Consumer Protection Act 2019: Key Features and Changes

- Anusha Almeida
-

“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 the 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.
In order to address the new set of challenges faced by the consumers in the recent years, the
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 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 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 which exceed Rs. 1 crore but
less than Rs 10 crore, and the National Commission can hear complaints exceeding Rs 10
crores.
Deposit for Appeal
Prior to 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 new 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 on 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 is 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 the purpose of 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 on
the consumer disputes. It will also aid in reducing the burden of cases present on 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 withdrawal, 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 in accordance with the
CCPA's orders.
Unfair Trade Practices:
The New Act provides a broad definition of Unfair Trade Practices that includes 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 deficiency in services
relating thereto.’ Thus, the product manufacturer, product service provider and product seller
have been brought within its scope for the purpose of claiming compensation.
The term 'product seller' is defined to encompass anybody participating in putting a product
for a commercial purpose, which includes 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 in 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 to manufacturing
requirements, does not conform to 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 in a product liability claim if he or
she has considerable influence over the product's manufacture, testing, design,
labelling, 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 which 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 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
responsibility and ensure necessary care to check the validity of the statements stated in the
advertisement in order 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
the 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 an 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 favour by
serving them. They are doing us a favour by giving us an opportunity to do so.”