UNIT – 4

CONSUMER PROTECTION ACT, (COPRA) 2019

The Consumer Protection Bill, 2019 was introduced in Lok Sabha by the Minister of Consumer
Affairs, Food and Public Distribution, Mr. Ram Vilas Paswan on July 8, 2019. The Bill replaces
the Consumer Protection Act, 1986. Key features of the Bill include: Definition of consumer.
A consumer is defined as a person who buys any good or avails a service for a consideration.
It does not include a person who obtains a good for resale or a good or service for commercial
purpose. It covers transactions through all modes including offline, and online through
electronic means, teleshopping, multi-level marketing or direct selling.

Rights of consumers: Six consumer rights have been defined in the Bill, including the right
to: (i) be protected against marketing of goods and services which are hazardous to life and
property: (ii) be informed of the quality, quantity, potency, purity, standard and price of goods
or services; (iii) be assured of access to a variety of goods or services at competitive prices;
and (iv) seek redressal against unfair or restrictive trade practices.

Central Consumer Protection Authority: The central government will set up a Central
Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of
consumers. It will regulate matters related to violation of consumer rights, unfair trade
practices, and misleading advertisements. The CCPA will have an investigation wing, headed
by a Director General, which may conduct inquiry or investigation into such violations.

CCPA will carry out the following functions, including: (i) inquiring into violations of
consumer rights, investigating and launching prosecution at the appropriate forum: (ii) passing
orders to recall goods or withdraw services that are hazardous, reimbursement of the price paid,
and discontinuation of the unfair trade practices, as defined in the Bill; (iii) issuing directions
to the concerned trader/ manufacturer/ endorser/ advertiser/ publisher to either discontinue a
false or misleading advertisement, or modify it; (iv) imposing penalties, and: (v) issuing safety
notices to consumers against unsafe goods and services.

Penalties for misleading advertisement: The CCPA may impose a penalty on a manufacturer
or an endorser of up to Rs 10 lakh and imprisonment for up to two years for a false or
misleading advertisement. In case of a subsequent offence, the fine may extend to Rs 50 lakh
and imprisonment of up to five years.

CCPA can also prohibit the endorser of a misleading advertisement from endorsing that
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. However, there are certain exceptions when
an endorser will not be held liable for such a penalty.

Consumer Disputes Redressal Commission: Consumer Disputes Redressal Commissions

(CDRCs) will be set up at the district, state, and national levels. A consumer can file a

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complaint with CDRCS in relation to: (i) unfair or restrictive trade practices; (ii) defective
goods or services; (iii) overcharging or deceptive charging; and (iv) the offering of goods or
services for sale which may be hazardous to life and safety. Complaints against an unfair
contract can be filed with only the State and National Appeals from a District CDRC will be
heard by the State CDRC. Appeals from the State CDRC will be heard by the National Court.
CDRC, Final appeal will lie before the Supreme court.

Jurisdiction of CDRCS: The District CDRC will entertain complaints where value of goods
and services does not exceed Rs one crore. The State CDRC will entertain complaints when
the value is more than Rs one crore but does not exceed Rs 10 crore. Complaints with value of
goods and services over Rs 10 crore will be entertained by the National CDRC.
Product liability: Product liability means the liability of a product manufacturer, service
provider or seller to compensate a consumer for any harm or injury caused by a defective good
or deficient service. To claim compensation, a consumer has to prove any one of the conditions
for defect or deficiency, as given in the Bill.

OBJECTIVE OF THE CONSUMER PROTECTION ACT, (COPRA) 2019

Objectives of consumer protection act are as follows:

● To provide better and all round protection to consumers.

● To provide machinery for the speedy redressal of the grievances.
● To Create framework for consumers to seek redressal
● To provide rights to consumers.
● To Safeguard the Rights of Consumers.

IMPORTANT TERMS OF THE CONSUMER PROTECTION ACT, (COPRA) 2019

This Act provides safety to consumers regarding defective products, dissatisfactory services,
and unfair trade practices. The basic aim of the Consumer Protection Act, 2019 is to save the
rights of the consumers by establishing authorities for timely and effective administration and
settlement of consumers' disputes.

New definition of consumer:

The new Act has widened the definition of consumer.

