Print Friendly, PDF & Email

Insights into Editorial: Govt to establish Central Consumer Protection Authority; what is it?

Consumer_Protection

Context:

Last week, Union Minister of Consumer Affairs, Food and Public Distribution announced that a Central Consumer Protection Authority (CCPA) will be established by the first week of April.

This was after the Minister held consultations with industry representatives about the role and functioning of a proposed CCPA.

The authority is being constituted under Section 10(1) of The Consumer Protection Act, 2019.

The Act replaced The Consumer Protection Act, 1986, and seeks to widen its scope in addressing consumer concerns.

The new Act recognises offences such as providing false information regarding the quality or quantity of a good or service, and misleading advertisements.

It also specifies action to be taken if goods and services are found “dangerous, hazardous or unsafe”.

The CCPA will have the powers to inquire or investigate into matters relating to violations of consumer rights or unfair trade practices suo motu, or on a complaint received, or on a direction from the central government.

Sources said the Ministry of Consumer Affairs, Food and Public Distribution is in the process of finalising the rules relating to the composition and functioning of the CCPA, and these are expected to be notified by April.

What is the Central Consumer Protection Authority?

The authority is being constituted under Section 10(1) of The Consumer Protection Act, 2019.

The Consumer Protection Act, 2019 aim is to protect the rights of the consumer by cracking down on unfair trade practices, and false and misleading advertisements that are detrimental to the interests of the public and consumers.

It will be headquartered in the National Capital Region of Delhi but the central government may set up regional offices in other parts of the country.

What can the possible structure of CCPA be?

The proposed authority will be a lean body with a Chief Commissioner as head, and only two other commissioners as members one of whom will deal with matters relating to goods while the other will look into cases relating to services.

The CCPA will have an Investigation Wing that will be headed by a Director General.

District Collectors too, will have the power to investigate complaints of violations of consumer rights, unfair trade practices, and false or misleading advertisements.

What kind of goods, and food items in particular, can be classified as “dangerous, hazardous or unsafe”?

This is not specified in the notification of the Act. Regarding food, an official said the CCPA will ensure that all standards on packaged food items set by regulators such as the Food Safety and Standards Authority of India (FSSAI) are being followed.

What will the CCPA do if any goods or services are found not meeting these standards?

  1. Under Section 20 of The Consumer Protection Act, the proposed authority will have powers to recall goods or withdrawal of services that are dangerous, hazardous or unsafe; pass an order for refund the prices of goods or services so recalled to purchasers of such goods or services.
  2. Discontinuation of practices which are unfair and prejudicial to consumer’s interest.
  3. For manufacture, selling, storage, distribution, or import of adulterated products, the penalties are:
  4. If injury is not caused to a consumer, fine up to Rs 1 lakh with imprisonment up to six months;
  5. If injury is caused, fine up to Rs 3 lakh with imprisonment up to one year;
  6. If grievous hurt is caused, fine up to Rs 5 lakh with imprisonment up to 7 years;
  7. In case of death, fine of Rs 10 lakh or more with a minimum imprisonment of 7 years, extendable to imprisonment for life.

How will it deal with false or misleading advertisements?

  1. Section 21 of the new Act defines the powers given to the CCPA to crack down on false or misleading advertisements.
  2. According to these provisions, if the CCPA is satisfied after investigation that any advertisement is false or misleading and is harmful to the interest of any consumer.
  3. It is in contravention of consumer rights, the CCPA may issue directions to the trader, manufacturer, endorser, advertiser, or publisher to discontinue such an advertisement, or modify it in a manner specified by the authority, within a given time.
  4. The authority may also impose a penalty up to Rs 10 lakh, with imprisonment up to two years, on the manufacturer or endorser of false and misleading advertisements.
  5. The penalty may go up to Rs 50 lakh, with imprisonment up to five years, for every subsequent offence committed by the same manufacturer or endorser.
  6. CCPA may ban the endorser of a false or misleading advertisement from making endorsement of any products or services in the future, for a period that may extend to one year. The ban may extend up to three years in every subsequent violation of the Act.

Separate regulator: Central Consumer Protection Authority (CCPA):

The Act proposes establishment of a central regulator, Central Consumer Protection Authority (CCPA), to address issues related to consumer rights, unfair trade practices, misleading advertisements and impose penalities for selling faulty and fake products.

Broadly, regulatory moves of CCPA will be directed towards the manufacturers, sellers and service providers and will not address customers’ grievances and disputes directly.

Nevertheless, the overall purpose of CCPA is to strengthen the existing consumer rights.

Jurisdiction under the Consumer Protection Act, 2019:

The act has defined the criteria of Consumer Disputes Redressal Commission (CDRCs).

The National CDRC will hear complaints worth more than Rs. 10 crores. The State CDRC will hear complaints when the value is more than Rs 1 crore but less than Rs 10 crore.

While the District CDRC will entertain complaints when the value of goods or service is up to Rs 1 crore.

What other powers will the CCPA have?

While conducting an investigation after preliminary inquiry, officers of the CCPA’s Investigation Wing will have the powers to enter any premise and search for any document or article, and to seize these.

For search and seizure, the CCPA will have similar powers given under the provisions of The Code of Criminal Procedure, 1973.

The CCPA can file complaints of violation of consumer rights or unfair trade practices before the District Consumer Disputes Redressal Commission, State Consumer Disputes Redressal Commission, and the National Consumer Disputes Redressal Commission.

It will issue safety notices to alert consumers against dangerous or hazardous or unsafe goods or services.

Conclusion:

The Commissions are intended to be quasi-judicial bodies, while the government is part of the executive.

There may be instances where the government is a party to a dispute relating to deficiency in service provided by a government enterprise, for e.g., the Railways.  In such a case, there would be a conflict of interest as the government would be a party to the dispute before the Commissions and will also have the power to appoint members to the Commission.

Similarly, if a consumer is subjected to grievous hurt due to adulteration the manufacturer of such a product can be punished with imprisonment of seven years and with fine which may extend to five lakh rupees.

This serves as an effective deterrent against producers or manufacturers adopting unfair practices for furthering their profit.