Consumer Protection Act, 2019- Key Highlights
The Digital Age has directed in a new era of commerce and digital branding, as well as a new set of customer expectations. Digitization has provided easy access, a large variety of choice, convenient payment mechanisms, improved services and shopping as per convenience. However, along the growth path it also brought in challenges related to consumer protection.
Keeping
this in mind and to address the new set of challenges faced by consumers in the
digital age, the Indian Parliament, on 6 August 2019, passed the landmark
Consumer Protection Bill, 2019 which aims to provide the timely and effective
administration and settlement of consumer disputes. The Consumer Protection
Act, 2019 (New Act) received the assent of the President of India and was
published in the official gazette on 9 August 2019. The New Consumer Protection Act, 2019 came into force on 20th July
2020 and it will empower consumers and help them in protecting their
rights through its various notified rules and provisions.
The New Act seeks to replace the more than 3 (three) decades old Consumer Protection Act, 1986 (Act).
KEY HIGHLIGHTS OF THE NEW ACT-
Establishment of Central Consumer Protection Authority: 
The New
Act will establish a new regulatory authority known as the Central Consumer
Protection Authority (“Central Authority”), which will have wide powers of
investigation including the power of search and seizure. The CCPA will have an
investigation wing, headed by a Director-General, which may conduct inquiry or
investigation into violation of consumer rights or unfair trade practices.
The CCPA has been granted wide powers to take suo-moto actions, recall products, order reimbursement of the price of goods/services, cancel licenses and file class action suits, if a consumer complaint affects more than 1 (one) individual.
E-Commerce
Transactions: 
The New Act has widened the definition of
'consumer'. The definition now includes any person who buys any goods, whether
through offline or online transactions, electronic means, teleshopping, direct
selling or multi-level marketing. The earlier Act did not specifically include
e-commerce transactions, and this lacuna has been addressed by the New Act.
Pecuniary
Jurisdiction: 
Revised pecuniary limits have been fixed under
the New Act. Accordingly, the district forum can now entertain consumer
complaints where the value of goods or services paid does not exceed INR
10,000,000 (Indian Rupees Ten Million). The State Commission can entertain
disputes where such value exceeds INR 10,000,000 (Indian Rupees Ten Million)
but does not exceed INR 100,000,000 (Indian Rupees One Hundred Million), and
the National Commission can exercise jurisdiction where such value exceeds INR
100,000,000 (INR One Hundred Million).
E-Filing of
Complaints: 
The New Act provides flexibility to the
consumer to file complaints with the jurisdictional consumer forum located at
the place of residence or work of the consumer. This is unlike the current
practice of filing it at the place of purchase or where the seller has its
registered office address. The New Act also contains enabling provisions for
consumers to file complaints electronically and for hearing and/or examining
parties through video-conferencing. This is aimed to provide procedural ease
and reduce inconvenience and harassment for the consumers.
Product Liability: 
The New Act has formally introduced the concept
of product liability and brought within its fold not just the product
manufacturer and product service provider but the product seller as well. A
‘product seller’ is such a person who is involved in placing the product in the
market for a commercial purpose (e.g. brand owner). A product liability action
for compensation can now be formally made on grounds of defectiveness of good
or deficiency of services that has caused harm to a person or his/her property
on grounds. The scope of defect and deficiency has been expanded to include
non-conformance to express warranty or specifications, design defect, failure
to provide adequate instructions or warnings to prevent any harm etc.
Unfair Contracts: 
Following international jurisprudence, the New
Act introduces a unique provision that safeguards consumers against unfair
contracts by declaring them to be illegal. An unfair contract covers contracts
between manufacturer/ trader and a consumer that causes significant changes in
the rights of the consumer that the New Act explicitly recognizes, such as by
way of – imposing unreasonable obligation or condition on the consumer which
puts consumer to disadvantage; reserving right to unilateral termination
(without reasonable cause) or assignment without consent (which is to the
detriment of the consumer) in the contract; imposing a penalty for breach which
is disproportionate to loss caused etc.
Unfair Trade
Practices: 
The New Act introduces a broader definition of
Unfair Trade Practices, which also includes sharing of personal information
given by the consumer in confidence, unless such disclosure is made in
accordance with the provisions of any other law. The New Act empowers the
Central Authority and Consumer Commission (i.e. the judicial fora) to order the
perpetrator of such practice to discontinue it.
Penalties for
Misleading Advertisement: 
The New Act introduces, for the first time, a
definition of misleading advertisement. It covers false description and
guarantee of a product or services. It also covers information that was deliberately
concealed from the consumer. If a misleading advertisement is found to be
prejudicial to the interest of consumers, then the Central Authority may impose
a penalty of up to INR 1,000,000 (Indian Rupees One Million) on a manufacturer.
Separately, the New Act has made it a criminal offence to publish false or
misleading advertisement for manufacturers and services providers. If found
guilty, they could be sentenced to imprisonment for up to 2 (two) years.
Celebrity
Endorsement: 
The New Act fixes liability on endorsers
considering that there have been numerous instances in the recent past where
consumers have fallen prey to unfair trade practices under the influence of
celebrities acting as brand ambassadors. In such cases, it becomes important
for the endorser to take the onus and exercise due diligence to verify the
veracity of the claims made in the advertisement to refute liability claims. If
a misleading advertisement is found to be prejudicial to the interest of
consumers, then the Central Authority may impose a penalty of up to INR
1,000,000 (Indian Rupees One Million) on the endorser as well. The Central
Authority can also prohibit the endorser of a misleading advertisement from
endorsing that particular product or service for a period of up to 1 (one)
year. For every subsequent offence, the period of prohibition may extend to 3
(three) years.
Provision for
Alternate Dispute Resolution: 
The New Act provides for mediation as an
alternate dispute resolution mechanism, making the process of dispute
adjudication simpler and quicker. This will help speedier resolution of
disputes and reduce pressure on consumer courts.
Conclusion 
Gone are the days of ‘Buyers beware’. The
consumer is now the king, not just in business but also in law. Hence, it is
important for FMCG, E-retailers and Celebrity Endorsers to be cognizant
of the provisions of the New Act. All businesses must pull up their socks and
amend their business practices and contracts to meet the expectations of the
New Act, so that they do not find themselves caught on the wrong side of the
law when then New Act is enforced.
Regards
CS Shubham Kapoor
Ph- 9711244345, 7017667034
Email- kapoor.shubhamm@gmail.com
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