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Analysis of Consumer Protection Act, 2019

Analysis of Consumer Protection Act, 2019
- Rajvi Shah, GNLU, Gandhinagar

Living in the digital age has ushered a new era of commerce and digital branding, along with a new set of customer expectations. Digitization has provided easy access, an array of choices, convenient payment mechanisms, improved services and shopping as per one\'s comfort. However, along with the growth it has also brought in challenges related to consumer protection. 

In response to this, Indian Government has repealed its three-decade old consumer law and has enforced a new law altogether. The Consumer Protection Act, 2019 has been enforced on 20th July 2020 repealing the previous 1986 law. Various changes have been inculcated to fill up the lacunae present in the previous law to meet contemporary needs. An analysis of the relevant alterations in the act is provided below:

Establishment of Central Consumer Protection Authority :- 

The New Act proposes the establishment of a regulatory authority known as the Central Consumer Protection Authority (CCPA).It will protect, promote and enforce the rights of consumers and regulate cases related to misleading advertisements, unfair trade practices and violation of consumer rights. Moreover, it has been granted extensive powers to take suo-moto actions, order reimbursement of the price of goods/services, recall products, cancel licenses and file class action suits, if a consumer complaint affects more than one individual.

E-filing of complaints and expanding territorial jurisdiction of courts :- 

The complaint filing has been made simpler by allowing consumers to file complaints at a district or state consumer commission closest to their residence, rather than the location where the service or products were sold. Even the facility of e filing has been provided. This act has also allowed video or e-conferencing hearing of the parties, which further safeguards consumers from harassment or inconvenience and eases the procedure. 

E-Commerce under the radar :- 

The guidelines propose that  e-commerce platforms like Amazon and Flipkart will have to disclose sellers’ details - their address, website, email and other conditions related to refund, exchange, terms of warranty and contract on their website to bring more transparency. The onus of ensuring that no counterfeit products are sold on these platforms will also lie with the companies. If any such product is reported, the company could be penalised. This move is fitting since cases of fake products sold through e-commerce platforms are rampant.

Enhancement in Pecuniary Jurisdiction :- 

The National CDRC will hear complaints worth more than Rs. 10 crores, compared to more than Rs. 1 crore earlier. The State CDRC will hear complaints when the value is more than Rs 1 crore but less than Rs 10 crore, compared to Rs. 20 lakhs upto Rs. 1 crore earlier. The District CDRC will entertain complaints when the value of goods or service is up to Rs 1 crore, compared to upto Rs. 20 lakhs earlier. This change in the pecuniary limits was much required as with the passage of time, the time of value of money has increased and previously the limits were much less and hence, was indirectly increasing the burden on higher courts. 

Appeal Procedure :- 

The opposite party needs to deposit 50 per cent of the amount ordered by the district commission before filing an appeal before the state commission. Earlier, the ceiling was of Rs25,000 which has been removed. The limitation period for filing of appeal to state commission has been increased to 45 days from 30 days, while retaining power to condone the delay. 

Inserted option for Alternate Dispute Resolution :- 

In addition to court procedures, other options for dispute resolutions have been provided where they can opt for mediation. This will help reduce the already existing burden of cases in the local courts and provide for quicker resolution of their dispute too. 

Penalty for for manufacturing for sale or storing, selling or distributing or importing products containing adulterant

As in the act of 1986 there was no such provision of progressive changes in the amount of penalties, with passing of time - until recently, the amount of penalties and compensation awarded for violating the rules was turning out to be very negligible compared to the damage done and the purpose of imposing such penalties was not being met. Under the Consumer Protection Act, 2019, a product manufacturer and seller is liable to provide compensation for injury or damage caused by a defective product or service. The errant businesses will be penalized with up to 6 months in jail or a fine of up to Rs 1 lakh if the consumers do not suffer any injuries. In cases where the consumer is injured, the fine to the manufacturer, seller or distributor is upto Rs 5 lakh and upto seven years in jail. In case of death of the consumer, the wrongdoer will have to pay a minimum fine of Rs 10 lakh and spend seven years in jail, which can be extended to life imprisonment. This will ensure the purpose of the compensation to make full again the injured person and penalties to deter the wrongdoer from violating the rules again get fulfilled. However, now with the 2019 COPRA coming in force, which includes higher penalties and compensation the issue of "cheap and affordable penalty" seems to be resolved, the drafters have seemed to not realize the mistake of fixing the amount of penalties. Soon within the coming 10-20 years, again the same issue of the penaliser affording the price of the penalty against the wrong committed. Some discretion could have been given to the court to effectively devise the amount to be compensated from the injurer, or come up with a flexible formula to overcome the effective compensation and penalties.

Unfair Trade Practices

The New Act broadens the definition of Unfair Trade Practices, which includes sharing of personal information given by the consumer in confidence, unless such disclosure is made in accordance with the provisions of any other law. This will help ensure data protection and their consequent misuse for cyber crimes like phishing and cyberstalking.

Penalties for Misleading Advertisement

The CCPA may impose a penalty of up to Rs. 10,00,000 on a manufacturer or an endorser, for a false or misleading advertisement. The CCPA may also sentence them to imprisonment for up to 2 years for the same. In case of a subsequent offence, the fine may extend to Rs. 50,00,000 and imprisonment upto five years. The CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of upto 1 year. For every subsequent offence, the said period may extend to three years.

The liability is fixed on endorsers considering numerous instances in the recent past where consumers have fallen prey to unfair trade practices under the influence of their role models acting as brand ambassadors. In such cases, it becomes imperative for the endorser to take the onus and exercise due diligence to verify the veracity of the claims made in the advertisement to refute liability claims.

Gone are the days, where the consumers were asked to beware. A consumer is now the one who is the king of the market . Hence, it is important for consumer driven businesses to be cognizant to the changes in the legal scenario and put in place the robust policies to deal with consumer redressal. Consumer driven businesses must also strive to take extra precautions and avoid unethical or unfair business practices . This Act has surely brought in plenty of steps to protect the consumer truly and provide them the ways to resolve the consumer dispute in an easier manner. 

References :- 

1.Consumer Protection Act, 2019
2.Shipra Singh, ‘Here\'s how consumers will benefit under the new Consumer Protection Act’ (The Economic Times, 19 August 2019) <> accessed 23 July 2020
3.StutiGaliya, ‘Consumer Protection Act, 2019 – Key Highlights’ (Mondaq, 20 August 2019) <> accessed 24  July 2020
4.Anonymous, ‘Consumer Protection Act, 2019 comes into force: 5 ways how it helps you’ (Times Now, 20 July 2020) <> accessed 25 July 2020
5.HemantSingh, ‘Consumer Protection Act, 2019: Meaning and Key Features’ (Jagran Josh, 23 July 2020) <> accessed 25 July 2020