IMPACT OF NEWLY IMPLEMENTED PROVISIONS OF CONSUMER PROTECTION ACT, 2019

IMPACT OF NEWLY IMPLEMENTED PROVISIONS OF CONSUMER PROTECTION ACT, 2019

Introduction

The Consumer Protection Act, 2019 received the assent of the President and was published in the official gazette on 9 August 2019. However, the act stated that New Act will come into force on such date as the Central Government may so notify. Further, on July 15, 2020 the Central Government issued a notification enforcing most of the provisions of the new act. The key sections which will have salient impacts on the consumer and the market are discussed in this article.

Definition of Consumer

The definition of “consumer” has been expanded to include persons who engage in offline or online transactions through electronic means or by tele-shopping or direct selling or multi-level marketing as per the explanation under the Section 2(7) of the new Act.

The definition now provides consumers with a remedy in case of multi-level marketing. Thus, the seller at each level of multi-level marketing can be exposed to liability under CPA 2019. It is not restricted to only the manufacturer of the product but all entities involved at various stages of production and marketing.

When services are provided for free, the person availing the service will not be considered as a consumer. Whether or not the service being provided is free is a question of fact and will have to be evaluated on case to case basis.

Product Liability

The CCPA can initiate class action, including enforcing recall, refund and return of products. Moreover, the Act also envisages a simplified dispute resolution process with a provision for mediation and e-filing of cases. The Consumer will be able to file cases in the nearest commission under the jurisdiction of which he resides.

Unfair Contracts

A contract between a manufacturer or trader and consumer will be deemed to be unfair under the Consumer Protection Act, 2019, if it causes a significant change in rights of a consumer. Contractual terms which specify excessive security deposits, provide for unilateral termination or assignment without consent of other party are among the several grounds which render a contract unfair. The 1986 Act did not provide consumers with a single forum against such contracts.

False and Misleading Advertisements

Under the new law, a consumer can file a complaint with the Central Consumer Protection Authority against any advertisement which gives or conveys false description of a product or service or contains a representation constituting an unfair trade practice etc.

In a complaint for misleading advertisement for an unfair trade practice that involves false guarantee or warranties, the new law said the burden of proof will lie upon the person raising a defense that the guarantees were based on adequate and proper test. CPA can impose a penalty of up to INR 1 million, and up to INR 5 million for every subsequent violation.

E-Filing

The new law not only expands the universe of grievances, it also makes it easier for consumers to file them. The 2019 Act as per the Section 35 emphasizes on speedier adjudication of complaints. It allows an aggrieved consumer  for electronic filings and notices. There was no provision for e-filing under the 1986 Act.

Jurisdiction & Class Action Suits

The pecuniary Jurisdiction under the 2019 Act shall be decided on the basis of ‘value of goods or services paid as consideration’ by the consumer. The thresholds for pecuniary jurisdiction of the commissions are:

  1. District Commission: Rs 1 crore.
  2. State Commission: Rs 1 crore to Rs 10 crore.
  3. National Commission: Exceeding Rs 10 crore.

Moreover, the CCPA can initiate class action, including enforcing recall, refund and return of products. Moreover, the Act also envisages a simplified dispute resolution process with a provision for mediation and e-filing of cases. The Consumer will be able to file cases in the nearest commission under the jurisdiction of which he resides.

E-Commerce

The government has however put sections pertaining to E-Commerce and jurisdiction of dispute on hold. The enforceability is much awaited.

Hence, it is important for consumer driven businesses to be careful of the changes in the legal landscape. Moreover, they need to have robust policies dealing with consumer redressal in place. Consumer driven businesses must also strive to take extra precautions against unfair trade practices.

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