Consumer Protection Act, 2019 — Key Provisions and Significance

The Consumer Protection Act, 2019 replaced the Consumer Protection Act, 1986 to govern consumer rights, product liability, and dispute settlement across physical and digital markets in India. Enacted in August 2019 and enforced on July 20, 2020, the law establishes the Central Consumer Protection Authority, introduces statutory product liability, regulates e-commerce transactions, and incorporates mediation for dispute resolution.

Institutional Framework and Central Consumer Protection Authority

Central Consumer Protection Authority (CCPA)

• The Central Government established the CCPA under Section 10 of the Act to regulate matters relating to violation of consumer rights, unfair trade practices, and false or misleading advertisements.
• The CCPA functions under the Ministry of Consumer Affairs, Food and Public Distribution with headquarters in the National Capital Region of Delhi.
• An Investigation Wing headed by a Director General conducts inquiries and investigations into consumer rights violations.
• The CCPA has the power to recall unsafe goods, order reimbursement of prices, and initiate class-action legal proceedings on behalf of affected consumers.
• It can impose penalties up to 10 lakh rupees on manufacturers and endorsers for misleading advertisements, extending up to 50 lakh rupees for subsequent violations.
• It can prohibit the endorser of a misleading advertisement from endorsing that particular product or service for up to one year, extendable to three years on repeated violations.

Defined Rights of Consumers

• Right to Safety: Protection against marketing of goods and services hazardous to life and property.
• Right to Information: Access to details regarding quantity, quality, purity, standard, and price of goods or services.
• Right to Choose: Assurance of access to a variety of goods and services at competitive prices.
• Right to be Heard: Assurance that consumer interests receive consideration at appropriate forums.
• Right to Seek Redressal: Remedy against unfair trade practices, restrictive trade practices, or exploitation.
• Right to Consumer Awareness: Access to consumer education and knowledge throughout life.

Three-Tier Quasi-Judicial Redressal Mechanism

Pecuniary Jurisdiction and Revisions

• The Act sets up a three-tier quasi-judicial adjudication structure: District Consumer Disputes Redressal Commission, State Consumer Disputes Redressal Commission, and National Consumer Disputes Redressal Commission (NCDRC).
• The basis of pecuniary jurisdiction under the 2019 Act is the actual value of goods or services paid as consideration, removing the earlier inclusion of the compensation amount claimed.
• The Central Government notified revised pecuniary limits through the Consumer Protection (Jurisdiction of the District Commission, the State Commission and the National Commission) Rules, 2021.

Procedural Reforms and Territorial Jurisdiction

• Consumers can file complaints electronically through the digital portal E-Daakhil.
• A complainant can file a case in the consumer commission where the consumer resides or works, removing the restriction that required filing only where the seller resides or where the cause of action arose.
• Hearing through video conferencing is permitted under the statutory rules.
• Admissibility of a complaint must be decided within 21 days from the date of filing; if no order is passed within 21 days, the complaint is deemed admitted.
• The commission must dispose of complaints within three months if no commodity testing is required, and within five months if laboratory analysis is needed.

Product Liability, E-Commerce, and Unfair Trade Practices

Product Liability Regime

• Chapter VI of the Act introduces statutory product liability actions against product manufacturers, product service providers, and product sellers for harm caused by defective products or deficient services.
• Harm includes personal injury, illness, death, mental agony, or damage to other property, but excludes damage to the defective product itself.
• A product manufacturer is liable even if they prove they were not negligent, if the product contained manufacturing defects, design defects, or lacked adequate usage warnings.
• A product seller is liable if they exercised substantial control over designing, packaging, or modifying the product, or failed to transmit manufacturer warnings.

E-Commerce Regulations

• The Act defines direct selling and e-commerce transactions, bringing online marketplaces and single-brand retailers under statutory oversight.
• Under the Consumer Protection (E-Commerce) Rules, 2020, platforms must display country of origin, seller identity, return and refund policies, and grievance officer details.
• E-commerce entities are barred from manipulating the prices of goods or services offered on their platforms to gain unreasonable profits.
• Platforms cannot impose cancellation charges on consumers unless similar charges are borne by the platform if they cancel orders unilaterally.

Unfair Trade Practices and Unfair Contracts

• The definition of unfair trade practices includes refusal to issue cash memos, refusal to take back defective goods, and unauthorized sharing of personal consumer data.
• The Act recognizes unfair contracts, which include unreasonable payment conditions, unilateral termination clauses, or excessive security deposits.
• Only the State Commission and the National Commission have jurisdiction to declare terms of a contract null and void if found unfair to consumers.

Alternate Dispute Resolution and Penal Provisions

Mediation Route

• Chapter V provides for the attachment of a Consumer Mediation Cell to each District, State, and National Commission.
• Commissions can refer disputes to mediation at the first hearing or at any stage with the written consent of both parties.
• Mediation proceedings take place in camera and must conclude within thirty days.
• If a settlement is reached through mediation, the commission passes an order accordingly, and no appeal lies against such settlement orders.

Offenses and Penalties

• Failure to comply with an order of a consumer commission is punishable with imprisonment between one month and three years, or a fine between 25,000 rupees and 1 lakh rupees, or both.
• Manufacturing or storing adulterated or spurious goods resulting in the death of a consumer attracts imprisonment of not less than seven years, extendable to life imprisonment, and a fine of not less than 10 lakh rupees.

Facts

• The Consumer Protection Act, 2019 received the assent of the President of India on August 9, 2019.
• The Act came into statutory force on July 20, 2020, repealing the Consumer Protection Act of 1986.
• National Consumer Rights Day is observed in India on December 24 each year to commemorate the enactment of the 1986 Act.
• World Consumer Rights Day is celebrated annually on March 15.
• The Central Consumer Protection Council is an advisory body headed by the Union Minister in charge of Consumer Affairs.
• State Consumer Protection Councils are chaired by the respective State Minister in charge of Consumer Affairs.
• District Consumer Protection Councils are headed by the District Collector.
• Section 2(9) of the 2019 Act codifies six explicit consumer rights.
• The E-Daakhil portal was launched by the National Consumer Disputes Redressal Commission in September 2020 for electronic filing of cases.
• Under Section 84 of the Act, strict liability principles apply to product manufacturers for harm caused by defective products.
• A person purchasing goods for commercial purposes is excluded from the definition of a consumer, unless the purchase is made exclusively for earning livelihood via self-employment.
• Appeals against orders of the National Commission lie directly before the Supreme Court of India under Section 67 of the Act.