As per the notification dated 15 July 2020, the Consumer Protection Act 2019 (“CPA 19”) came into force with effect from 20 July 2020. Most of the provisions came into force from 20 July, except for the provisions relating to Central Consumer Protection Authority (“CCPA”), which came into force with effect from 24 July 2020. The Lok Sabha passed the Consumer Protection Bill 2019 in August last year, and the Presidential assent was also provided in the same month.
Due to advancements in technologies in the consumer market, the consumers’ experience in the past decade has been dramatically enhanced. Gone are those times when consumers had to move out for everything they needed. Now almost all the products and services are just one-click away. However, the general perception was that the earlier consumer protection regime wasn’t able to keep up with the growing advancements. Keeping this factor in mind and with an aim to further enhance the rights for consumers, the government rolled out this “pro-consumer” legislation.
The CPA 19 aims to effectively protect the rights of the consumers and establish authorities, which will help in the effective administration of justice to the consumers. It appears to be more consumer-friendly than its predecessor. It contains various provisions which take into account the modern ways of providing good and services to consumers like e-commerce, multi-level marketing, and teleshopping.
This article discusses some of the relevant provisions of the CPA 19 and analyses their effect in the consumer market.
Definition of ‘consumer’ changed
The predecessor legislation did not specifically include those individuals as ‘consumers’, who were engaged in online procurement of goods and services. Now, the definition has been widened, and consists of all persons as consumers who are involved in “offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing.” This will bring all the stakeholders involved at various levels of online marketing into the ambit of CPA 19, and not only the manufacturer or the seller. It is pertinent to note that the term ‘consumer’ does not include a person who has received goods or services for resale or for free.
Introduction of the CCPA
CCPA is one of the most critical provisions in the entire CPA 19. The CCPA is a regulator that will enhance the consumer experience by protecting and enforcing consumers’ rights. Some of their broad functions include inter-alia: powers to initiate suo-moto proceedings against the law-breaker, pass directions to recall products or discontinue services and provide refunds to consumers, and file cases on behalf of multiple consumers.
CCPA has also been entrusted with powers to take actions and levy penalties against misleading advertisements and the endorsers. This implies that CCPA will now be authorised to take action against any celebrity if that celebrity endorses any products without exercising due diligence. CCPA can levy penalty up to Rs 10 Lakhs and sentence such person for 2 years of imprisonment for the first violation. For subsequent violations, the penalty can be up to Rs 50 Lakhs and imprisonment for up to 5 years. This power of CCPA will curtail the menace of false advertisements prevailing in the Indian market.
CCPA has been newly introduced in CPA 19 as, earlier, there was no regulatory body to enforce the rights of the consumers except the Consumer Courts, and they were already overburdened due to voluminous cases. CCPA will work in addition to the Consumer Courts to resolve disputes in some matters like the recalling of the products and levying penalties. This shall reduce the case load of Consumer Courts and also encourage consumers to resolve disputes who earlier hesitated to approach the Consumer Courts. As CCPA comes into power, it will play an instrumental role in addressing consumer concerns and making delivery of justice in consumer matters faster than ever before.
It is worth mentioning that for enforcing consumers’ rights, CCPA is new of its kind. However, for regulating malpractices and fraudulent activities of different sectors, there existed some regulators before. Like the Food Safety and Standards Authority of India is there to regulate food and beverages, the Central Drugs Standard Control Organisation is there, which governs the pharmaceuticals, and the Securities and Exchange Board of India is there to protect interests of investors. Nevertheless, CCPA will cover, under its umbrella, all those consumers who were left out due to some gaps in the regulatory powers of the authorities.
Interestingly, there could be a jurisdictional conflict between the CCPA and the Consumer Courts in cases where a “class of consumer” files the lawsuit. CPA 19 does not explicitly explain the meaning of “class of consumers”. However, it is safe to assume that it will mean a group of consumers having a common grievance against the defaulting party. CCPA is authorised to protect and promote the rights of “class of consumers” only. In contrast, Consumer Courts are mandated to accept claims from almost all types of consumers including “class of consumers”. So, in the case of “class of consumers”, it may become a conundrum that under whose watch will the complaints from “class of consumers” will eventually lie.
