How The New Consumer Protection Act Empowers Consumers

The Quint, July 21, 2020

The new amended Act introduces the concept of product liability as well as brings e-commerce within its ambit.

The Consumer Protection Act, 2019, that came into effect on 20 July, broadens the definition of a consumer and provides her with a wider range of powers by recognising online transactions as well as provides the ability to institute complaints from place of residence or work.

The central government, repealing the older Act of 1986, has notified certain provisions under the Act which pertain to Consumer Protection Councils, Consumer Disputes Redressal Forum, mediation, product liability, punishment for manufacturing, selling, distributing spurious or adulterated goods and products.

Union Minister for Consumer Affairs, Food & Public Distribution Ram Vilas Paswan, said the new rules under the Act, for prevention of unfair trade practices by e-commerce platforms will also come into force in the coming days.

He pointed out that the new Act includes many amendments to provide protection to buyers not only from traditional sellers but also from the new e-commerce retailers and platforms.

The Quint explains the major provisions of the amended Act.

How The New Consumer Protection Act Empowers Consumers.

  1. How Does it Empower Consumers?

The new act does so by recognising those engaged in offline as well as online multi-level transactions. This aims to protect those rendered vulnerable in the wake of rapidly-developing digital technology.

Under the new notified provisions, a consumer can now institute a complaint from her place of residence or where she works for gain. This comes as a significant change from the earlier version of the Act under which a complaint could be initiated only in the place where the transaction took place.

  1. Central Consumer Protection Authority

The Act includes rules for the establishment of the Central Consumer Protection Authority (CCPA) to protect and enforce the rights of consumers.

The CCPA will be empowered to conduct investigations into violations of consumer rights and institute complaints and prosecution, order recall of unsafe goods and services as well as discontinue unfair trade practices and misleading advertisements.

It will also have powers to impose penalties on manufacturers, endorsers and publishers of misleading advertisements.

This provision, however, is yet to be notified. The Ministry has stated that the gazette notification for establishment of the Central Consumer Protection Authority and rules for prevention of unfair trade practice in e-commerce are under publication.

  1. What Will The Central Consumer Protection Council Do?

Central Consumer Protection Council will be constituted as an advisory body on consumer issues and will be headed by the Union Minister of Consumer Affairs, Food and Public Distribution with the Minister of State as Vice Chairperson and 34 other members from different fields.

The Council, which has a three-year tenure, will have a minister in charge of consumer affairs of two states from each region – North, South, East, West, and Northeast.

  1. How Does It Change The Dispute Resolution Process?

A number of changes have been introduced to the dispute resolution process, including the pecuniary jurisdiction of the commissions and empowering them to review their own orders.

The changes in the pecuniary jurisdiction are as follows:

  • The pecuniary jurisdiction of District Commissions has increased from ₹20 lakh earlier to up to ₹1 crore.
  • Pecuniary jurisdiction of State Commissions increased from ₹1 crore to Rs 10 crore.
  • National Commission can hear cases above ₹10 crore, up from the earlier threshold of ₹1 crore.

Paswan informed during his conference that the new Act provides for “simplifying the consumer dispute adjudication process” in the consumer commissions by enabling a consumer to file complaints electronically as well as video-conferencing for hearing cases by the commissions.

The new provisions also include deemed admissibility of complaints if the question of admissibility is not decided within the specified period of 21 days.

  1. Stricter Watch On E-Commerce

Paswan further said that the rules for prevention of unfair trade practice by e-commerce platforms will also be covered under this Act. This rule, like the CCPA, is yet to be notified and is under publication, according to the ministry.

Under this act every e-commerce entity is required to provide information relating to

  • return of goods
  • refund
  • exchange
  • warranty and guarantee
  • delivery and shipment
  • modes of payment
  • grievance redressal mechanism
  • payment methods
  • security of payment methods

Importantly, the rules stipulate that e-commerce entities must also include country of origin. Paswan said this is to enable the consumer to make an informed decision at the pre-purchase stage on its platform.

He stated that e-commerce platforms have to acknowledge the receipt of any consumer complaint within forty-eight hours and redress the complaint within one month from the date of receipt under this Act.

According to Udai S Mehta, Deputy Executive director, CUTS International, an organisation working for consumer protection and rights, “this rapid e-commerce growth in India has resulted in an increased number of consumer grievances. Under the Consumer Protection Act, 1986, there were either no provisions or ambiguous ones relating to e-commerce in India.”

“Consumers facing grievances while purchasing goods from platforms like Flipkart, Snapdeal, etc, and/or availing services from online platforms like MakeMyTrip, Swiggy, etc did not have much protection. To resolve this, the new Consumer Protection Act, 2019 has widened the scope of protection to consumers,” Mehta added.

  1. Introduces The Concept Of Product Liability

Paswan further added that the new Act introduces the concept of product liability and brings within its scope, the product manufacturer, product service provider and product seller, for any claim for compensation.

The basis for product liability action are:

  • Manufacturing defect
  • Design defect
  • Deviation from manufacturing specifications
  • Not conforming to express warranty
  • Failing to contain adequate instructions for correct use
  • Service provided-faulty, imperfect or deficient

“Under the new Act, e-commerce will be governed similar to direct selling in India and online platforms for selling goods or services, or aggregating services will be held liable for any violation of consumer rights or adopting any unfair trade practices,” Mehta said.

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