REPORT WRITING

Overview of the Consumer Protection Act

1. Need for the Consumer Protection Act

The Speaker introduced the topic by showing the students a video uploaded by the National
Council for Financial Education on ‘Consumer Rights and Protection’. It was observed that
as a buyer or consumer, most people are unaware of their rights, and the procedure to follow
to resolve their issues in case they are sold a defective product or a deficient service. A
legislation safeguarding the rights and interests of consumers to protect them from unfair
trade practices and illegal marketing. It is a social welfare legislation. Therefore, the purpose
of the Act is to protect the consumer rights which are as follows:
 Right to safety
 Right to choose
 Right to be informed
 Right to consumer education
 Right to be heard
 Right to seek addressal

2. Consumer Protection Act, 1986 v. Consumer Protection Act, 2019

The 2019 Act has substantially enhanced the scope of consumer protection. This is because
with the advent of technology, economic liberalization, globalization of markets and
digitalization of products and services the rights of consumers were affected due to e-
commerce. For instance, A person ordered an Iphone from an online shopping app and
received something else in the shape of an Iphone or a courier had to be sent to WES
Education Services Ltd in Canada, but it was wrongly delivered to WES Plastic Private Ltd.
The consumer here is entitled to compensation for the wrong delivery, harassment and mental
agony caused. This is the reason why the 1986 Act faced challenges as it could not deal with
disputes arising out of e-commerce and thus it called for immediate attention. Thus, it
includes ‘e-commerce’, direct selling and multi-level marketing transactions within its ambit.
The new act has brought in changes by reforming advertising claims, endorsements,
punishments, adjudication of disputes etc. It truly upholds the Principle of “Customer is
KING”.

Who is a Consumer?
Section 2(7) of the Consumer Protection Act, 2019 defines ‘consumer’ as a person who buys
goods and hire services for a consideration but for his/her personal use and not a commercial
purpose. However, a person is a consumer if he buys goods or hires service for self-
employment, i.e., for the purpose of earning his livelihood. For example, an auto driver
discovers that the auto purchased by him from Bajaj Auto Company has a manufacturing
defect. He can approach the Consumer Commissions because he earns his livelihood by
driving the auto. But if ‘A’ a businessman dealing with electrical appliances enters into a
contract with a seller to buy an office space in a building for his technicians and the seller
defaults in delivering the possession of the flat causing damage to A, he will not be
considered as a consumer as the purpose was not for his residence and was commercial.

Misleading Advertisements

The new Act establishes a Central Consumer Protection Agency which has the authority to
impose a penalty of Rs 10 Lakhs in case of a false/misleading advertisement on the
manufacturer, seller and even endorsers1. The Speaker narrated a case in which he
represented the consumer. In the case, a person had purchased insurance through
policybazar.com for his car and paid the premium. It was promised by policybazar’s
advertisement that customers have an option to buy add on benefits such as right to invoice,
nil depreciation etc., this required extra premium. The person paid the extra money. Three
months later, he got into an accident and claimed for insurance along with the additional
benefits. The insurance company rejected his claims by arguing that the person was not
entitled for add on benefits; terms and conditions mentioned in the advertisement is totally
different from the terms and conditions of the insurance company. It was argued on the behalf
of the consumer that once policy is issued, the insured cannot be denied the claim on the
ground that he is not eligible for the insurance.

Endorser’s Liability

Celebrity who endorses a particular product or service are ‘influencers’ because they play a
very important role in creating awareness, adding value to brands and influencing their fans
to buy that product or hire a particular service. Consumers have blind faith in their favourite
celebrities which subconsciously forces them to purchase the products and services endorsed
by the celebrity. Thus, it becomes crucial to ensure that such endorsements are not misleading
or false to safeguard the consumer rights.

1
Consumer Protection Act, 2019, §21.
The Advertising Standards Council of India Code provides guidelines on advertisements
by celebrities. As per the guidelines 2, it is the responsibility of the endorser to check any
indiscriminate endorsement, make sure that the product or service is honestly represented.
The testimonials, endorsements must reflect genuine and reasonable current opinion of the
individual endorsing the product. There shall be no endorsement of any
product/treatment/remedy that is prohibited under the Drugs & Magic Remedies and Drugs
& Cosmetics Act. The Speaker also mentioned that Advertisements are not that essential,
they are tricks to cause a consumerist desire in people. This was documented in a research on
the psychology behind advertisements.

