Changes of Consumer Protection Laws cause Consumer affected

Abstract:

The Government instead of bringing an amendment in the 1986 Act, enacted a new Act altogether so as to provide enhanced protection to the consumers taking into consideration the booming e-commerce industry and the modern methods of providing goods and services such as online sales, tele-shopping, direct selling and multi-level marketing in addition to the traditional methods. The 2019 Act has brought in some major changes and provides for more protection to the consumers in parimateria to the earlier 1986 Act which can be seen from the comprehensive definition provided for the term 'Consumer' and 'Unfair Trade Practice'. The 2019 Act expands the scope of the definition of Consumer so as to include the consumers involved in online transactions and it now squarely covers the E-commerce businesses within its ambit. The 2019 Act has also widened the definition of Unfair Trade Practices as compared to the 1986 Act which now includes within its ambit online misleading advertisements; the practice of not issuing bill/memo for the goods and services; failing to take back defective goods or deactivate defective services and refund the amount within the stipulated time mentioned in the bill or memo or within 30 days in the absence of such stipulation; and disclosing personal information of a consumer unless such disclosure is in accordance with law.

Keywords: Consumer Redressed Forums, protection to the consumers, Professional Negligence, Consumer Protection, Business cycles

The Consumer Protection Act, 2019: An Overview

The 2019 Act has also introduced the concept of 'unfair contract' which includes those contracts, which favor the manufacturers or service providers and are against the interest of the consumers such as contracts requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations; imposing any penalty on the consumer for a breach of the contract, which is wholly disproportionate to the loss occurred due to such breach to the other party to the contract; refusing to accept early repayment of debts on payment of applicable penalty; entitlement of a party to the contract to terminate such contract unilaterally, without reasonable cause; permitting or has the effect of permitting one party to assign the contract to the detriment of the other party who is a consumer, without his consent; and imposing on the consumer any unreasonable charge, obligation or condition which puts such a consumer to any disadvantage. Such unfair consumer contracts are now covered under the 2019 Act and a complaint in this regard can now be filed by a consumer. The CCPA has been provided with vast powers to inquire, investigate and take action against violations of the 2019 Act. Another significant power the CCPA has been showered with, is the power to take action and impose penalty against misleading and false advertisement as well as against any endorser of such advertisement, which means the CCPAcan now initiate action against the celebrities who have endorsed such misleading and false advertisement provided such celebrities failed to carry out any due diligence before participating in such advertisements. The CCPA may impose a penalty of up to Rs.10 Lakhs for first violation and up to Rs.50 Lakhs on every subsequent violation on a manufacturer or an endorser, for a false or misleading advertisement. In addition to this, such manufacturer or endorser may be sentenced to imprisonment for upto two years.

Legal Perspective :

The CCPA has also been granted the authority to initiate suo-moto proceedings against violators; pass directions to recall products or discontinue services and provide refund to consumers; and file class action suits on behalf of multiple consumers which makes it an effective tool to curb mass violation of consumer interest. Another major introduction in the 2019 Act is the concept of Product Liability which covers within its ambit the product manufacturer, product service provider and product seller, for any claim for compensation. The term 'product liability' is defined by the 2019 Act as the responsibility of a product manufacturer or product seller, of any product or service, related to the product to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating to the product. Also, since the product seller has now been defined to include a person who is involved in placing the product for a commercial purpose and as such would include e-commerce platforms as well. Therefore, the ground commonly taken by E-commerce websites that they merely act as 'platforms' or 'aggregators' will now not be tenable before the court anymore. There are increased liability risks for manufacturers as compared to product service providers and product sellers, considering that under the 2019 Act, manufacturers will be liable in product liability action even where they successfully prove that they were not negligent or fraudulent in making the express warranty of a product. However, certain exceptions have been provided under the 2019 Act from liability claims, such as, that the product seller will As far as the Consumer Redressal Forums are concerned, certain key changes have been brought by the 2019 Act such as:-

(I) Territorial Jurisdiction – The 2019 Act now provides an added advantage to the consumers by providing for filing of complaints where the complainant resides or personally works for gain as against the 1986 Act which only provides for filing of complaint where the opposite party resides or carry on business. This would help in removing the difficulties faced by the consumers in seeking redressal of their grievances against businesses who may not have an office or branch in their state.

 (ii) Pecuniary Jurisdiction – The 2019 Act also changed the pecuniary jurisdiction for the District, State and National Commissions, respectively. The pecuniary limit for the District Commission has been increased to up to Rs.1 Crore from up to Rs.20 Lakhs; for State Commission it has been increased to up to Rs.10 Crores from up to Rs.1 Crore; and for National Commission the pecuniary jurisdiction has been increased to over and above Rs.10 Crores as against Rs.1 Crore in the 1986 Act. In addition to this, the 2019 Act has also changed the manner for determining the pecuniary jurisdiction for filing the Complaint. Now the pecuniary jurisdiction will be determined on the basis of the value of goods or services paid as consideration as against the 1986 Act wherein, the pecuniary jurisdiction was determined as per the value of goods and services as well as compensation claimed.

