Debriefed: Highlights of the Consumer Protection Bill, 2018
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Debriefed: Highlights of the Consumer Protection Bill, 2018

Meera Emmanuel

The Consumer Protection Bill, 2018, was recently passed by the Lok Sabha, and is slated to replace the prevailing Consumer Protection Act of 1986.

The 2018 Bill has mostly left the mechanisms and protections put in place by the 1986 Act intact. However, certain new features have been introduced to fortify the consumer protection law. The highlights of the new Bill include the following.

Addressing Growth of E-commerce 

Among the notable new features of the new Bill is its attempt to address consumer concerns stemming from the growth of e-commerce and false or misleading advertisements. This is apparent from the definitional clause of the Bill itself. New relevant definitions proposed to be added to the consumer law include advertisement, e-commerce, electric service provider and endorsement.

Accordingly, the definition of “consumer” also includes those who buy goods or avail services online through e-commerce outlets. An explanation to Section 2 (7), which defines a “consumer”, lays down:

(b) the expressions “buys any goods” and “hires or avails any services” includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing

On a related note, consumer complaints can be made not only in written form, but also in electronic form to the appropriate authorities.

Combatting False or Misleading Advertisements

Specific provisions of the Bill target false or misleading advertisements, which can be penalised with fines or bans on exhibition/appearance. A newly created Central Consumer Protection Authority (‘Central Authority’) also carries the mandate to act against false or misleading advertisements.

On a complaint being made of such an advertisement, and the same being proved, the CCPA can slap a fine of up to Rs 10 lakh on those complicit in broadcasting such false or misleading advertisement, as well as a one year ban. This has been provided for in Section 21.

Such liability would extend to endorsers as well, including celebrity endorsers. Repeated violations may attract a penalty of up to Rs 50 lakh  and a ban on appearance/exhibition up to three years. The CCPA also has the authority to direct the withdrawal or modification of the misleading advertisement under Section 21 of the Bill. The penalty may be avoided, however, if the concerned person/company is able to show that due diligence was exercised to verify the claims made in the advertisement.

The Central Consumer Protection Authority (CCPA)

The Bill proposes the creation of a new authority, in addition to the already existing three-tiered consumer dispute redressal forums, to protect consumers as a class. This new entity is called the Central Consumer Protection Authority (CCPA).

As per Section 10, this new Central Authority is empowered to regulate on matters relating to violation of consumers rights, unfair trade practices, and false or misleading advertisements. It is also tasked with generally promoting, protecting and enforcing the rights of consumers. To this end, its functions include:

  • Referring complaints to the consumer protection authorities
  • Intervening in commission proceedings
  • Reviewing measures for consumer protections and making recommendations to fortify consumer protection
  • Research, awareness and making recommendations for consumer protection

As part of its general mandate to protect consumer interests, it is empowered to conduct or direct inquiry or investigation into consumer complaints, either on its own or on a referral by the government. It may engage experts from relevant fields for consultation purposes. It can also refer matters before it to the concerned regulator under any other law, if so required.

As noted earlier, its punitive powers include the authority to penalise those complicit in broadcasting false or misleading advertisements through fines, bans or withdrawal/modification orders.

It can also direct the withdrawal of defective/hazardous goods or discontinuation of such services, under Section 20. Failure to comply with such orders by the CCPA may attract a penalty of up to Rs 20 lakh or jail time up to a year, as per Section 88. However, these punitive orders can only be passed after providing the parties an opportunity to be heard.

The CCPA has also been conferred powers of search and seizure. In fact, it is to have an Investigation Wing headed by the Director General as per Section 15. The members of the Investigation wing has can carry out searches and inspections when dealing with those believed to have violated consumer rights or indulged in an unfair trade practice or caused the broadcast of false or misleading ads.

However, to balance out these powers, the Bill also penalises vexatious searches with imprisonment up to a year or a fine up to Rs 10,000 or both under, Section 93. Further, as per Section 22 (3), the materials so seized would have to be returned to the person from whom they are seized within twenty days after making copies and extracting the necessary information.

Mediation

A separate chapter, Chapter V,  has been created to detail the procedure to be followed to refer a consumer dispute to mediation. Section 74 under the said chapter calls for the creation of Consumer Mediation Cells to be attached to National, State, and District Consumer Commissions. Parties can voluntarily submit to mediation by informing the concerned dispute resolution forum of the same. As per Section 37, the dispute may be referred to mediation if there is a possibility of settlement by the parties.

Chapter V details the procedure to be followed in mediating such consumer disputes. If the parties are unable to reach a settlement through mediation, the matter will be reverted back to the concerned dispute resolution forum to hear it.

Product Liability

As per the Bill, product liability refers to the responsibility of the manufacturer or producer of the consumer product when it comes to the safety and quality of the product. This would include an obligation to compensate for any harm caused by a defective product or a deficiency in service.

As per Section 84 (2), a product manufacturer would be liable in a product liability action even if he proves that he was not negligent or fraudulent in making the express warranty of a product.

As per Section 86, the product seller would be liable if:

  • he exercised substantial control over manufacturing, processing, labelling etc. of the product
  • he altered or modified product which contributed to the harm
  • the express warranty made by him fails
  • the manufacturer is not known or cannot be reached
  • there is failure reasonable care

Product liability provisions would be attracted in any of the following scenarios i.e.

  • the product suffers from a manufacturing defect, or a deviation in design
  • If there is a deviation from manufacturing specifications.
  • If the product fails to contain adequate instructions of correct usage to prevent any harm or if there is no warning regarding improper or incorrect usage.

Changes in Pecuniary Jurisdiction

The revised pecuniary jurisdiction for the three tiered consumer dispute redressal commissions are as follows:

  • District Commissions: complaints valued up to Rs 1 crore
  • State Commissions: complaints valued between Rs 1 crore and Rs 10 crore
  • National Commission: complaints valued at Rs 10 crore and above

Read the Consumer Protection Bill, 2018 below:

1_2018_LS_Eng-1.pdf
Preview
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