Syllabus topics (RTMNU)
- Consumer Protection Act, 2019: objectives, scope, and main provisions of the Act
- Definition of terms under the Act - Consumer, Person, Complainant, Goods, Service, Unfair Trade Practices and Misleading Advertisement
- Rights of Consumer
- Consumer Dispute Redressal Commission: Procedures to be followed
- District Commission, State Commission, and National Commissions – Constitution, Powers and functions of commission
- Fines and Penalties under the Act
Consumer Protection Act, 2019: Objectives, Scope and Main Provisions
The Consumer Protection Act, 2019 (CPA 2019) is the law that protects buyers of goods and users of services in India. It replaced the old Consumer Protection Act, 1986. It received the President's assent on 9 August 2019 and most of its provisions came into force on 20 July 2020.
Why a new Act? The 1986 Act was made before e-commerce, online advertising, celebrity endorsements and direct selling. The 2019 Act covers these new markets.
Objectives:
- Protect consumer rights – to promote and protect the six rights of consumers.
- Quick and cheap justice – simple, low-cost redressal through Consumer Commissions.
- Stop unfair trade practices – check false claims, misleading advertisements and unfair contracts.
- Product liability – make manufacturers, sellers and service providers responsible for harm caused by defective products.
- Regulate new markets – cover e-commerce, teleshopping, direct selling and multi-level marketing.
- Consumer awareness – through Consumer Protection Councils at district, state and national level.
Scope: The Act extends to the whole of India. It applies to all goods and services (unless exempted by the Central Government), to all sellers – public, private or co-operative – and to all modes of transaction: offline, online, teleshopping, direct selling and multi-level marketing.
Main provisions (new features):
- Central Consumer Protection Authority (CCPA) – a regulator set up under the Act to protect consumer rights as a class; it can order recall of unsafe goods, stop unfair trade practices and penalise misleading advertisements.
- Product liability – a consumer can claim compensation for harm from a defective product or deficient service.
- E-filing – complaints can be filed online (the e-Daakhil portal) and hearings may be held by video conferencing.
- Complaint from where the consumer lives or works – not only where the seller is located.
- Mediation – disputes can be referred to mediation cells attached to the Commissions.
- Unfair contracts – State and National Commissions can declare one-sided contract terms void.
- Penalty on endorsers – celebrities endorsing misleading ads can be fined and banned from endorsing.
- Renamed bodies – "Forums" became "Commissions" with higher money limits.
Definitions: Consumer and Person
Consumer [Section 2(7)]: A consumer is any person who buys goods or hires/avails services for a consideration (price) which is paid, promised, partly paid or under a deferred payment system. It includes any other user of the goods or beneficiary of the service when used with the approval of the buyer. The buying may be offline or online.
Not a consumer: a person who buys goods for resale or for a commercial purpose. However, goods bought and used only for earning a livelihood by self-employment are not "commercial purpose". Example: a tailor who buys one sewing machine to earn his living is a consumer; a garment factory buying 100 machines is not.
Person [Section 2(31)]: includes an individual, a firm (registered or not), a Hindu Undivided Family, a co-operative society, any other association of persons (registered or not) and every other artificial juridical person.
Complainant, Goods and Service
Complainant [Section 2(5)]: the person who files a complaint. It includes: (i) a consumer; (ii) a registered voluntary consumer association; (iii) the Central or State Government; (iv) the CCPA; (v) one or more consumers with the same interest; (vi) the legal heir or representative of a dead consumer; (vii) the parent or guardian of a minor consumer.
Goods [Section 2(21)]: every kind of movable property, and includes "food" as defined in the Food Safety and Standards Act, 2006.
Service [Section 2(42)]: service of any description made available to potential users, such as banking, finance, insurance, transport, processing, supply of electricity or energy, telecom, boarding or lodging, housing construction, entertainment, amusement or news. It excludes free-of-charge service and service under a contract of personal service (e.g. a servant's employment).
Unfair Trade Practices and Misleading Advertisement
Unfair trade practice [Section 2(47)]: a trade practice that uses an unfair method or a deceptive practice to promote the sale, use or supply of goods or services. Examples:
- Falsely claiming goods are of a certain standard, quality or grade.
- Offering "free gifts" or prizes when the cost is already hidden in the price.
- Selling goods that do not meet safety standards set by law.
- Hoarding or destroying goods to raise prices.
- Making fake or spurious goods.
- Not issuing a cash memo or bill.
- Refusing to take back defective goods or refund within the stated period (or 30 days if no period is stated).
- Disclosing a consumer's personal information given in confidence, unless required by law.
