Consumer Protection Bill

Consumer Protection Bill-2018

Consumer Protection Bill-2018

The Consumer Protection Bill, 2018 is aimed at changing the dynamic of consumer welfare across the country. The regulation, which is set to effectively replace the Consumer Protection Act of 1986, is designed to strengthen the rights of the consumers and facilitate a mechanism for the redressal of complaints pertaining to defects in goods and deficiency in services. This article seeks to create awareness of the Bill among the consumers, manufacturers and retailers.

Road to the Bill

Before exploring the facets of the Bill, here’s a preview of the factors that led to the inception:

The Consumer Protection Act, 1986

The provisions pertaining to consumer rights were previously regulated by the Consumer Protection Act of 1986. The Act was meant to facilitate the redressal of complaints at the district, state and national level and to deal with offences such as unfair trade practices. As the Act was lacking in many pivotal aspects, the Law Commission of India recommended for a separate law to be enacted for this purpose. (Know more)

The 2011 Bill

The above factors resulted in a 2011 Bill, which merely sought to amend the 1986 Act in terms of filing online complaints and included provisions opposing the unfair terms in a contract. The Bill didn’t withstand the test of time and was annulled with the dissolution of the 15th Lok Sabha.

The 2015 Bill and Its Amendments

Later, The Consumer Protection Bill, 2015 was introduced to replace the 1986 Act of the same name. However, the implementation of the same was stalled as the Standing Committee on Consumer Affairs, to whom the Bill was passed to, made several recommendations. The latest Bill includes the recommendations of the 2015 Bill.

Objective of the Bill

The Bill seeks to facilitate the protection of the interest of the consumers. To cater to this purpose, proper authorities will be designated for the timely, effective administration, and settlement of consumer disputes. As a whole, the new enactment could potentially revolutionize consumer rights by empowering the consumers and agencies with a lot more power than they are now vested with.

The Proposed Hierarchy of Administration

The Bill seeks to create a Central Consumer Protection Authority (CCPA) for the purpose of promoting, protecting and enforcing the rights of the consumers. The administrative body will be presided by a Chief Commissioner and other Commissioners, who will perform the role of subordinates to the former. It will have an investigation arm which will be headed by a Director General. The entity, which is designed on the lines of the Federal State Commission of the U.S.A. will be designated for:

  • Redressal on complaints pertaining to unfair trade practices.
  • The issue of safety guidelines for goods and services.
  • Order refunds for failed procurements.
  • Recall goods.
  • Prevent unfair and restrictive trade practices.
  • Initiate measures against misleading advertisements.
  • Referral of complaints to other regulators.
  • Punitive rights, which includes the levy of penalties.
  • Prohibiting a person from endorsing a product or service for up to a year or three years in case of subsequent performance of the offence.

In addition to this, the bill aims to:

  • Establish Consumer Disputes Redressal Commissions at national, state and district-levels to deal with consumer complaints.
  • Create Consumer Protection Councils (CPC) at the district, state, and national level in an advisory role. CPC’s were also established under the previous Act, but with different responsibilities.
  • Setting-up of consumer mediation cells.

The Consumer’s Entitlement

The Consumer Protection Bill, 2018, caters to the consumers in the following manner:

  • Consumers will be safeguarded against the marketing of goods, products or services which are hazardous to life and property.
  • The consumers will have the right to be informed of the quality, quantity, potency, purity, standard and price of goods, products or services; and must have assured access to a variety of goods, products or services at competitive prices.
  • The consumers will have the rights to be heard and must be guaranteed of the recognition of their interests.
  • The consumers may seek redressal against unfair or restrictive trade practices or unscrupulous exploitation of consumers.
  • The consumers are entitled to file a claim of product liability against the manufacturer, seller or service provider in the event of an injury, defect in the procured goods or deficiency in the services rendered. A case for this purpose could be filed from any location, in contrast to the existing law which mandates the consumer to register the complaint from the place of procurement or the place of the rendering of service.
  • The consumer is entitled to be compensated for any harm caused. The harm could be in the form of property damage, personal injury, illness, death, or mental agony or emotional harm accompanying such conditions.

Unfair Contracts

Unfair contract forms a part of the drawbacks faced under the Consumer Protection Act as there were no provisions in place to check its occurrence. Under the proposed Bill, the State and National commissions may determine if the terms of a contract are unfair and declare the same to be null and void.