Definition of consumer:

As per the Act, a person is called a consumer who avails the services and buys any good for
self-use. Worth to mention that if a person buys any good or avails any service for resale or
commercial purposes, he/she is not considered a consumer. This definition covers all types of
transactions i.e. offline and online through teleshopping, direct selling or multi-level marketing.

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Central Consumer Protection Authority:

The Act proposes the establishment of the Central Consumer Protection Authority (CCPA) as
a regulatory authority. The CCPA will protect, promote and enforce the rights of consumers
and regulate cases related to unfair trade practices, misleading advertisements, and violation of
consumer rights.

CCPA would be given wide-ranging powers.

The CCPA will have the right to take suo-moto actions, recall products, order reimbursement
of the price of goods/services, cancel licences, impose penalties and file class-action suits.

The CCPA will have an investigation wing to conduct independent inquiry or investigation into
consumer law violations.

Consumer Disputes Redressal Commission:

The Act has the provision of the establishment of Consumer Disputes Redressal Commissions
(CDRCs) at the national, state and district levels to entertain consumer complaints.

As per the notified rules, the State Commissions will furnish information to the Central
Government on a quarterly basis on vacancies, disposal, the pendency of cases and other
matters.

The CDRCS will entertain complaints related to:

Overcharging or deceptive charging

Unfair or restrictive trade practices

Sale of hazardous goods and services which may be hazardous to life.

Sale of defective goods or services

As per the Consumer Disputes Redressal Commission Rules, there will be no fee for filing
cases up to Rs. 5 lakh.

E-Filing of Complaints:

The new Act provides flexibility to the consumer to file complaints with the jurisdictional
consumer forum located at the place of residence or work of the consumer. This is unlike the
earlier condition where the consumer had to file a complaint at the place of purchase or where
the seller has its registered office address.

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The new Act also contains enabling provisions for consumers to file complaints electronically
and for hearing and/or examining parties through video-conferencing.

Consumers will also not need to hire a lawyer to represent their cases.

Product Liability & Penal Consequences:

The Act has introduced the concept of product liability.

A manufacturer or product service provider or product seller will now be responsible to

compensate for injury or damage caused by defective products or deficiency in services. This
provision brings within its scope, the product manufacturer, product service provider and
product seller, for any claim for compensation. The term 'product seller' would also include e-
commerce platforms.

Penalties for Misleading Advertisement

The CCPA may impose a penalty on a manufacturer or ari endorser, for a false or misleading
advertisement. The CCPA may also sentence them to imprisonment.

Provision for Alternate Dispute Resolution:

The new Act provides for mediation as an Alternate Dispute Resolution mechanism, there will
be a strict timeline fixed in the rules.

As per the recently notified rules, a complaint will be referred by a Consumer Commission for
mediation, wherever scope for early settlement exists and parties agrees for it. The mediation
will be held in the Mediation Cells to be established under the aegis of the Consumer
Commissions. There will be no appeal against settlement through mediation.

Unfair Trade Practices:

The new Act has armed the authorities to take action against unfair trade practices f00 The Act
introduces a broad definition of Unfair Trade Practices, which also includes the sharing of
personal information given by the consumer in confidence unless such disclosure is made in
accordance with the provisions of any other law.

The Central Consumer Protection Council:

The Consumer Protection Act empowers the Central Government to establish a Central
Consumer Protection Council. It will act as an advisory body on consumer issues.

As per the notified Central Consumer Protection Council Rules, the Central Consumer
Protection Council would be headed by the Union Minister of Consumer Affairs, Food and
Public Distribution with the Minister of State as Vice Chairperson and 34 other members from
different fields.

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The Council, which has a three-year tenure, will have a Minister-in-charge of consumer affairs
from two States from each region - North, South, East, West, and NER. There is also a
provision for having working groups from amongst the members for specific tasks.

COMPLAINT

Sec 2 of the Consumer Protection Act, 2019 defines a complaint as any written allegation made
by a consumer to obtain relief under the Consumer Protection Act in the case of an unfair
contract, unfair trade practice, restrictive trade practice, defective goods, deficiency of services
or hazardous goods or service. A complaint may also include a written allegation to claim
liability against the product manufacturer, seller or service provider.