Misleading advertisement [Section 2(28)]: an advertisement that falsely describes a product or service, gives a false guarantee, conveys an express or implied representation that would be an unfair trade practice, or deliberately hides important information. Example: a fairness cream claiming "fair skin in 7 days" without proof.
Rights of Consumer
Section 2(9) lists six consumer rights:
- Right to safety – protection against goods and services hazardous to life and property (e.g. ISI-marked electrical goods).
- Right to be informed – about quality, quantity, potency, purity, standard and price, to protect against unfair trade practices (e.g. MRP and expiry date on a pack).
- Right to choose – access to a variety of goods and services at competitive prices.
- Right to be heard – consumers' interests will receive due consideration at appropriate forums.
- Right to seek redressal – against unfair or restrictive trade practices and unscrupulous exploitation.
- Right to consumer awareness – the right to be educated about consumer rights.
Consumer Dispute Redressal Commission: Procedure
The Act sets up a three-tier quasi-judicial system: District Commission, State Commission and National Commission.
Procedure on a complaint:
- Filing – complaint filed (offline or online through e-Daakhil) where the opposite party resides/works or where the complainant resides/works or where the cause arose.
- Limitation – within two years from the date the cause of action arose (Section 69); delay can be condoned for sufficient cause.
- Admission – the Commission decides whether to admit, normally within 21 days.
- Notice – a copy is sent to the opposite party, who must reply within 30 days (extendable by 15 days).
- Mediation – if both parties agree, the matter may go to the mediation cell.
- Testing – if goods need testing, a sample is sent to an appropriate laboratory.
- Decision – the complaint should be decided within 3 months of notice (5 months if testing is needed).
Appeals: District → State within 45 days; State → National within 30 days; National → Supreme Court within 30 days. When the appellant must pay money under the order, a part deposit (50% for appeals from the District Commission) is needed before appeal.
District, State and National Commissions: Constitution, Powers and Functions
| Point | District Commission | State Commission | National Commission |
|---|---|---|---|
| Set up by | State Government | State Government | Central Government |
| Members | President + at least 2 members | President + at least 4 members | President + at least 4 members |
| Money limit (value of goods/services paid)* | Up to ₹50 lakh | Above ₹50 lakh up to ₹2 crore | Above ₹2 crore |
| Appeal against its order to | State Commission | National Commission | Supreme Court |
*Limits as revised by the Consumer Protection (Jurisdiction of the District Commission, the State Commission and the National Commission) Rules, 2021 – check latest.
Powers: the Commissions have the powers of a civil court under the Code of Civil Procedure – summoning parties and witnesses, examining them on oath, calling for documents and evidence, and ordering laboratory tests. State and National Commissions can also hear appeals, call for records of lower Commissions (revision) and declare unfair contract terms void.
Functions / reliefs it can order: remove the defect; replace the goods; refund the price; pay compensation for loss or injury; remove deficiency in service; stop the unfair trade practice; withdraw hazardous goods from sale; issue corrective advertisement; pay punitive damages; pay costs.
Fines and Penalties under the Act
| Offence | Penalty (as in the Act) |
|---|---|
| Not obeying an order of a Commission (Sec 72) | Imprisonment from 1 month up to 3 years, or fine from ₹25,000 up to ₹1 lakh, or both |
| Not obeying a CCPA direction (Sec 88) | Imprisonment up to 6 months, or fine up to ₹20 lakh, or both |
| False or misleading advertisement by maker/service provider (Sec 89) | Imprisonment up to 2 years and fine up to ₹10 lakh; repeat offence up to 5 years and ₹50 lakh |
| CCPA penalty for misleading ad (Sec 21) | Fine up to ₹10 lakh (₹50 lakh for repeat); endorser may be banned for up to 1 year (3 years for repeat) |
| Selling adulterated goods (Sec 90) / spurious goods (Sec 91) | Graded by harm: from imprisonment up to 6 months and fine up to ₹1 lakh (no injury) to imprisonment of 7 years to life and fine of at least ₹10 lakh (if death is caused) |
Likely exam questions
- (Long, 8/16 marks) Explain the objectives, scope and main provisions of the Consumer Protection Act, 2019.
- (Long, 8/16 marks) Describe the constitution, powers and functions of the District, State and National Consumer Disputes Redressal Commissions, and state the procedure for filing a complaint.
- (Short, 4 marks) Define 'consumer' under the Consumer Protection Act, 2019. Who is not a consumer?
- (Short, 4 marks) State the six rights of consumers.
- (Short, 4 marks) What is a misleading advertisement? State the penalty for it.