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RSTV: POLICY WATCH- CONSUMER PROTECTION BILL, 2019


RSTV: POLICY WATCH- CONSUMER PROTECTION BILL, 2019


Introduction:

A new consumer protection bill provides for strict monitoring and punishment for misleading advertisements. It aims to empower consumer courts at the state and district level to disperse greater financial compensation to the consumers. The bill also has a provision for setting up an executive agency called central consumer protection authority with a mandate to carry out investigations into violations of consumer rights, recall of unsafe goods and services and discontinue unfair trade practices. The bill will replace the Consumer Protection Act of 1986.

 

Highlights of the bill:

  • Definition of consumer: A consumer is defined as a person who buys any good or avails a service for a consideration.  It does not include a person who obtains a good for resale or a good or service for commercial purpose.  It covers transactions through all modes including offline, and online through electronic means, teleshopping, multi-level marketing or direct selling.
     
  • Rights of consumers: Six consumer rights have been defined in the Bill, including the right to: (i) be protected against marketing of goods and services which are hazardous to life and property; (ii) be informed of the quality, quantity, potency, purity, standard and price of goods or services; (iii) be assured of access to a variety of goods or services at competitive prices; and (iv) seek redressal against unfair or restrictive trade practices.
     
  • Central Consumer Protection Authority: The central government will set up a Central Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers.  It will regulate matters related to violation of consumer rights, unfair trade practices, and misleading advertisements.  The CCPA will have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into such violations.
     
  • CCPA will carry out the following functions, including: (i) inquiring into violations of consumer rights, investigating and launching prosecution at the appropriate forum; (ii) passing orders to recall goods or withdraw services that are hazardous, reimbursement of the price paid, and discontinuation of the unfair trade practices, as defined in the Bill; (iii) issuing directions to the concerned trader/ manufacturer/ endorser/ advertiser/ publisher to either discontinue a false or misleading advertisement, or modify it; (iv) imposing penalties, and; (v) issuing safety notices to consumers against unsafe goods and services.
     
  • Penalties for misleading advertisement: The CCPA may impose a penalty on a manufacturer or an endorser of up to Rs 10 lakh and imprisonment for up to two years for a false or misleading advertisement. In case of a subsequent offence, the fine may extend to Rs 50 lakh and imprisonment of up to 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.  However, there are certain exceptions when an endorser will not be held liable for such a penalty.
     
  • Consumer Disputes Redressal Commission: Consumer Disputes Redressal Commissions (CDRCs) will be set up at the district, state, and national levels.  A consumer can file a complaint with CDRCs in relation to: (i) unfair or restrictive trade practices; (ii) defective goods or services; (iii) overcharging or deceptive charging; and (iv) the offering of goods or services for sale which may be hazardous to life and safety.  Complaints against an unfair contract can be filed with only the State and National   Appeals from a District CDRC will be heard by the State CDRC.  Appeals from the State CDRC will be heard by the National CDRC.  Final appeal will lie before the Supreme Court.
     
  • Jurisdiction of CDRCs: The District CDRC will entertain complaints where value of goods and services does not exceed Rs one crore.  The State CDRC will entertain complaints when the value is more than Rs one crore but does not exceed Rs 10 crore.  Complaints with value of goods and services over Rs 10 crore will be entertained by the National CDRC.
     
  • Product liability: Product liability means the liability of a product manufacturer, service provider or seller to compensate a consumer for any harm or injury caused by a defective good or deficient service.  To claim compensation, a consumer has to prove any one of the conditions for defect or deficiency, as given in the Bill.

 

Significance:

  • Presently Consumer only have a single point of access to justice, which is time consuming. Additional swift executive remedies are proposed in the bill through Central Consumer Protection Authority (CCPA).
  • Deterrent punishment to check misleading advertisements and adulteration of products.
  • Product liability provision to deter manufacturers and service providers from delivering defective products or deficient services.
  • Ease of approaching Consumer Commission and Simplification of Adjudication process.
  • Scope for early disposal of cases through mediation.

 

Issues with the Bill:

  • The Bill does not address the fundamental problem of protracted and complicated litigation, the bane of consumer forums constituted under the Consumer Protection Act of 1986. Instead, it provides an alternative to the consumer forums, in the form of mediation.
  • The Bill does provide for a regulator, but there is no proper focus on the duties of the regulator.
  • Even the definition of ‘consumer rights’ in the Bill is not simple and straight forward, so that consumers at least know what their entitlements are.

 

Measures needed:

  • Cases should be resolved in 90 days.
  • Consumer education and proper awareness building measures.
  • Lessons to be learnt:-
    • Several countries like Canada, Estonia have devised advertisement regulations for unhealthy foods targeted at children
    • Countries such as the UK, Ireland and Belgium have specifically banned celebrity endorsement of unhealthy foods. The impact of such restrictions has been reported to be significant. 

 

Conclusion:-

The emergence of global supply chain, rise in global trade and rapid development of e-commerce have led to a new delivery system for goods and services and also provided new options and opportunities for consumers. Misleading ads, tele-marketing, multi-level marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive intervention to prevent consumer detriment. This bill is the step in the right direction in addressing these issues.

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