The Consumer Protection Act, 2019 provides for efficient and effective settlement of consumer
disputes while promoting the interest of the consumers. The introduction of online filing of
complaints and mediation proceedings is a step towards speedy disposal of consumer cases and
is a greater step towards digitization of consumer disputes.

The status of a complaint can be checked online and the fees for submission of the complaint
can also be submitted through an online payment portal.
Things to keep in mind when instituting consumer complaints.

Issuance of notice

It is recommended that a notification be sent to the opposing party before filing the complaint,
outlining the defects/deficiencies in the products or services offered. If the parties are unable
to reach an agreement, the complainant may submit a complaint with a jurisdiction
authority/forum.

Jurisdiction determination:

Pecuniary jurisdiction:

The pecuniary jurisdiction limit has been modified under the CPA, 2019. According to the new
statute, the pecuniary limitation bar is as follows

District Commission: Amount not exceeding 1 crore

State Commission: 1 Crore 10 Crore Rupees

National Commission: Amount exceeding Rupees 10 Crore

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Territorial jurisdiction:

As per the CPA, 2019 a complaint can be filed where the consumer resides or personally works
for gains as well as the place where the opposite party resides or carry-on business. The
complaint can also be filed where the cause of action, wholly or in part, arises.

Submission of Complaint:

A complaint can be submitted either online or in person. It might be submitted in person by the
complainant or by his representative. It can also be sent by registered post with the court fee.

Three copies of the complaint are required to be submitted out of which one is retained for the
official purpose, one is forwarded to the opposite party and one is for the complainant. If the
number of opposing parties is increased, more copies of the complaint are necessary.

Contents of the Complaint:

The complaint should include the following information:

Name, description, and address of the complainant

The name, description, and address of the opposing party or parties

Facts about the complaint, such as when and where it occurred

Documents to back up allegations, if any

Specifics of the dispute: a flaw in the goods/a deficiency in the service

The relief being sought

Limitation for filing Complaint/Appeal:

The complaint must be filed within two years of the date the cause of action arose. This would
be two years from the day the deficit in service or defect in products was discovered. This is
known as the statute of limitations for filing a complaint under consumer court.

Appeal before state commission would have to be filed within 30 days from the order of District
commission and appeal before National commission is to be made within 30 days from the
order of the lower forum and for an appeal before Supreme court against the order of Nation
commission is to be within 45 days.

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Court Fees:

The court fees remain nil up to consideration of 5 lakh Rs involved before the district
commission. In respect of state commission, the court fees range from 2,500 Rs to 6,000 Rs
whereas court fees in the case of the national commission are 7,500 Rs.
In the event of an appeal before the State Commission or the National Commission, a deposit
of 50% of the entire award amount passed by the lower commission is required.

CONSUMER

As per Section 2(7) of the 2019 Act, consumer is any person who buys goods or avails any
service for a consideration and includes any user except for the person who has availed such
services or goods for the purpose of resale or commercial use. The explanation to the definition
specifically states that the expression "buys any goods" and "hires or avails any services"
includes all online transactions conducted through electronic means or direct selling or
teleshopping or multi-level marketing. Online transactions is an exclusive feature of this act
and added keeping in mind the growing e-commerce business and advancement in technology.

Unfair Trade Practice' under the 2019 Act

Section 2(47) of the Consumer Protection Act, 2019 defines 'unfair trade practice'. The
definition of 'unfair trade practice' has been broadened to include practices such as:

Manufacturing or offering spurious goods for sale or adopting deceptive practices for providing
service, not issuing proper cash memo or bill for the services rendered and the good sold,
refusing to withdraw, take back or discontinue defective goods and services and refund the
consideration taken thereof within the time period stipulated in the bill or within 30 days if
there is no such provision in the bill, disclosing personal information of the consumer to any
other person not in accordance with the prevailing laws. The repealed Act of 1986 did not
include online misleading advertisements in the definition of unfair trade practice that were
added in the 2019 Act.