The Speaker pointed out several cases of endorsement liability, to explain its significances.
The cases are as follows:

 Hero Xtreme 200r by Hero Motorcorp Ltd3

In this advertisement, Virat Kohli was seen driving the bike recklessly and flouting the
traffic rules. This was in violation with the guidelines given by the ASCI.
 Anoop Menon Case: Dhathri Hair Oil4
The District Redressal Commission of Kerala imposed a penalty against the Malyalam
actor, Anoop Menon because the promise made by him that the use of the hair oil would
lead to hair growth in six weeks was not substantiated by any research. Moreover, the
actor never used the product.
 Frankfinn Aviation Services Private Limited5
In the advertisement, actress, Alia Bhatt claimed that Frankfinn is “The world’s Number
1 Air Hostess Training Institute”. This claim was challenged, it was considered
misleading as there was no data to support the same.
 Lenskart Blu Smartphone Lenses6

2
https://www.ascionline.org/index.php/principles-guidelines.html
3
Devesh Mishra, Virat Kohli’s Hero Xtreme 200R Ad Encourages Unsafe Riding: ASCI, CARTOQ HONEST
CAR ADVICE, (March 4, 2019), https://www.cartoq.com/virat-kohlis-hero-xtreme-200r-ad/.
4
Millia Dasgupta, Court Fines Brand Ambassador For False Claims, LAWSISTO.COM, India’s End to End
Legal Assistant, (January 5, 2021), https://lawsisto.com/legalnewsread/OTI1Ng==/Court-Fines-Brand-
Ambassador-For-False-Claims.
5
Anonymous, ASCI Upholds Complaints Against Ads by Bharti Airtel, Frankfinn Aviation Services and More,
EXCHANGE FOR MEDIA, (June 6, 2017; 8:13 AM),
https://www.exchange4media.com/advertising-news/asci-upholds-complaints-against-ads-by-bharti-
airtelfrankfinn-aviation-services-and-more-69117.html.
6
Anonymous, ASCI Bans 344 Ads Including Republic TV, Hero Motorcorp, P&G, Lenskart etc, MONEY LIFE,
(March 2, 2019), https://www.moneylife.in/article/asci-bans-344-ads-including-republic-tv-hero-motocorp-
blenders-pride-pg-loreal-india-head-and-shoulders-hul-ponds-sensodyne-lenskart-rasna-dabur-goodknight-
patches-in-october-and-november-2018/56506.html.
 Here, Katrina Kaif claimed that these lenses are so unique that they obstruct the harmful
blue light from electronic screens. This was challenged as there was no reliable evidence,
data to show whether the electronic screens emit dangerous blue light in the first place.
 Maggie Noodles Controversy7
The discovery of lead in Maggie Noodles also brought the various actors who endorsed
the product, such as, Amitabh Bachchan, Madhuri Dixit, Preeti Zinta under legal scrutiny.

This shows that endorsers have a huge responsibility when it comes to advertisement,
because they have the ability to influence thousands of people to buy or hire a service.
Therefore, they must take all the necessary precautions before endorsing a product or service.

Product Liability

Sections 82 to 87 of the 2019 Act, provide for liability of a manufacturer, seller and a service
provider in case a defective product is sold or deficiency in a service is observed. It is the
responsibility of the product manufacturer, seller, service provider to compensate the buyer in
case of defective product and deficient service.

A liability arises in case of a,

a) Manufacturing defect
b) Defect in design
c) Difference in the specification or standards laid down by the government

The new act now holds the seller liable unlike the 1986 Act, if he plays a role in designing,
packaging, labelling or if he has given an express warranty.

A service provider can be held liable if there is a fault in quality, nature, performance, if there
is an act of omission or commission, conscious withholding of important information or
negligence. This can be better understood with the following case as described by the
Speaker, a person had purchased a laptop with a hard drive. The computer started having
issues. It was found that the Hard Drive was causing problems. He contacted the
manufacturer, who asked the person to deliver it to a third party. The third party misplaced
the Hard drive that contained information worth lakhs. The third party also concealed
important information with regards to the hard drive. Here, the manufacturer and the third
party were held liable.
7
Divya Kathuria, Liabilities of Celebrities Endorsing Products in India: An Analysis in the Light of Maggi
Fiasco, IPLEADERS, INTELLIGENT LEGAL SOLUTIONS, (June 6, 2015),
https://blog.ipleaders.in/liabilities-of-celebrities-endorsing-maggi/.
Exceptions to action by a consumer

a) If the product is misused/altered or modified at the time of harm by the consumer itself
b) If the consumer does not use expert supervision when it is advised to do so, and
subsequently incurs damages

Unfair Contracts

The new act has introduced liability against unfair contracts that are in favour of the sellers/
manufacturers and completely ignore the interests of the consumers8. Such contracts include,

 Charging excessive security deposits

 Disproportionate penalty on consumers
 Refusing to accept early repayment of debts on payment of applicable penalty
 Unilateral termination of contracts
 Imposing unreasonable charge

This would help in keeping businesses in check so that they don’t use their dominance to take
advantage of the consumers.

