Consumer Protection In India

1. Introduction

With the fast-growing economy taking place in the marketplace, the dimensions of consumer protection are continuously changing. Indian consumers suffer from various unfair trade practices such as adulterated and sub-standard goods, less weights and measures, fraudulent advertisement, high prices, black marketing and poor after-sales service. It is (rightly) said that except for mother’s milk, everything is adulterated in India. Adulteration has become a small-scale industry in India. A large number of adulterants are harmful to health. The drug racket is a menance to the consumer. The Indian market has been flooded with nearly 45,000 banned drugs, out of which nearly 35,000 are either useless or harmful Complex products, innovative services, technological advancements, aggressive selling practices illustrate the current marketing age. When the market is so dynamic, the consumer protection frameworks therein cannot afford to remain stable at one point. [1] [1: Shodhganga.inflibnet.ac.in]

They have to keep growing, adapting and refining all the time. Consumer protection concerns are shared globally and are not specific to any country or sector.

The literal meaning of “COSUMER” is a person who buys goods and services for his own personal use and not for manufacture or resale. it also covers transactions through all modes offline and online. For the protection of consumer rights and to provide an adequate remedy to customers Consumer protection act was passed by Parliament in 24th Dec. 1986.

According to Section 2(d) of Consumer Protection Act 1986 [2], “CONSUMER” means any person who buys any goods for a consideration which has been paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose (other than self-employment purpose) and hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment and includes any beneficiary of such services other than the person who hires the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first-mentioned person. This definition is not exhaustive in nature. In the year 1986 various other Acts were amended for the protection of consumer rights like the Essential commodities Act 1954,The drug and cosmetics Act 1940 and the agriculture produce (grading & marketing )Act 1985. The consumer protection Act is amended by Parliament in the respective years of 1993,2005,2013,2015, 2018 to add more clauses to cover all types of consumers and to provide them the best available remedy through strengthening the Consumer Redressal Forums all over India. [2: Indiankanoon.org/Consumer Protection Act 1986 ]

2. Aims and Objectives

1. Sustain the balance between the purchaser and seller.
2. Maintain and boost the consumer’s interest.
3. Protection of consumer rights.
4. Prevent consumer exploitation from deceitful traders.
5. Signify consumer interest before the Government & make effective protection law.
6. Consolidate consumer resistance against unfair trade practices.
7. Collaborate with Government for making policies for consumer protection.
8. Build a programmes for consumer education and awareness.
9. Ensure consumer-oriented practices.
10. Redress the aggrieved consumer through Government and NGO’s.

3. Consumer Protection Needed

Consumer protection in India is needed due to some important factors :

1. High prices of goods and services
2. Monopoly of companies
3. Less supply of Products
4. Improper weight or quality of the products
5. Legal complexities
6. Lack of awareness
7. Misleading advertisements
8. Adulteration in goods/products

4. Existing Consumer Protection Frameworks in India

1. Legal framework in India [3]

[3: http://www.prsindia.org/sites/default/files/bills_files/Comparision%20Table-Consumer%20Protection%20Act.pdf]

1.1. Consumer Protection Act,1986

• Passed in 24 Dec. 1986
• Recognition of 6 rights of consumers
• Include 6 types of Unfair trade practices like false representation
• Formation of Consumer protection council (CPCs)

Who can file a complaint –

• A customer
• Any voluntary consumer organisation
• The Central Government
• The State Govt. or Union Territory Administration

What constitute complain –

• If consumer suffered loss
• If consumer purchased the defected goods
• If deficiency in service occurred in hired services
• If the amount is charged is greater than the MRP

Procedure of filing complain –

• File within 2 years of cause of action
• Submit the 3 copies of complaint and attach the supporting documents in it
• There is no need to hire a Lawyer, Complainant can appear In-person at court

Pecuniary Jurisdiction of courts –

• District : Up to Rs 20 lakh.
• State : Between Rs 20 lakh and up to Rs one crore.
• National : Above Rs one crore.

Judicial structure of court –

• 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.

Penalty & Imprisonment

• Failure to comply with an order of the district, state or national Commissions will attract imprisonment of up to three years or fine of up to Rs 10,000 or both.