Concept of Unfair Contract

The 2019 Act has also introduced the concept of unfair contract. 'Unfair Contract' is defined
under Section 2(46) and it refers to any contract between a consumer and a manufacturer or
service provider or trader whose terms brings about a significant change in the consumer rights
under the Act. These terms are namely such as:
a) Requirement of excessive security deposits by the consumer in for facilitating the
performance of obligations under the contract;
b) Imposing penalty for breach of contract on the consumer which is not in proportion with the
loss suffered due to such breach;
c) Not accepting early debt repayment along with the applicable penalty:

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d) Allowing one of the parties to terminate the contract without any reasonable cause or
Unilaterally,
e) Entitling one party to assign the contract to the detriment of the consumer and without his
consent;
f) Imposing unreasonable condition, obligation or charge on the consumer that puts him in a
disadvantageous position.

Consumer Rights

Under the Act, consumers have six main rights, which are listed as follows:

a) The right to be protected against the marketing of goods, products or services which are
hazardous to life and property;

b) The right to be informed about the quality, quantity, potency, purity, standard and price of
goods, products or services, as the case may be, so as to protect the consumer against
unfair trade practices;

c) The right to be assured, wherever possible, access to a variety of goods, products or services
at competitive prices;

d) The right to be heard and to be assured that consumer's interests will receive due
consideration at appropriate fora;
e) The right to seek redressal against unfair trade practice or restrictive trade practices or
unscrupulous exploitation of consumers; and

f) The right to consumer awareness.

CONSUMER DISPUTE

The jurisdiction of Consumer Disputes Redressal Commission is invoked when a 'complaint

has been filed by 'complainant'.

Act applies to all goods and services - Save as otherwise expressly provided by the Central
Government, by notification, this Act shall apply to all goods and services - Section 1(4) of
Consumer Protection Act, 2019.

Dispute relating to land and immovable property is not covered Dispute regarding immovable
property is not consumer dispute, as there is no sale of 'goods' or 'services' for consideration.
However, dispute can be raised about service in connection with immovable property.

Land is not movable and hence not 'goods'. Hence disputes regarding sale/allotment of land
are outside purview of CPA. (Krishan Baldev Gupta v. Haryana State Development Corpn.
(1993) || CPJ 191 (NCDRC).

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In Shaila Construction v. Nainital Lake Development III (1996) CPJ 11 (NCDRC), it was held
that there is no hire of services when there is outright sale of immovable property. However,
there can be deficiency in service and complaints can be lodged.

CONSUMER RIGHTS

Six consumer rights have been defined in the Bill, including the right to:
(i) Be protected against marketing of goods and services which are hazardous to life and
property.

(ii) Be informed of the quality, quantity, potency, purity, standard and price of goods or
services.

(iii)Be assured of access to a variety of goods or services at competitive prices.

(iv) Seek redressal against unfair or restrictive trade practices.

DEFECT

The term 'defect' is defined under Section 2 (10) of Consumer Protection Act, 2019 as "any
fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which
is required to be maintained by or under and law for the time being in force or under any
contract, express or implied or as is claimed by the trader in any manner whatsoever in relation
to any goods or products and the expression 'defective' shall be construed accordingly,"
In any buyer-seller relationship, deficiency of service prevails, Such as legal aid, banks
ralways, construction, transportation, education, electricity, entertainment, restaurant,
hospitality,etc. The consequences of deficiency of service can range from inconvenience or
harassment to mental or physical injury to death, thereby leading to legal consequences.

DEFICIENCY

Definition of Deficiency of Service

Section 2 (11) of Consumer Protection Act, 2019 defines Deficiency of Service as "any fault,
imperfection, shortcoming or inadequacy in the quality, nature and manner of performance
which s required to be maintained by or under any law for the time being in force or has been
undertaken to be performed by a person in pursuance of a contract or otherwise in relation to
any service and includes (a) any act of negligence or omission or commission by such person
to the consumer and (b) deliberate withholding of relevant information by such person to the
consumer.

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 The term 'defect' is defined under Section 2 (10) of Consumer Protection Act, 2019 as "any
fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which
is required to be maintained by or under and law for the time being in force or under any
contract, express or implied or as is claimed by the trader in any manner whatsoever in relation
to any goods or products and the expression 'defective' shall be construed accordingly."

In any buyer-seller relationship, deficiency of service prevails. Such as legal aid, banks,
railways, construction, transportation, education, electricity, entertainment, restaurant,
hospitality, etc. The consequences of deficiency of service can range from inconvenience or
harassment to mental or physical injury to death, thereby leading to legal consequences.