Unfair Trade Practices

The 2019 act has widened the scope of ‘Unfair Trade Practices’ and its definition includes,
online misleading advertisements, not providing bill for goods and services bought, not
taking back defective goods, failing to refund, disclosing the consumer’s personal
information and so on. It provides for more and better protection to the consumers as
compared to the 1986 Act.

The other important changes brought out by the 2019 Act are as follows,

1. The consumers can file their complaints directly from their home or workplace 9. This has
relaxed the earlier provision, where a complaint could be filed only where the seller
resided or cause of action arose. Class action suits can be filed under the new act.
2. Pecuniary Jurisdiction: The District Commission can now hear cases whose value
doesn’t exceed Rs. 1 Crore, State Commission between Rs.1 Cr to 10 Cr and National
Commission can entertain disputes exceeding Rs. 10 Crores10.
8
Consumer Protection Act, 2019, §2(46).
9
Ananday Misshra, Analysis of the Consumer Protection Act, 2019, TAXGURU, (June 3, 2020),
https://taxguru.in/corporate-law/analysis-consumer-protection-act-2019.html.
10
Samarjit Pattnaik and Rahul Tyagi, Consumer Protection Act, 2019: A Paradigm Shift, MONDAQ, (October
21, 2020), https://www.mondaq.com/india/dodd-frank-consumer-protection-act/996444/consumer-protection-
3. E-commerce and Direct Selling: E-businesses now have to disclose details like their
address, website, e-mail address, information related to refund, return, guarantee and
warranty, delivery, shipment, payment options, the safety of payment, grievance handling
mechanism etc11. This was essential as cases of defective products being received from
online businesses were on the rise.
4. Regulator: Central Consumer Protection Authority (CCPA) is created to resolve issues
related to consumer rights, unfair trade practices or misleading advertisements to provide
effective redressal of disputes and prevent their rights and interests 12. The CCPA can
impose a fine of Rs. 10 Lakhs or imprisonment upto 2 years on a manufacturer or
endorser for a misleading advertisement. If such an offence is repeated, fine of Rs 50
Lakhs and imprisonment for 5 years may be imposed. Limitation period for filing appeals
to the State Commission has increased from 30 to 45 days.
Section 69 of the Act, talks about condonation of delay. So even if a consumer delays
complaint for 2 years he can still file a case provided he has reasonable grounds for the
same.
The CCPA has a separate investigative wing and can take up suo moto action and also
conduct the relevant Research and Development.
5. Definition of ‘Goods’ and ‘Services’: It now includes ‘food’ as defined under the Food
Safety and Standards Act. ‘Telecom’ has been added to the definition of services13.
6. Mediation and E-filing: Mediation is an effective and efficient mode of alternate dispute
resolution. It is speedy and reduces the burden on consumer courts which have so many
pending cases on them. It is believed that most of the disputes would be resolved at this
stage only as there is a scope for early settlement and there is mutual agreement of the
parties14. Complaints can now be filed electronically and the proceedings can be
undertaken through video conferencing. This facilitates dispute redressal during the
Covid-19 pandemic. The Arbitration clause does not debar consumers from approaching
the consumer commissions, an arbitrator can be appointed and if the parties are not
satisfied, they can approach the commissions.
act-2019-a-paradigm-shift-.
11
Supra note 9.
12
Gaurang Kanth and Divjot Singh Bhatia, The Consumer Protection Act, 2019: An Overview, MONDAQ,
(January 14, 2020), https://www.mondaq.com/india/dodd-frank-consumer-protection-act/876600/the-consumer-
protection-act-2019-an-overview#:~:text=The%202019%20Act%20has%20also,defective%20services%20and
%20refund%20the.
13
Prof. (Dr.) Chitrapu Kama Raju and Abhishek Sharma, Consumer Protection Act, 2019: Analysis and
Challenges for Future, LATEST LAWS, (June 23, 2020), https://www.latestlaws.com/articles/consumer-
protection-act-2019-analysis-and-challenges-for-future/.
14
Supra note 13.
7. Power of the Commissions: The Commissions have the same power as a civil court and
also the power of judicial review15. They can suo moto recall any product either partially
or fully.
8. Admissibility of the complaint: The complaint must be admitted within 21 days,
otherwise it is deemed to have been admitted16.

RERA: Special Tribunal for Consumers who are Buyers of Buildings and Properties

In case of a dispute involving properties or buildings both the RERA Tribunal and Consumer
Commissions have equal competence. It is upon the consumer to choose between the two, but
not simultaneously. If the complaint is pending before the commission the consumer may
withdraw it file it before the RERA Tribunal.