Appeal Against –

• District Forum – within 30 days – in State Commission
• State Commission – within 30 days – National Commission
• National Commission – within 30 days – Supreme Court

1.2. Consumer Protection Bill, 2015 [4]

[4: http://www.prsindia.org/sites/default/files/bills_files/Comparision%20Table-Consumer%20Protection%20Act.pdf]

Passed in 10 Aug. 2015

Adds three types of Unfair trade practices to the list, namely:

1. failure to issue a bill or receipt;
2. refusal to accept a good returned within 30days; and
3. disclosure of personal information given in confidence.

Product liability –

• The responsibility of the manufacturer if a defect in a good has caused physical damage, injury or death.
• Claimant is required to prove that manufacturer knew or should have known that harm would be caused.
• Product seller is liable for negligence in specified conditions.

Unfair Contracts-

• · Lists six contract terms which may be held as unfair.

Regulator

• Establishes the Central Consumer Protection Authority (CCPA) to enforce consumer rights.
• CCPA can pass orders regarding recall of products, unfair contracts, and misleading advertisements.
• CCPA can declare unfair contract terms as null and void.
• CCPA can impose penalties for violation of consumer rights and misleading advertisement.

Pecuniary Jurisdiction of courts-

• District: Up to Rs 50 lakh.
• State: Between Rs 50 lakh and up to Rs 10 crore.
• National: Above Rs 10 crore.

Penalties & Imprisonments

• In case of Commissions, fine increased to a maximum of Rs 50,000.
• Failure to follow CCPA order – imprisonment of up to six months or fine of up to Rs 20 lakh, or both.
• Penalty for publishing a false advertisement of food – fine of up to Rs 10 lakh.
• Penalty for manufacture, sale etc.of adulterated food -fine of up to Rs one lakh.

Misleading Advertisements

• The CCPA can order withdrawal or discontinuation or modification of false and misleading advertisements.
• CCPA/District Commission will direct issuance of corrective advertisements.

E- Commerce

• Defines Electronic intermediary.

1.3. The Consumer Protection Bill, 2018 [5]

[5: http://www.prsindia.org/sites/default/files/bills_files/Comparision%20Table-Consumer%20Protection%20Act.pdf]

• Passed in 20 Dec. 2018
• Unfair Trade Practices
• Retains the three types of practices added in the 2015 Bill.
• Amends 30 days to time period specified in cash memo or 30 days if no time period mentioned.
• For disclosure of personal information, removes reference to public interest exception.
• Removes those contests/ lotteries from the ambit of unfair trade practice that may be prescribed

Product Liability

• Product liability for service providers included.

Removes following conditions of liability for manufacturer

1. defendant is the manufacturer; and
2. dangerous aspect of product was proximate cause of harm with regard to the product manufacturer.

Removes the condition regarding manufacturer’s knowledge. Reference to negligence not included in the Bill

Unfair Contracts

• Changes definition to include terms which can cause significant change in consumer rights.
• Complaints against unfair contracts can be filed with only the State and National Commission.

Advisory body

• Makes CPCs advisory bodies at the district, state and national level

Regulator

• Investigation wing set up under CCPA.

Pecuniary Jurisdiction of courts –

• District : Up to Rs one crore.
• State : Between Rs one crore and up to Rs 10 crore.
• National: Above Rs 10 crore.

Judicial Structure –

• 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

Penalties & Imprisonments

• In case of Commissions, fine increased to a maximum of Rs one lakh.
• Failure to follow CCPA order – same as 2015 Bill.
• Graded penalties for adulterated products and spurious goods.

Misleading advertisements

• The CCPA can issue direction to discontinue false advertisements, or modify it.
• For false and misleading advertisements, a penalty of up to Rs 10 lakh may be imposed on manufacturer or an endorser.
• For a subsequent offence, the fine may extend to Rs 50 lakh. The manufacturer can also be punished with imprisonment of up to two years, which may extend to five years in case of every subsequent offence.
• The CCPA can also prohibit the endorser of a misleading advertisement from endorsing any particular product or service for a period of up to one year.
• For every subsequent offence the period of prohibition may extend to three years. There are certain exceptions when an endorser will not be held liable.
• Penalties also specified for adulterated products and spurious goods.

E-commerce

• Direct selling, e-commerce and electronic service provider defined.
• The central government may prescribe rules for preventing unfair trade practices in e-commerce and direct selling.