(iii) Alternate Dispute Resolution – Another provision introduced by the 2019 Act to ensure speedy resolution of disputes is to provide for referring the disputes to mediation. As per the 2019 Act, the Consumer Forum shall refer the matter to mediation on written consent of both the parties. For this purpose, the 2019 Act also provides for establishment of a consumer mediation cell by the respective State Governments in each District Commission and State Commission as well as at the National Commission by the Central Government. (iv) E-Complaints - The 2019 Act also provides for filing of Complaints before the District Forums electronically in accordance with the rules which are yet to be prescribed by the Government. Conclusively, the Consumer Protection Act, 2019 when compared with the 1986 Act shows that it provides for greater protection of consumer interests taking into consideration the current age of digitization. The 2019 Act also deals with the technological advancements in the industry, provides for easier filing of complaints and also imposes strict liability on businesses including endorsers for violating the interest of the consumers. However, the test of time will prove the fate of the 2019 Act as and when it is notified by the Central Government, which, prima-facie, appears to be much more consumer-friendly than the 1986 Act and also includes the current industry trends of e-commerce.

Product Safety Laws

Manufacturers of products sold to the public must follow rules and regulations created by the Consumer Product Safety Commission. The CPSC regulates all consumer products except those (such as guns and drugs) that are overseen by another agency. It establishes product safety requirements, issues recalls, evaluates product hazards, and bans products it deems dangerous.

If the CPSC determines a particular product poses a danger to the public, it sends a letter to the manufacturer explaining the violation and the corrective action required. The manufacturer may be required to notify the public of the danger, fix the product hazard, stop selling the product, recall the product, or any combination of these.

The CPSC has created a Small Business Ombudsman to help small business owners understand which safety regulations apply to them.

State Consumer Protection Laws

Virtually all states have enacted laws that prohibit unfair and deceptive practices by businesses against consumers. These statutes, called UDAP laws, are enforced by state attorneys general. An example of an UDAP law is an Unfair Claims Settlement Practices Act, which requires insurers to follow certain procedures when settling claims.

Many UPAD laws allow consumers to sue a business if they have purchased, leased or rented goods or services from that business and been injured due to an unfair or deceptive practice. Claimants may sue the business for compensatory damages and attorneys fees. A state-by-state summary of UDAP laws is available at the National Consumer Law Center's website.

Examples of Acts That Violate UDAP Acts

Here are examples of acts committed by businesses that may violate state UDAP acts.

• A representative of loan consolidation company tells college students that the company is registered on the New York Stock Exchange, it is an expert in student loans, and that all fees charged will reduce loan balances. None of these statements is true.
• A contractor provides a homeowner his contractor's license number and details about his general liability and workers compensation policies. The information is false as the contractor has neither a license nor insurance.
• An employee of a car rental agency tells customers that an administrative fee is required by the state, the collision damage waiver is free of charge, and no taxes will be charged. All of these statements are false.

Product Warranties

Most businesses that make products offer a warranty, which is a promise to buyers. A warranty explains what the manufacturer will do if the product is faulty. Warranties may be express (written or oral) or implied. Federal law governs written warranties while state laws govern implied warranties.

Written Warranties

Federal law doesn't require manufacturers to provide a written warranty but if they choose to provide one, it must meet federal requirements. For instance, the warranty must clearly explain its scope (full or limited), be easy to understand, and be readily available when the product is purchased. Consumers may sue businesses that issue false or misleading warranties or that fail to fulfill their obligations under a warranty.

Implied Warranties

When a manufacturer sells a product to a consumer, it generally provides two implied warranties:

• Merchantability. The manufacturer warrants that the product is not defective and that it will do what it's supposed to do. For example, a hairdryer will blow hot air.
• Fitness For Particular Purpose. The manufacturer warrants that the product is fit for the particular purpose for which it was sold. For example, a Vac-U-Fur brand vacuum cleaner sold at pet shops should suck up dog hair.

​​Here's how consumers will benefit under the new Consumer Protection Act?

Consumers can cheer as the Consumer Protection Act, 2019 has recently replaced the three decade old Consumer Protection Act, 1986.

The new Act proposes a slew of measures and tightens the existing rules to further safeguard consumer rights. Introduction of a central regulator, strict penalties for misleading advertisements and guidelines for e-commerce and electronic service providers are some of the key highlights.

CONCLUSION

As is evident, CPA 2019 has made several changes to the erstwhile CPA 1986. CPA 2019 has widened the reach of consumer protection regime in India. The changes made vide CPA 2019 seem to further empower consumers by leveraging responsibilities not only on their counterparts, i.e., the sellers, manufacturers, service providers, but also the endorsers of such products. It also attempts to address the issues that were not comprehensively touched upon by CPA 1986, such interests of consumers as a class, etc.

CPA 2019 has also attempted to ease and fasten the process of consumer disputes resolution by increasing the pecuniary jurisdiction of the commissions, attaching mediation cells, increasing the members of the commissions, imposing higher penalties etc.

The ramifications of CPA 2019 cannot be precisely gauged beforehand, as many new concepts have been introduced. However, what can definitely be said is that everyone involved in a transaction, other than the consumer, will have to be more careful, and cautious than ever before. The new Consumer Protection Act proposes a slew of measures and tightens the existing rules to further safeguard consumer rights.

References

• Statement of Objects and Reasons of the Consumer Protection Bill, 2019.
• Section 15 of CPA 2019.
• Section 18 of CPA 2019.
• Section 16 of CPA 2019.
• Indian Medical Association v. VP Shantha & Ors. 1996 AIR 550
• State of Karnataka v. Karnataka Pawn Brokers Association, SLP(C) Nos. 8652-8656 of 2012.
• Section 74-81 of CPA 2019 (Chapter V)
• Section 72 of CPA 2019
• Section 27 of CPA 1986 vis-a-vs Section 72 f CPA 2019
• Section 74 of CPA 2019
• Section 81 of CPA 2019
• Section 34(2)(d) of CPA 2019
• Section 35(1) of CPA 2019
• Section 101(2)(p) of CPA 2019