Consumer Protection Bill, 2018
The Consumer Protection Bill, 2018 was recently passed by the Lok Sabha and is likely to replace the archaic Consumer Protection Act, 1986. The bill has mostly been untouched with respect to the mechanisms and protections put in place by the 1986 act. However, certain new features have been introduced to reinforce the consumer protection law. Here are the 5 things which a consumer needs to know about the new Consumer Protection Bill, 2018:
- Central Consumer Protection Authority (CCPA):
The bill proposes creation of a new Central Authority, in addition to the already existing 3-tiered consumer dispute redressal forums. This new 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 the consumers. On this account, its function includes:
- Referring complaints to the consumer protection authorities;
- Intervening in commission proceedings;
- Reviewing measures for consumer protection.
As part of its general mandate to protect consumer interest, it is empowered to conduct or direct inquiry or investigation into consumer complaints, either suo motu or on a referral by the government. Furthermore, it has punitive powers which includes the authority to penalize 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. CCPA’s power has been given further impetus by empowering it to conduct search and seizure. In fact, it is to have an Investigation Wing headed by the Director General.
- Addressing the rise of e–commerce: Among the new features, is its attempt to address consumer concerns stemming from the rise of e-commerce and false or misleading ads. This is apparent from the definition clause itself where a slew of new definitions are proposed to be added which includes but not restricted to words like advertisement, e-commerce, electric service provider and endorsement, among others. Consequently, the definition of ‘consumer’ includes those who buy goods or avail services online via e-commerce outlets. Furthermore, consumer complaints can be made not only in the written form, but also in electronic form to the appropriate authorities.
- Combating false or Misleading Ads: Specific provisions of the proposed bill target false or misleading advertisements, which can be penalized with fines or bans on exhibition/appearance. On a complaint being made to such an ad, and the same being proved, the CCPA can slap a fine upto Rs. 10 lakhs on those complicit in broadcasting such false or misleading ads, as well as a one year ban. Such liability would extend to endorsers as well including celebrities who are associated with such advertisement. Repeated violators may attract a penalty upto Rs 50 lakhs and a ban on appearance/exhibition upto 3 years. The CCPA has been further empowered to direct the withdrawal or modification of such misleading advertisement. This penalty may, however, be avoided, if the concerned person/company is able to show that due diligence was exercised to verify the claims made in such advertisement.
- Product liability: Product liability refers to the responsibility of the manufacturer or the producer of the consumer product with respect to the safety and quality of that product. This entails an obligation to compensate for any harm caused by a defective product or a deficiency in service to the aggrieved consumer. Moreover, 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 the product. The product seller would be liable if:
- He exercised substantial control over manufacturing, processing, labeling 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 of reasonable care.
Product liability provision would be attracted in any of the following scenarios are triggered:
- The product suffers from manufacturing defect, or a deviation in design.
- If there is a deviation from manufacturing specification.
- 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: There has been a revision vis-à-vis the pecuniary jurisdiction for the 3-tiered dispute redressal commissions which is as follows:
- District Commissions: complaints valued upto Rs. 1 crore.
- State Commissions: complaints valued between Rs. 1 crore- Rs 10 crore.
- National Commission: complaints valued at Rs 10 crore and above.
Although the legislature misses the mark where it could have dedicated more discussions and provisions safeguarding the consumers with respect to their interaction with e-commerce platforms, which is a billion dollar industry in India, but, in the end, the proposed Consumer Protection Bill, 2018 with its consumer-oriented amendments is a delayed but welcome modifications which definitely reinforce the consumer rights in today’s market economics.
Jashan Preet Singh Sidhu
Associate Partner at Aggarwals & Associates, Mohali.