CONSUMER PROTECTION IN INDIA
In a recent legislative move, the Consumer Protection Act, 1986 was replaced by the new Consumer Protection Act, 2019 which came into force on July 20, 2020. The main objective of the new Act is to protect the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers’ disputes and for matters connected therewith or incidental thereto.
Important Highlights of the new Consumer Protection Act, 2019
Broadened Definition of “Consumer”
The new Act has broadened the definition of “consumer” to include persons engaging in offline or online transactions through electronic means or by tele-shopping or direct selling or multi-level marketing. By this new definition, consumers can seek remedy against multi-level marketing whereby sellers at each level of multi-level marketing can be held liable under the new enactment, including social media influencers or endorsers. However, persons who are provided with free services are not considered as a consumer despite such service being free is question or fact and will have to be evaluated on case to case basis.
The new enactment has extended its scope to e-commerce business recognizing and, the Central Government has the authority to take measures for the purpose of preventing unfair trade practices in e-commerce.
The new enactment has a separate chapter for the same and has a new ground for complaint filing which has been one of the most significant additions to the act. Aggrieved consumers can now claim significant compensation as a relief against manufacturers or service providers.
Central Consumer Protection Authority
The new enactment has established Central Consumer Protection Authority (“CCPA”) which is a regulatory authority empowered to impose penalties, recall goods, cause withdrawal of service, provide refunds and investigate into matters.
False or Misleading Advertisement
CCPA has the power to take action against false or misleading advertisements by imposing penalty of upto Rupees 10 Lakhs and/or imprisonment of upto 5 years on a manufacturer or endorser for such advertisement. Furthermore, for every subsequent offence, the period of prohibition may extend to three years.
Change in Pecuniary Jurisdiction
With the new enactment, pecuniary jurisdiction has also been raised in all three commissions which are reflected below.
- District Consumer Disputes Redressal Forum: The jurisdiction of the District Forum has been enhanced to Rs. 1 cr.
- State Consumer Disputes Redressal Commission: The State Jurisdiction shall be able to entertain Complaints whose value is minimum Rs. 1 cr but does not exceed 10 cr.
- National Consumer Disputes Redressal Commission: The National Commission, , shall be able to entertain Complaints valued above Rs. 10 cr.
By the new enactment, disputes can now be settled by way of mediation,if acceptable by both the parties.
Changes to territorial jurisdiction and e-filing of Complaints
The new enactment gives consumers the option to file complaints with the jurisdictional consumer forum located at the consumer’s place of residence or work. This is aimed to provide procedural ease and reduce inconvenience and harassment for the consumers.