In a discussion in the Rajya Sabha in December last, Vice-President M. Venkaiah Naidu narrated his experience with a spurious weight-loss advertisement and how he lost money but never got the medicine. Consumer Affairs Minister Ramvilas Paswan promised then that a Bill on consumer protection would be tabled soon.
One year later, the Bill was passed in the Lok Sabha on Thursday, December 20, 2018. The previous day, the Bill was moved by Mr. Paswan in the House but couldn't be discussed due to pandemonium.
The Bill, originally introduced in January 2018 in the last winter session of Parliament, seeks to replace the three-decade-old Consumer Protection Act, 1986, which was amended thrice but is still found wanting in tackling the challenges posed by online transactions, and tele-, multi-level, and digital marketing.
The Corporate Affairs Ministry states that the objective of the Bill is ‘‘to provide for the protection of the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers’ disputes.’’
The Bill seeks to set up a central consumer protection authority (CCPA) to "promote, protect and enforce the rights of the consumers." The CCPA can act on complaints of unfair trade practices, issue safety guidelines, order product recall or discontinuation of services, refer complaints to other regulators, and has punitive powers such as imposing penalties.''
The Bill also seeks to provide Consumer Disputes Redressal Commissions at national, State and district-levels to look into consumer complaints. Consumer Protection Councils will also be set up at the district, State, and national level, as advisory bodies. Consumer mediation cells will be set-up on the same lines.
The Bill defines “consumer rights" as the right to be protected against the marketing of goods, products or services which are hazardous to life and property. It is also the right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services; and to be assured of access to a variety of goods, products or services at competitive prices. It also includes the right to be heard and to be assured that the consumer’s interests will receive due consideration at appropriate fora; to seek redressal against unfair or restrictive trade practices or unscrupulous exploitation of consumers; and the right to consumer awareness.
The Bill also envisages provisions for product liability action on account of harm caused to consumers due to a defective product or by a deficiency in services. For example, a consumer can sue the cab aggregator if the taxi comes late and as a result, they miss a scheduled flight. Also, the case can be filed from anywhere, unlike the existing law which allows the consumer to register the complaint only from the same place of purchase of the product or where the service is availed.
The CCPA has the authority to direct the removal of a misleading advertisement, take punitive action such as imprisonment or imposing penalties on the advertiser and seller, and even barring a person from endorsing the product or service for up to a year. The Bill also lists punitive actions against those who are found manufacturing, storing, distributing, selling, or importing products that are spurious or contain adulterants.
As for Vice-President Mr. Naidu's experience, under the new law he could get the advertisement withdrawn and ensure the product seller is imprisoned or penalised for issuing misleading advertisements.
Comparison of the Consumer Protection Act, 1986 with the Consumer Protection Bill, 2018
Ambit of law
1986 Act: All goods and services for consideration, while free and personal services are excluded
2018 Bill: 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.
Unfair trade practices (Defined as deceptive practices to promote the sale, use or supply of a good or service.)
1986 Act: Includes six types of such practices, like false representation, misleading advertisements.
2018 Bill: 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. Contests/ lotteries may be notified as not falling under the ambit of unfair trade practices.
1986 Act : No provision.
2018 Bill: 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.
1986 Act : No provision.
2018 Bill: Defined as contracts that cause significant change in consumer rights. Lists six contract terms which may be held as unfair.
Central Protection Councils (CPCs)
1986 Act: CPCs promote and protect the rights of consumers. They are established at the district, state, and national level.
2018 Bill: The new Bill makes CPCs advisory bodies for promotion and protection of consumer rights. Establishes CPCs at the district, State and national level.
1986 Act : No provision.
2018 Bill: 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
1986 Act: District: Up to Rs 20 lakh; State: Between Rs 20 lakh and up to Rs one crore;National: Above Rs one crore.
2018 Bill: 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.
1986 Act: Selection Committee (comprising a judicial member and other officials) will recommend members on the Commissions.
2018 Bill: No provision for Selection Committee. Central government will appoint through notification.
Alternate dispute redressal mechanism
1986 Act: No provision.
2018 Bill: Mediation cells will be attached to the District, State, and National Commissions.
1986 Act: 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.
2018 Bill: 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.
1986 Act: No provision.
2018 Bill: 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.
Sources: Consumer Protection Act, 1986; Consumer Protection Bill, 2018; PRS Legislative Research .