The New Consumer Protection Act

The Consumer Protection Act, 2019 (“New Act”) is being heralded as the new standard for safety, security and solution for aggrieved consumers and was received assent of the President on August 9, 2018. It aims to demystify some of the important aspects that were unclear and benefit consumers as a whole. Whilst the new consumer protection rules are to be formed under the New Act and may take certain time, hereinbelow we discuss certain important aspects of the New Act:

1. Definition of a consumer

The definition of the word consumer has been widened from what in meant in the erstwhile Consumer Protection Act, 1986 (“Erstwhile Act”). Now the term will amongst others also include consumer - (i) who have brought product or services through online transactions; (ii) teleshopping networks on TV; and (iii) mutli-level marketing platforms like Amway. Under the New Act platforms like Amazon, Flipkart that acted as an intermediary between the seller and the consumer may now also be held liable.

2. Establishing Central Consumer Protection Authority

The New Act proposes to setup a Central Consumer Protection Authority (“Authority”). The Authority will be a regulatory body setup to investigate and look into violations of consumer rights, misleading advertisements etc. The Authority may also file matters in the appropriate consumer forum. In addition to this, the Authority will also have the power to take up cases ‘Suo-moto’.

3. Change in pecuniary jurisdiction

There has been a sea change in the pecuniary jurisdiction at each level under the New Act.
The change is as follows:
(i) district level – Not more than INR 1 crore;
(ii) state level – Between INR 1 crore to INR 10 crores; and
(iii) national level – Exceeding INR 10 crores

This change appears to be have been done to ensure that consumers do not directly approach the National Commission thereby reducing the pendency of the cases in the National Forum.

4. Inclusion of product liability

The term ‘product liability’ had not been defined in the Erstwhile Act. The New Act not only defines the aforesaid term but places the liability on the manufacturer, the seller and the service provider. Provisions have been inserted in the New Act so with regard to ‘product liability action’ and ‘product manufacturer’ that define the liability along with its exceptions.

5. Introducing mediation

As means of an ‘alternate dispute resolution’ process has also been inserted in the New Act. This attempt is that more and more cases can be adjudicated through the mediation process so as to make consumer redressal speedy and less cumbersome.

6. Changes to the aspect of misleading advertisements

Under the Erstwhile Act the aspect of ‘misleading advertisements’ was included in the definition of ‘unfair trade practices’ and the district forum had the power to order the party issuing the misleading advertisement to issue a corrective statement in order to neutralise the effect of the misleading advertisement. However now, under the New Act, on an offence of misleading advertisement, the manufacturer or endorser can be fined up to INR 10 lakh on the first offence and INR 50 lakhs for every subsequent offence. The manufacturer can also be punished with up to 2 years imprisonment on first offence and up to 5 years for every subsequent offence.

However, no punishment for the endorser has been prescribed under the New Act though he may be prohibited from endorsing any particular product or service for a specified period. This is done keeping in mind the impact that celebrity endorsements have on the general public and therefore a regulation has to be maintained in this aspect also.

7. Widening the aspect of Unfair trade practices

The term ‘Unfair trade practices’ was defined under the Erstwhile Act as per which only limited acts constituted an unfair trade practice. In the New Act, more aspects have been added to this list, which amongst others includes – (i) failure to issue a act or receipt; (ii) refusal to accept a good returned within 30 days if no time period mentioned in the cash memo, and if mentioned, as per the cash memo only and (iii) disclosure of personal information given in confidence.

In addition to this, using contests/game of skills or luck had also been previously included in the ambit of unfair trade practices, however pursuant to the New Act, the Central Government has the power to exempt any such contest or game as an unfair trade practice. This appears to have been done as it appears that it would be unreasonable to term all such contests or games as unfair practices and instead if proper guidelines have been laid down for judging the competition, such contest/game can be exempted from the ambit of this section.

8. Unfair contract

The term ‘Unfair contract’ has been defined in the New Act as a contract between a manufacturer/trader/service provider and a consumer having terms which ‘can cause significant change in the rights of such consumer’ and further includes points such as requiring excess security deposits from a consumer to complete contractual obligations, unilaterally terminating a contract without reasonable cause. Due to the need to protect the interests of the consumers against prejudice caused by huge organisations, such a term has been defined and based on this a complaint can also be filed to obtain relief.

This Article is by Rohitaashv Sinha, Advocate & Associate Partner at Agarwal Jetley & Co., Advocates & Solicitors. Contact: Email: rohitaashv.sinha@agarwaljetley.com or Mob: (+91) - 9999565393