Now go get the right value for your money with the new Consumer Protection Act

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Now go get the right value for your money with the new Consumer Protection Act

Now go get the right value for your money with the new Consumer Protection Act

Arun Pinto   ¦    Jul 30, 2020 10:11:55 AM (IST)
Now go get the right value for your money with the new Consumer Protection Act-1The new Consumer Protection Act, 2019, notified as in force from July 20, 2020, coming 34 years after the 1986 version, has introduced several concepts that were unthinkable in 1986.

While folks have already started identifying lacunae in the new law, the fact remains that it is a very big step forward for India and shows the diligence with which the government has done all it could to address all issues that could arise and force a new level of performance by Indian trade and industry.

The Act has introduced important new concepts that can now ensure that this law is not just for the shelf but can make a real difference in our lives.

So what's new?

Offline, Online, and affiliate selling: Key changes start with the revision of the definition of a lawful consumer to include anyone paying for a product or service offline or online. Online marketing, traders, and delivery agents are now covered in the loop and would be liable for any loss to the extent of their involvement. This now includes persons involved in multi-level marketing (also called affiliate marketing).

Goods: Goods traded now include 'every kind of moveable property including food as defined in Food Safety and Standards Act 2006', so any complaints regarding home-delivered food do not have to be suffered in silence.

Unfair practices: Unfair practices have now been expanded to include refusal to provide a bill or receipt, refusal to accept a return within 30 days of the sale, and disclosure of any private information of a consumer except as permitted in the law.

Telecom and other Govt. Service Providers: Telecom companies have specifically been covered in the new act and since their failure to provide proper service is now a ground for claims one cannot rule out that railways, road transport corporations, and other services rendered by PSUs would be covered leading to a better deal for the Indian citizen.
Adulterated and spurious Products: New provisions now enable the consumer to drag manufacturers, sellers or distributors to court when adulterated and spurious products are found to have been supplied. The new law allows consumers to file complaints in state/district or national commissions claiming compensation for the spurious or adulterated product from the manufacturer.  

Real teeth
The Consumer Protection Act, 2019 gives real teeth to courts against errant businesses as they can be awarded jail or be fined even if the consumer is not injured.

Central Consumer Protection Authority: Another big step is the creation of a CCPA (Central Consumer Protection Authority) or 'Central Authority' who will be responsible for the implementation of the law as a whole. The first priority of the incumbent would be to ensure that the purpose of the law is met, namely the customer does not lose for any reason. Power is vested in the CCPA to even issue new rules if needed to ensure the operation of the system in an intended manner. Another very relevant power with the Central Authority is to convert a single party claim into a class action if another customer is found to have faced a similar loss due to the same deficiency that has been claimed for.

Suo Moto Class Action: 
Class Action option in the 1986 law made it incumbent on consumers to get together and then register a joint complaint, a situation that manufacturers never bothered about given the reticence of the Indian psyche to initiate legal proceedings. In such matters, the CCPA can now register a class action suo-moto if others affected have not raised a complaint.

The Central Authority would have with him a Director-General who would be carrying out raids and seizures whenever required.

Three-tier judicial hierarchy

District, State, and National Forums have been re-designated as District and State Commissions with pecuniary jurisdiction limits of 1 Crore, 10 crores, and above 10 Crores respectively.

The overall system will be run by a Central Consumer Protection Council, which consists of 35 members, led by the Union Minister for Consumer Affairs and Minister of State as Vice-Chairperson, and 34 other members from different fields.

Who can file a complaint? A lawful customer!
Any ‘Lawful Customer’ has the power to raise a complaint about any deficiency in any product or service with a seller, and if not adequately addressed by the seller within 15 days the buyer can record a complaint with the appropriate Commission online without having to hire a lawyer first. Of course, once the consumer had made his decision he/she could hire a lawyer if they see the need.

This brings us to the interesting part.

The liability that the consumer could claim would most likely be a handsome amount that will more than compensate any extra effort invested by the complainant. Given the fact that courts are also very supportive of consumer needs, the chances of a favorable settlement only go up. This now takes us into the world of Professional Indemnity Insurance and Product Liability Insurance.

A business opportunity for Insurance providers and legal counsels:
Professional Indemnity Insurance would provide insurance covers to both something that is done or omitted by a professional in the course of his or her work (also frequently called E&OE, or Errors and Omissions Liability Insurance) and Product Liability Insurance would protect business organizations from the burdens of claims for personal injury or property damage.

The door would also open for insurance of endorser liability to cover the risk faced by celebrities inadvertently endorsing products that run into trouble. Even if the penalty imposed on the endorser by the authority is paid by the Insurer, it may be noted that the prohibition of the celebrity from more endorsements for the embargoed duration would still remain which the celebrity cannot avoid.

Another business opportunity is the cover of legal costs in defending proceedings including damages arising from out-of-court settlements.

To favour a quick settlement the law also provides for settlement by mediation, with the compulsory participation of qualified mediators when directed by the authority where the complaint is being considered. Even if not specifically mentioned in the law as it now stands, it is expected that mediation would not be applicable in any case involving a fatality.

Rules regarding appeals have also been made very stringent so that for a ruling to be appealed, 50% of the total compensation allowed has to be deposited by the defendant before raising an appeal. The earlier ceiling of Rs 25,000 has now been removed so that now the amount deposited has to be 50% of whatever damages have been ordered to be compensated.

A law in favor of the Consumer
The law now is clearly in favour of the customers and the days have gone that we should hesitate to claim full compensation for any losses we suffer due to the casual and careless attitude of big business houses and manufacturing organizations. This should change the way we spend money and the way we recover the full worth of what we spend when dealing with any organization, big or small.

Doubts and criticism still prevail and always will!
Still, doubts have been expressed about this new law. says that a sudden surge in cases because of the opportunities in the new law could cause the whole setup to become weighed down and collapse whether at the district, state, or the central level.

About mediation, a view has been expressed that the option to mediate being dependant on the direction of the district, state, or central authority could provide scope for misuse by vested interests. While this might have been possible in a different era, online recording, and monitoring of the happenings in the organization should eliminate any such possibilities.

What's the situation on the ground?
Even though these provisions are now in force, the functioning of the consumer commissions in Mumbai have come to a halt since March, when the pandemic struck. "The new Act only provides for e-filing, with no provisions for (a) virtual hearing. We were expecting the State and the Central government to come with rules regarding this," said Uday Warunjikar, the president of the Consumer Courts Advocates Association.

Similarly, a concern has been voiced, that the filing of even one high value or prominent case would cause other cases to take a back seat, and these' others' would mostly include cases involving 'smaller people', about the purchase or service of mobiles or household appliances like mixers, washing machines, fridges televisions, etc by more ordinary people.

The problem would be more severe in the case of Fast-moving consumer goods (FMCG), products that are sold quickly and at a relatively low cost. Examples include non-durable household goods such as packaged foods, beverages, toiletries, candies, cosmetics, over-the-counter drugs, dry goods, and other consumables. Cases involving such items should not get elbowed out to accommodate a dramatic or very high-value case.

One more concern expressed is about the DG attached to the Central Authority – this DG and his team would have the authority to raid suspected activities or locations and seize incriminating evidence found. It is hoped that rules would define how this power would work vis-a-vis similar responsibilities of other local and state authorities and how that interface could be maintained without 'turf wars' between different government departments spinning out of control.

So now, at last, the doors look like they have opened for the Indian Citizen to demand compensation that is rightfully his, and the business sector will have to pull up its socks and get its act together and provide the best or face it.