can refuse to accept them. If you do not need the goods by a specific time, you could ask for an estimated delivery date. But even if you do not agree a delivery date the seller must still deliver in a reasonable time. If you think enough time has passed and do not want to wait any longer, tell the seller. Say that if the item has not come within a certain period (14 days might be reasonable) you want your money back. But if you agree at that point to wait longer - say an extra month - you cannot cancel in that time. When you order something, you and the seller should agree a fixed price. You may agree that if the cost of the goods goes up before delivery, you will pay the increase. In some instances the cost may not be known. Whatever the situation, make sure you know where you stand, preferably in writing. Mail Order You have the same statutory rights when you buy through mail order as when you buy from a shop, but there are other things you need to consider. Be particularly careful when giving your credit card details over the telephone that you are dealing with a reliable trader. Goods should be delivered within a reasonable time, usually 28 days or as specified in the advertisement. If the goods do not turn up you can cancel the order and ask for your money back. But if you agree to allow the seller extra time, you cannot cancel until that time is up. The law allows you a reasonable time to examine the goods. Do this as soon as you can and if they are faulty send them back immediately with a note explaining the problem. Keep a copy of your note. It is also advisable to get a proof of postage certificates from the Post Office. Most

mail order catalogues have special arrangements for the return of goods. In other cases, the company should reimburse you for the cost of returning the goods. If you order through an advertisement read it thoroughly before placing an order and keep a copy. If you cannot keep a copy, note the advertiser's name and address, where and when the advertisement appeared, when you posted your order and any other.details, such as charges for postage and packing. Try to avoid sending cash in the post. Use credit cards, cheques or postal orders. If you have to send cash, send it by registered post. If ordering from a book or record club, make sure you know what commitment you are making. Find out exactly what you have to buy and over how long in order to qualify for the introductory offer. Most newspapers and magazines have mail order protection schemes(MOPS). These cover you if you send payment in advance for goods in response to an advertisement, and the firm goes out of business before you get the goods or a refund. You can write to the publication's advertising manager for help. Direct Mail Many items bought by post are in response to direct marketing through catalogues, newspapers, magazines, inserts, postal advertising sent to you by name or hand delivered, or as a result of advertisements appearing on television, radio or posters. Some people are happy to receive the offers for goods or services which come through the letterbox. Others find them a nuisance and would prefer not to receive them. If you do not want to receive this sort of mail, you can ask for your name to be deleted from direct mailing lists by writing to the Mailing Preference Service. It may take up to three months for the unwanted mail to stop arriving.

Telephone Sales Many companies now use the telephone to promote their goods and services. If you would like to reduce the number of sales calls you receive, contact your telephone company and ask to register with the Telephone Preference Service. If you regularly receive unwanted calls from the same company write to it and ask it to stop. It is legally obliged to do this. If the calls keep coming you can take it up with the Office of Telecommunications (Oftel).

CONCLUSION The Consumer Protection Act provides many rights in favor of the consumer so that exploitation of the consumer can be reduced to a much lower rate. As the consumer gets certain rights, he also gets certain responsibilities so that he could not misuse the power he has been offered by the government in his favor.