Consumer Protection Bill 2018

Indian Polity Fundamental Rights

There are a host of products and services in the market. Issues of adulteration, false weights, monopoly, unfair trade practice are very high and are to be addressed to protect the consumer against it. Consumers in any modern market economy often experience information asymmetry and a significant imbalance of bargaining power as compared to producers and sellers of products and services.

Consumer markets for goods and services have undergone a drastic transformation since the enactment of Consumer Protection Act, 1986. Consumer protection Bill 2018 seeks to replace the existing Act of 1986 to address emerging consumer vulnerabilities.

The salient features of the Consumer Protection Bill 2018 are:

It defines the “consumer” as a person who buys any good or avails a service for a consideration.
The Bill covers transactions, both online and offline, and includes tele-shopping and multi-level marketing.
Definition of “consumer rights” in the Bill exhaustively covers the right to be protected against the marketing of goods, products or services that are hazardous to life and property.
It also focuses on the right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be, so as to protect a consumer against unfair trade practices.
It also includes the right to be assured, wherever possible, of access to a variety of goods, products or services at competitive prices.
It involves the right to seek redress against unfair or restrictive trade practices, or unscrupulous exploitation of consumers.

Comparison of the Consumer Protection Act, 1986 with the Consumer Protection Bill, 2018

Provision	1986 Act	2018 Bill
Ambit of law	All goods and services for consideration, while free and personal services are excluded	All goods and services, including telecom and housing construction, and all modes of transactions (online, teleshopping, etc.) for consideration. Free and personal services are excluded.
Product liability	No provision.	Claim for product liability can be made against manufacturer, service provider, and seller. Compensation can be obtained by proving one of the several specified conditions in the Bill.
Unfair trade practices	Includes six types of such practices, like false representation, misleading advertisements.	The new Bill adds three types of practices to the list, namely: (i) failure to issue a bill or receipt; (ii) refusal to accept a good returned within 30 days; and (iii) disclosure of personal information given in confidence, unless required by law or in public interest.
Unfair contracts	No provision.	Defined as contracts that cause significant change in consumer rights. Lists six contract terms which may be held as unfair.
Central Protection Councils (CPCs)	CPCs promote and protect the rights of consumers. They are established at the district, state, and national level.	The new Bill makes CPCs advisory bodies for promotion and protection of consumer rights. Establishes CPCs at the district, State and national level.
Regulator	No provision.	Establishes the Central Consumer Protection Authority (CCPA) to promote, protect, and enforce the rights of consumers as a class. CCPA may: (i) issue safety notices; (ii) pass orders to recall goods, prevent unfair practices, and reimburse purchase price paid; and (iii) impose penalties for false and misleading advertisements.
Pecuniary jurisdiction of Commissions	District: Up to Rs 20 lakh; State: Between Rs 20 lakh and up to Rs one crore; National: Above Rs one crore.	District: Up to Rs one crore; State: Between Rs one crore and up to Rs 10 crore; National: above Rs 10 crore.
Composition of Commissions	District: Headed by current or former District Judge and two members. State: Headed by a current or former High Court Judge and at least two members. National: Headed by a current or former Supreme Court Judge and at least four members.	District: Headed by a president and at least two members. State: Headed by a president and at least four members. National: Headed by a president and at least four members.
Appointment	Selection Committee (comprising a judicial member and other officials) will recommend members on the Commissions.	No provision for Selection Committee. Central government will appoint through notification.
Alternate dispute redressal mechanism	No provision.	Mediation cells will be attached to the District, State, and National Commissions.
Penalties	If a person does not comply with orders of the Commissions, he may face imprisonment between one month and three years or fine between Rs 2,000 to Rs 10,000, or both.	If a person does not comply with orders of the Commissions, he may face imprisonment up to three years, or a fine not less than Rs 25,000 extendable to Rs one lakh, or both.
E-commerce	No provision.	Defines direct selling, e-commerce and electronic service provider. The central government may prescribe rules for preventing unfair trade practices in e-commerce and direct selling.

Merits:

Provide time-bound redressal of their grievances.
It will allow Central government to regulate e-commerce and direct selling among other important measures.
It is a welcome step towards tackling misleading endorsements
Provides for simplification of consumer disputes adjudication process for faster disposal of grievances through filing of complaints by a consumer from his place of residence, e-filing and video conferencing for hearing.
The CCPA will act in a manner similar to enforcement agencies in other jurisdictions such as the Federal Trade Commission (FTC) in the US. This will be a landmark step in upgrading the implementation mechanism to global standards
This is the first time that powers to take action for damage caused by a product have been introduced in a consumer protection framework.

Demerits:

It has penalty provisions for the endorsers and on the other it is giving them a route to get away because the clause of due diligence will act in their defence
It lags behind in tackling misleading advertisements endorsed by any celebrity
This step will act as a deterrent for manufacturers since the liability quotient has increased

Way Forward:

Several countries like Canada, Estonia have devised advertisement regulations for unhealthy foods targeted at children
Countries such as the UK, Ireland and Belgium have specifically banned celebrity endorsement of unhealthy foods. The impact of such restrictions has been reported to be significant.

Conclusion:

The emergence of global supply chain, rise in global trade and rapid development of e-commerce have led to a new delivery system for goods and services and also provided new options and opportunities for consumers. Misleading ads, tele-marketing, multi-level marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive intervention to prevent consumer detriment. This bill is the step in the right direction in addressing these issues.

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