Product Liability introduced
Product liability means that the manufacturer or seller of any goods or services is liable to compensate the consumer for any defect in their product or services. An injury must be caused to the consumer to claim under the product liability provisions. Earlier, the consumers were only compensated for the cost product or services, but now they will also be compensated for injuries as well. As e-commerce is now included in the domain of CPA 19, they will not be able to relinquish their liability on account of them just being a “market aggregator”.
An extra layer of protection is given to the consumers under product liability action. Now, product manufacturers will also be liable in an action of product liability, even when they were not negligent. This means that even when the product manufacturers have proved that they were not careless and did exercise diligence, they can still be held liable for any product defects. Although, there are some exceptions, wherein the claim for product liability cannot be filed, like if the product is misused, product liability action will not stand.
Process of filing complaints eased
CPA 19 also allows hearing of matters through video conferencing, which is a great step towards swift justice administration. Another significant move that makes this Act consumer-friendly is that now the consumer can file a case from where he/she resides. Earlier, claims were filed only in those places where the opposite party, i.e., the violator, lived or carried out work or where the cause of action aroused. Additionally, the complaints can also be filed electronically. This will incentivise more consumers to file cases who earlier were not able to do so because of either travelling costs or lack of time. Consequently, there will be a level playing field in the consumer market as manufacturers or sellers will desist from taking advantage of consumers.
Alternative dispute resolution clause
CPA 19 provides for an option of mediation to the parties, if acceptable by both the parties, at the first hearing of the complaint or any later stage. The mediation cell shall be attached to District, State, and National Commissions. The use of alternative dispute resolution, in this case, mediation, is always beneficial for parties as well as the justice system. For consumers, it is a faster way of securing justice; on the other hand, for commissions, it reduces the case load.
Pecuniary jurisdiction enhanced
In the predecessor legislation, District Commissions, State Commissions, and National Commission were allowed to entertain complaints where ‘value of goods or services and compensation’ was up till Rs 20 Lakhs, was between Rs 20 Lakh and Rs 1 Crore, and was above Rs 1 Crore respectively. CPA 19 enhanced the pecuniary jurisdictions and now District Commissions, State Commissions, and National Commission are allowed to entertain complaints where ‘value of goods or services paid as consideration’ is up till Rs 1 Crore, is between Rs 1 Crore and Rs 10 Crores, and is above Rs 10 Crores respectively. Therefore, compensation is no longer a factor in determining in which commission would the case eventually go. So, the habit of inflating the amount of compensation for appealing before State and National Commissions would be stopped, and better utilisation of every commission will consequently follow.
New e-commerce rules
The new e-commerce rules have also been notified by the government, which shall be applicable from 23 July 2020. These rules will apply to all electronic retailers which are providing services to Indian consumers. The rules mandate that every e-commerce entity shall ensure an accurate description of goods, and make sure that the virtual description matches the original feature of products or services. This rule will curtail the long practice of sellers wherein they depict something else and deliver something different. It will enhance consumers’ confidence in e-shopping, and this will prove critical in building a digital economy. The new rules require the e-commerce entities to show the ‘country origin’ of the product or the seller. This shall give a boost to the dominant wave of Atma Nirbhar Bharat as people are more likely to purchase those goods that are built locally. This will also boost the Make-in-India program. The new rules also prohibit e-commerce entities from imposing cancellation charges unless the seller is ready to pay similar costs for cancellation. In all, these rules require the e-commerce entities to display information explicitly so that the consumers are not deceived during any stage of their purchase.
The CPA 19 will prove to be a game-changer in this new era of technology-driven consumer market place. It takes into account various factors for the protection of consumers who are transacting through e-means, which were left out in its predecessor legislation. The introduction of CCPA will help in speedier enforcement of the rights of consumers. Also, the usage of electronic means to deliver justice will prove instrumental in or post COVID world. As people would not like to move much out of their houses in or after this pandemic, the facilities like filing e-complaints and hearings through video conferencing will not deter consumers from enforcing their rights. Furthermore, the introduction of mediation is welcomed by all the stakeholders.
Though CPA 19 benefits the consumers to a great extent; the manufacturers have to be extra vigilant, given the broad product liability provisions.
CPA 19 is set to change the consumer market for good, in times to come.
Tushar Chitlangia, 2nd Year, National Law University Odisha