1.4. Composition of Redressal Agencies [6]

[6: www.ncdrc.nic.in/composition]

National Commission

• President (a person who is or has been Jude of the Supreme Court to be appointed by the Central Govt.)
• Four Members

State Commission

• President (a person who is or has been or is High Court appointed by the state govt.)
• Two Members

District Forum

• President (a person who is or has been a judge of a qualified to be a District Judge )
• Two Members

2. Rights of the consumers [7]

[7: www.nationalconsumerhelpline.in/rightsoftheconsumers]

The consumer has innumerable rights under the consumer protection Act and some new rights added recently in The Consumer Protection Bill, 2018. So here they are :-

I. Right to Safety

Consumers have right to be protected by the goods which are dangerous to health and life. As a consumer, if we are cognizant or aware of this right. we can take precautions to prevent the harm.

II. Right to Complain

If the harm is caused after using the product in spite of precautions then you have a right to complain against the dealer.

III. Right to be Informed

Consumers have right to be informed about the quality, quantity, purity, standard, grade and price of the goods available to them.

IV. Right to Choose

Every consumer has right to choose the product of their own choice. But sometimes the advertisements on TVs influence the consumers to buy the product. These irregularities can be avoided in effective manner if consumer is aware of this right.

V. Right to be Heard

Consumers have right to be heard by manufacturers, dealers and advertisers about their views and grievances. Also consumers have right to be heard before the court in legal proceedings while dealing with his/her consumer rights. Consumers also have right to be consulted by the government and public authorities when rules or policies are made affecting the Consumer Interests.

VI. Right to seek Redressal

The Consumer has right to get Redress – to seek adequate legal relief from the appropriate court of law. This right also provide consumer to get Compensation from the dealer or supplier or manufacturer of the goods if consumer has suffered any loss or damage.

VII. Right to consumer Education

Consumer Education empowers consumers to exercise their consumer rights. To restrict the malpractices and exploitation of consumers .The consumer alertness and education is essential.

2. Self-Guideline/Rules [8]

[8: New Age Challenges in Consumer Protection in India by Archna singh www.ijbm.com]

Manufacturer service providers and industries have their own existing laws in various sectors in the form of code of conduct or general guiding principles.

Most Bank have adopted a code of Bank’s Commitment to Customers formulated by the Banking Codes and Standards Board of India. Similarly, industry associations like National Association of Software & Service Companies (NASSOCOM) and Confederation of Indian Industry (CII) grinding towards welfare of consumers. How the service providers handle the complaint of the customers is also a very vital part of consumer protection. As a worthy practice, some organizations have Customer Complaints systems which are ISO 100002 compliant.

3. Consumer Groups[9]

[9: New Age Challenges in Consumer Protection in India by Archna singh www.ijbm.com]

No consumer protection framework is complete without the participation of consumers’ groups in consumer education campaigns, giving recommendation to policy makers and promoting the interests of consumers in general. Many Consumer Organizations are running in India and actively involved in complaints handling, education, advocacy, creating awareness amongst consumers. For example, some prominent VCOs in India are Consumer Education and Research Centre (CERC), Consumer Unity of Trust Society (CUTS),Voluntary Organization in the Interest of Consumer Education (VOICE) these are one of the leading NGO’s for providing the consumer a right path and help them to attain the relief.

5. Current Challenges in Consumer Protection in India

5.1. Lack of Information

In a usual consumer market, the seller holds more information as compared to the customer. When making a purchase the consumers would like to know three pieces of information the price of the product, the quality of the product, and the terms of trade. (London Economics, 1997) [10] [10: London Economics. (1997). Consumer detriment under conditions of imperfect information. London: Report]

Consumers are not properly informed or they may not have the full (or any) details about these three pieces of information.

This lack of information put consumers in an unfavorable position, and got exploited by the sellers. This is more prevalent in certain industries such as financial services, telecom, and e-commerce. These are the fastest growing sectors in India, where an increasing number of consumers are entering the market. Problems in newer Markets can arise due to the following:

• Difficulty to understanding the services offered
• Multifarious terms of the contract
• Inventive terms in contract

5.2. Effectiveness of Exisinting Law

The current laws on consumer protection are not implemented by the effectiveness Due to growing economy and growing the customers reach to producers/sellers there cannot be one ideal law but the effectiveness of the current legal framework is the ultimate necessity.

