Personal Finance

The new consumer law and you

Parvatha Vardhini C | Updated on January 21, 2018

The Consumer Protection Bill, 2018 has a wider ambit and is more comprehensive than the earlier law

On the last day of the winter session of Parliament, the Minister for Consumer Affairs, Ram Vilas Paswan, introduced the new Consumer Protection Bill, 2018 in the Lok Sabha. If all goes well, the Bill could become an Act sooner than later. It will replace the Consumer Protection Act, 1986.

The Consumer Protection Bill, 2018 is wider in its ambit. It also legislates on at least three new areas vis-à-vis the older law. For one, under the product liability provisions, it holds the manufacturer responsible if a defect in a good has caused physical damage, injury or death; two, it sets up a regulator to enforce consumer rights and, three, it provides for an alternative dispute redressal mechanism.

Wider scope

The new law will apply to all goods and services, including sale/construction of homes/flats and telecom services. It brings within its fold all forms of selling — offline/online sales, teleshopping, direct selling and multi-level marketing.

While the earlier law did cover unfair trade practices, the current one makes it more comprehensive.

It adds practices such as failure to issue a bill or a receipt, refusal to accept a good returned or refusal to discontinue service within 30 days (if it is so stipulated and requested by the consumer) and disclosure of personal information given in confidence, to the list of unfair practices.

It also defines unfair contracts. Issues such as excessive security deposit requirements, penalty for breach of contract which is disproportionate to the loss incurred, and refusal to accept early repayment of debt on payment of applicable penalty will now fall under its ambit.

Product liability

The highlight of the new law is the inclusion of the product liability action. Thus, when you suffer any harm due to a defect in a product made by a manufacturer, serviced by a service provider or sold by a product seller, you have a right to claim compensation once the 2018 Bill becomes law.

The Bill lays down circumstances under which the manufacturer, service provider and seller will be held liable. For instance, a product manufacturer will be liable to compensate for harm caused to the consumer under any one of the following conditions: the product contains a manufacturing defect/it is defective in design/there is deviation from manufacturing specifications/it does not conform to the express warranty/it does not contain adequate instructions for correct usage.

It should be noted that under the 2018 Bill, it is enough if the consumer proves any one of the conditions stated to trigger liability on the part of the manufacturer/seller/service provider to compensate.

The earlier version of the Bill required consumers to prove all conditions to be eligible for compensation.

Regulator on the cards

To promote and protect consumer rights, Consumer Protection Councils at the district, state and national levels are prescribed under the current law. But this is only an advisory body and hence does not have powers of enforcement. To overcome this drawback, the new Bill brings in a regulator for consumer affairs, much like SEBI for the markets or the IRDAI for insurers.

Called the Consumer Protection Authority, it will be a central authority with offices at the regional level. This Authority will have powers to inquire, investigate into complaints, initiate prosecution and issue safety notices/pass orders in relation to matters such as recall of goods, reimbursement of the amount paid by consumers, misleading advertisements and unfair trade practices/contracts. The Authority can act on its ownor on directions from the Centre. An aggrieved consumer can also complain either in writing or in electronic mode, to either the District Collector or the Commissioner of regional office or the central Consumer Protection Authority.

Non-compliance of the order issued by the Consumer Protection Authority is punishable with an imprisonment of up to six months, or a fine of up to ₹20 lakh, or both. The Authority may also impose penalties with regard to the misleading advertisements, food adulteration and spurious goods. The penalty for false or misleading advertisement is imprisonment of up to two years and fine of up to ₹10 lakh.

A penalty on the endorser of the misleading advertisement is suggested as well, which could put celebrities who endorse products that don’t live up to their claims, in the dock. The penalty for the manufacture, sale, storage, distribution or import of food containing an adulterant or spurious goods is also punishable with imprisonment and fine in various degrees depending on the extent of damage caused.

Mediation possible

Currently, a Redressal Commission operates at the district, state and national levels to adjudicate consumer disputes. The new law provides for an alternative dispute redressal mechanism if there is chance for a settlement agreeable to the parties to the dispute. The Bill envisages setting up of mediation cells attached to the district forums, state and national commissions. Mediation is a process where a neutral third party called mediator assists the parties in dispute in amicably resolving it (out of court). Already Bengaluru-based National Law School of India University is running an online mediation centre for e-commerce disputes under the aegis of the Ministry of Consumer Affairs, as a pilot project.

Published on January 20, 2018

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