In a general context, a contract is termed as unfair if it causes a significant change in the rights of the consumer, which includes:

  • The demand for excessive security deposits.
  • The levy of a disproportionate penalty for a breach in contract.
  • The refusal to accept early repayment of debts.
  • The termination of a contract without reasonable cause.
  • The transfer of a contract to a third party to the detriment of the consumer without his/her consent.
  • The levy of unreasonable charge or obligations on the consumer.

Unfair and Restrictive Trade Practices

The CCPA will be entrusted with the task of preventing and discontinuing unfair and restrictive trade practices; and the District, State or National Commission may discreet the discontinuation of such unfair and restrictive trade practices.

The nature of unfair trade practices includes:

  • The falsification of the quality or standard of a good or service.
  • Sale of goods by being non-compliant with the standards.
  • Manufacture of spurious goods.
  • Non-issuance of a receipt for a good or service.
  • Refusal to withdraw or refund goods or services within thirty days from the date of issue of order.
  • Disclosure of personal information provided by a consumer to any other person.

On the other hand, restrictive trade practice refers to the levy of unjustified costs or restrictions on consumers, the likes of which may include:

  • Delay in the provision or goods, which in turn results in a price enhancement of such goods.
  • Demanding the purchase of certain goods or services to obtain the other.

Penal Provisions

For the awareness of retailers and consumers alike, the penal provisions, as proposed in the bill, are as follows:

S. No.Type of Offence Penalty/Punishment
1Non-compliance with the orders of the District, State or National CommissionImprisonment of up to three years or a minimum fine of Rs. 25,000 (can be as high as Rs.1 lakh)
2Non-compliance with an order of the CCPAImprisonment of up to six months and/or a fine of up to Rs. 20 lakhs
3False and misleading advertisementsA penalty of Rs. 10 lakhs for the manufacturer or enforcer, which would be Rs. 50 lakhs for subsequent offences of the same nature; and/or imprisonment of up to two years (five years for subsequent offences)
4For the manufacture, storage, sale, distribution or import of adulterated productsA penalty of Rs. 1,00,000 and/or imprisonment for six months
5Injury to the consumer (due to the act mentioned in point 4)A penalty of up Rs. 3 lakhs and imprisonment of up to one year
6If a grievous hurt is caused (due to the act mentioned in point 4)A fine of up to Rs. 5 lakhs and imprisonment of up to seven years
7In the event of death (due to the act mentioned in point 4)A penalty of up to Rs. 10 lakhs or more and imprisonment of at least seven years, which is extendable to life

 

Note: Apart from this, the Bill proposes a penalty of Rs. 10,000-Rs. 50,000 on consumers for raising frivolous complaints.

Consumer Protection Act and Consumer Protection Bill – A Comparison

We thought a comparison would help you to be averse with the implications of the recent enactment:

S. No. Consumer Protection Act, 1986Consumer Protection Bill, 2018
1All goods and services are included under its ambit, except for free and personal servicesAll goods and services are included, particularly online marking and teleshopping. On a note of similarity, free and personal services are again excluded
2Covered six types of unfair practices, the likes of which include false representation and misleading advertisementsCovers three more practices, which includes – the failure to issue a receipt or bill, refusal to accept a good returned within 30 days and disclosure of personal information given in confidence, unless issued by law or in public interest.
3Doesn’t address product liabilityClaim for product liability can be filed against the manufacturer, service provider and seller. Compensation for the same can be obtained by proving any of the several specified conditions in the bill.
4Doesn’t address unfair contractsUnfair contracts got the description of causing a significant change in consumer rights. To curb its prevalence, the Bill enlists six contractual terms which may be deemed unfair
5CPC’s were established for protecting the rights of consumers at the district, state and national levelFacilitates CPCs advisory bodies for the promotion and protection of consumer rights at the district, state and national levels
6No regulators were designatedCCPA will be formed for the successful administration of the regulation
7No provision for dispute redressalMediation cells will be attached to the District, State, and National Commissions
8Non-compliance with the orders of the commission will lead to imprisonment ranging between one month to three years and/or a fine ranging between Rs. 2,000 to Rs. 10,000Such an act may lead to an imprisonment of three years and/or a fine of at least Rs. 25,000 (can go up to Rs. one lakh)
9No provisions for e-commerceThe Central Government may prescribe the norms for preventing unfair trade practices in e-commerce and direct selling as the Bill specifically defines direct selling, e-commerce and electronic service provider in its portfolio

 

Post by Sreeram Viswanath

IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.