5.3. Redress Mechanism

Redressal Mechanisms provide to consumers who have had bad experiences in the market. Consumer Protection Act, 1986 provides for a quasi-judicial system consisting of the Consumer Forum, State Commissions and National Commission.

Some specific challenges relating to redress mechanisms are:

• Bulky legal process
• The onus is on the consumer to take action
• Lack of understanding about legal workings
• Lack of Alternate Dispute Redressal Mechanisms
• Illiteracy

5.4. Data Protection & Privacy[11]

[11: New Age Challenges in Consumer Protection in India by Archna singh www.ijbm.com]

Data Protection & Privacy have gained importance with growth in the information technology sector. Limit-less online transactions and

trades have brought in new challenges in the field of data protection. Consumers Bank account details and personal information are now at huge risk because this information can be easily stolen.

The issue of data protection has various aspects that require consideration. These include:

• Privacy of Account Details of Consumers
• Personal data Protection
• Data of consumers sold as commodity by companies
• International Drift of Data

5.5. Unfair Trade Practices

Unfair Trade Practices are fraudulent, deceptive or dishonest trade practices or business representation of the product/service, which is prohibited by law or actionable under law by a judgment of the court.

5.6. Misleading Advertisement

When advertisements try to influence the consumers by making false claims the consumers get influenced by them and they become deceptive, false or misleading and a question arises on the ethics of manufactures and sellers. (CUTS International, 2013) [12] [12: CUTS International. (2013). Study and Analyse the Situation in India Regarding Unfair Trade Practices and Limitations of the Law Enforcement. Delhi: GIZ]

Individuals do not have the power or resources to take upon large business houses against any unfair trade practices or misleading ads. Misleading ads like Patanjali or Nestlé product ads.

5.7. Quality standards

Quality standards ensure the minimum quality compliance by producers. India follows the Bureau of Indian Standards (BIS) or international standards by bodies such as ISO, WHO, FAO, etc. Certification of Indian quality standards is done by BIS. The international standards certification is done by third parties. All international standards that are being followed in India are voluntary in nature. Standards developed by BIS fall under two categories: Mandatory and voluntary. Standards relating to necessary products and commodities fall under the mandatory category, for example as in case of electronic products.

Some issues relating to Quality standards in India are

• Standards in India are voluntary in nature
• A lack of strict standards rules
• Many existing Indian Standards doesn’t verified by the international standards
• The Third parties certifying doesn’t have to be authentic.
• Standardisation is not widespread in India

5.8. Vulnerable Consumer Groups

• Due to Digital divide i.e. inequality due to access to information & communication technology and e-skills, elderly and children are more exposed to risks from their digital activity.
• People lacking access to internet, ICT or skills to use these resources might suffer with regards to various opportunities and developments. (EU, 2014).[13] [13: Europe Economics. (2007). An analysis of the issue of consumer detriment and the most appropriate methodologies to estimate it. London: DG SANCO. Retrieved from http://ec.europa.eu/consumers/startegy/docs/study_consumer_detriment.pdf]
• Children are especially vulnerable to abusive advertisements aimed at them and undesirable internet access. Children’s growing participation in social networking websites has raised privacy concerns as having a profile on a social network has become an essential part of their online lives (OECD, 2009).[footnoteRef:14] [14: www.oecd.org/india/children privacy issues]

6. Duties of the Consumer

As the consumer have numerous rights they also have certain kind of duties here they are [15]: [15: www.consumeraffairsjamaica.gov.in]

• a) The Responsibility to be aware
• b) The Responsibility to gather
• c) The Responsibility to Think Independently
• d) The Responsibility to Speak out
• e) The Responsibility to Complain
• f) The Responsibility to be an Ethical Consumer
• g) The Responsibility to Respect the Environment