Challenges to the Consumer Protection Act 2019

 The main objective of the Consumer Protection Act was the speedy resolution of cases.
However, there are still high number of pending cases, that too only on the stage of
arguments. Cases keep on getting adjourned. Therefore, there is a need to curtail the
practice of giving adjournments to a large extent.
 Moreover, the consumer commissions lack proper infrastructure and the coram is never
complete. The coram should comprise of a President, 2 Members and an Expert.
 The CCPA has been given the power to investigate, however the same responsibility is
also given to district collectors. This would lead overlapping in functions leading to
conflict of interests. Furthermore, appeals against the CCPA’s order can only be heard by
the National Commission. The grounds for such appeal are vague and unclear.

Conclusion

When compared with the 1986 Act, the new Act provides for greater protection of consumers
and is in fact more consumer-friendly. It takes into account the current age of digitization and
globalization. With technological advancements has introduced e-filing, proceedings through
video conferencing have empowered the rights of consumers. It imposes strict liability on
manufacturers, sellers and even endorsers. It is indeed a welcoming step towards reforms and
development of consumer rights.

15
Rohit Pradhan, Critical Analysis: Consumer Protection Act, 2019, LEXFORTI, (September 18, 2020),
https://lexforti.com/legal-news/critical-analysis-consumer-protection-act-2019/#Challenges.
16
Supra note 15.
At the same time, the challenges to it cannot be ignored. To fully achieve the objectives of
the Act, what India requires are not statutory or procedural laws but a better infrastructure for
resolving the pending cases. Disputes will only be resolved quickly if an adequate number of
members are appointed and present in the commissions. Hence, the real determinant of its
effect still remains its implementation. Its practical application will help us analyse its
shortcomings if any, and the ways to improve them. Therefore, the provisions must be
implemented efficiently and properly.

Bibliography

1. https://www.ascionline.org/index.php/principles-guidelines.html.
2. Devesh Mishra, Virat Kohli’s Hero Xtreme 200R Ad Encourages Unsafe Riding: ASCI,
CARTOQ HONEST CAR ADVICE, (March 4, 2019), https://www.cartoq.com/virat-
kohlis-hero-xtreme-200r-ad/.
3. Millia Dasgupta, Court Fines Brand Ambassador for False Claims, LAWSISTO.COM,
India’s End to End Legal Assistant, (January 5, 2021),
https://lawsisto.com/legalnewsread/OTI1Ng==/Court-Fines-Brand-Ambassador-For-
False-Claims.
4. Anonymous, ASCI Upholds Complaints Against Ads by Bharti Airtel, Frankfinn Aviation
Services and More, EXCHANGE FOR MEDIA, (June 6, 2017; 8:13 AM),
https://www.exchange4media.com/advertising-news/asci-upholds-complaints-against-
ads-by-bharti-airtelfrankfinn-aviation-services-and-more-69117.html.
5. Anonymous, ASCI Bans 344 Ads Including Republic TV, Hero Motorcorp, P&G,
Lenskart etc, MONEY LIFE, (March 2, 2019), https://www.moneylife.in/article/asci-
bans-344-ads-including-republic-tv-hero-motocorp-blenders-pride-pg-loreal-india-head-
and-shoulders-hul-ponds-sensodyne-lenskart-rasna-dabur-goodknight-patches-in-october-
and-november-2018/56506.html.
6. Divya Kathuria, Liabilities of Celebrities Endorsing Products in India: An Analysis in the
Light of Maggi Fiasco, IPLEADERS, INTELLIGENT LEGAL SOLUTIONS, (June 6,
2015), https://blog.ipleaders.in/liabilities-of-celebrities-endorsing-maggi/.
7. Ananday Misshra, Analysis of the Consumer Protection Act, 2019, TAXGURU, (June 3,
2020), https://taxguru.in/corporate-law/analysis-consumer-protection-act-2019.html.
8. Samarjit Pattnaik and Rahul Tyagi, Consumer Protection Act, 2019: A Paradigm Shift,
MONDAQ, (October 21, 2020), https://www.mondaq.com/india/dodd-frank-consumer-
protection-act/996444/consumer-protection-act-2019-a-paradigm-shift-.
9. Gaurang Kanth and Divjot Singh Bhatia, The Consumer Protection Act, 2019: An
Overview, MONDAQ, (January 14, 2020), https://www.mondaq.com/india/dodd-frank-
consumer-protection-act/876600/the-consumer-protection-act-2019-an-
overview#:~:text=The%202019%20Act%20has%20also,defective%20services%20and
%20refund%20the.
10. Prof. (Dr.) Chitrapu Kama Raju and Abhishek Sharma, Consumer Protection Act, 2019:
Analysis and Challenges for Future, LATEST LAWS, (June 23, 2020),
https://www.latestlaws.com/articles/consumer-protection-act-2019-analysis-and-
challenges-for-future/.
11. Rohit Pradhan, Critical Analysis: Consumer Protection Act, 2019, LEXFORTI,
(September 18, 2020), https://lexforti.com/legal-news/critical-analysis-consumer-
protection-act-2019/#Challenges.