7. Current data of complaints

6230 complaints received in the GAMA portal during the period April, 2015 to January, 2018bIn so far as the Ministry of Consumer Affairs, Food and Public Distribution (Department of Consumer Affairs) is concerned, a portal called “Grievance Against Misleading Advertisements (GAMA)” has been launched to deal with the complaints relating to misleading advertisements. Under an MoU, the Department has assigned the task of processing the complaints received through the GAMA portal to the Advertising Standards Council of India (ASCI) as per its code. Complaints received through this portal are evaluated by ASCI and are processed through its Consumer Complaints Council. In cases where the complaints are upheld, the advertisers are asked to modify or withdraw the misleading advertisements. In case of non-compliance, ASCI forwards such complaints to the Regulators concerned to take necessary action. During the period April, 2015 to January, 2018, 6230 complaints have been received in the GAMA portal. While 1262 complaints have been rejected, 3146 complaints have been resolved, 1148 complaints have been referred to the Regulators concerned for taking further action. [16] [16: www.prsindia.org/currentconsumercomplaintsdata]

8. Cases of Consumer Rights

1. Patanjali Product Sample Failure [17] [17: https://m.hindustantimes.com/india-news/baba-ramdev-s-patanjali-products-fail-uttarakhand-quality-test/story ]

An RTI query revealed that Patanjali’s Divya Amla juice and Shivlingi Beej failed to meet the quality standards. The lab report said 31.68% of foreign matter was found in the products and also had less PH value as prescribed. Out of 82 samples, collected betwwen 2013 to 2016, 32 failed the quality test.

2. Maggi Dispute(M/S Nestle India Limited vs The Food Safety And Standfards Authority of India [18]) [18: http://www.icmrindia.org/casestudies/catalouge/Law/The%20Maggi%20Ban-Case%20Study.htm]

The Nestle India Pvt. (Ltd.) (subsidiary company of Nestle international, Switzerland) product Maggie found containing MSG while the labelling of the product says ‘NO MSG’. After a laboratory test the product found containing the MSG FSSAI ban the product for 5 months. Bombay High court remove the ban but when the matter appear before Supreme Court the court held that the producer is liable if a consumer suffers any harm after consuming their product. The SC imposed a penalty and order to destroy the Maggie product containing MSG which is dangerous to health if eaten.

3. Club Mahindra Case [19] [19: https://indiankanoon.org/doc/27374524]

The Pune District Consumer Dispute Redressal Forum has directed Chennai Based Mahindra Holidays and Resorts India Ltd. Also known as Club Mahindra to Pay Rs. 2.08 lakh with 9% annual interest rate to a complainant who was not able to avail of its services even after becoming a member.

9. Key Measures for Protection of Consumer Rights

1. Awareness of consumer rights through campaigns like Jago GRAHAK Jago
2. Always insist on Cash Memo
3. Never pay more than the mentioned MRP in the product
4. Look after for Standard marks like ISI, FPO, etc.
5. Check the product Expiry and manufacturing date while purchasing
6. Be an educated, aware, and strong consumer
7. If found anything suspicious in the product or deficiency in services then make a Call to National Toll-Free Consumer Helpline No. 1800-11-4000 [20] [20: www.nationalconsumerhelpline.in ]
8. Battle for your Rights

10. Way Forward

Due to changing nature of products and technological advancements in the business environment, new risks to consumer welfare have emerged. These insist to update the current law of consumer protection. The Consumer Protection (Amendment) Bill, 2018 bridges some of the gaps, a lot still needs to be done. The Consumer Protection Law should possess the following features: clarity, accountability, Impartial appointment.

The Consumer Protection framework needs to be designed for keeping in mind the evolving nature of the marketplace[footnoteRef:21]. [21: New Age Challenges in Consumer Protection in India by Archna singh www.ijbm.com]

Further, the interests of vulnerable groups should be given special attention and safeguards.

Cross boundary trade and online transactions have resulted in a global customer base of many companies. Thus, issues related to consumer protection have grown in their importance. In order to ensure that the interests of Indian consumers are protected in the rapidly changing economy, effective measures have to be taken by policymakers. It is time we carry forward our laws and their execution in line with the progressions in business. Such timely action would make sure consumers trust and confidence in the market and also protected by those laws. Legislation alone can’t solve all the problems unless and until consumer is not aware of their rights. We should be concerned with promoting consumer education and awareness, settling consumer complaints, conducting consumer research and working in liaison with other organizations to find solutions to consumer problems. There is vast scope for building up a massive and dynamic consumer awareness movement in India.

“Your Product, Your Rights”