Important Case Laws

Indian Medical Association v V.P. Shanth

This case is a result of medical negligence from medical profession. This landmark decision
recognized patient's rights through giving them the consumer status where complaints could be
lodged in a case of deficiency in the field of medical services under the Consumer Protection
Act, 1986. The liability of doctor and hospital management arises when a patient is admitted.
The standard duty of care must be maintained by the hospital. When a patient is admitted,
he/she is also considered as a consumer.

The Supreme Court emphasised on the interest and safeguards of patients which is given the
upmost importance.

Consumer Complaint Mechanism

The consumers have the liberty to go the Consumer Courts in case of deficiency in services as
laid downed under the Act. The new Consumer Protection Act, 2019 has opened the option of
filing consumer complaint electronically. The procedure to register consumer complaint is
made simple by allowing the State and District Consumer Forums for reviewing the
applications and advising appropriate method such as mediation.

DIRECT SELLING

Direct selling is the selling of products in a non-retail setting, for example, at home, online, or
other venues that are not a store. It eliminates middlemen who are involved in distribution,
such as wholesalers and regional distribution centres. Instead, products are sent directly from
the manufacturer to the sales company, then to the rep or distributor, and finally to the
consumer.

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 TYPES OF DIRECT SELLING

● Single-level direct sales

● Host or party-plan sales
● Multi-level marketing (MLM)

Single-level direct sales

This type of direct selling is usually done face-to-face, e.g., through door-to-door or one-on-

one presentations. Still, it can also take place online. As a result, salespeople earn their income

from commission sales and occasional bonuses from the company they get their products from.

They do not recruit other sales reps to receive more income.

Host or party-plan sales

This type of sales takes place in a group setting. The primary method of generating sales leads

is by hosting a social event and offering products for sale. Salespeople then use the party-plan

sales model as a source for future business by asking customers if they would like to host such

selling parties, too. Think of Mary Kay as one of the classic direct selling examples, as they

often host social events to sell goods and find recruits when they aren’t making one-on-one

sales.

Multi-level marketing (MLM)

If you’re a multi-level business salesperson, your primary focus is on recruiting members, not

the actual product itself. What makes MLM different from other types of direct selling is that

income earned through it is based on sales commissions and the sales made by other business

partners recruited into the company.

MLMs are popular with people who want to work from home, but they can be risky to

participate in due to hefty upfront fees, difficult-to-meet quotas, and pay dependent on one’s

recruits. Most MLMs are generally not looked upon as a good thing. The examples of such

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 direct sales companies are Scentsy, Mary Kay, LuLaRoe, Arbonne, and many others. They also

use the party-plan model, but to recruit new salespeople while selling products.

DIRECT SELLING UNDER CONSUMER PROTECTION ACT 2019

Every direct selling business must nominate a nodal person who is responsible for ensuring
compliance with the Act and its regulations, as well as any order or demand issued under the
terms of any other legislation now in effect or its rules.

Every direct selling company must keep track of all of its direct sellers, including evidence of
identification, address, e-mail, and other contact information.

Direct selling entities shall, upon a consumer's written request following the purchase of any
goods or services, provide him with data about any direct seller from whom such consumer has
made a purchase, including the name, address, e-mail, contact number, and any other
information essential for appropriate dispute resolution communication with such direct seller.

MEANING OF E-COMMERCE

E-commerce refers to the buying and selling of goods or services using the internet, and the
transfer of money and data to execute these transactions. Ecommerce is often used to refer to
the sale of physical products online, but it can also describe any kind of commercial transaction
that is facilitated through the internet.

TYPES OF E-COMMERCE MODELS

Electronic commerce can be classified into four main categories. The basis for this simple is
the parties that are involved in the transactions. So the four basic electronic commerce models
are as follows,

1. Business to Business

This is Business to Business transactions. Here the companies are doing business with each
other. The final consumer is not involved. So the online transactions only involve the
manufacturers, wholesalers, retailers etc.

2. Business to Consumer

Business to Consumer. Here the company will sell their goods and/or services directly to the
consumer. The consumer can browse their websites and look at products, pictures, read

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 reviews. Then they place their order and the company ships the goods directly to them. Popular
examples are Amazon, Flipkart, Jabong etc.

3. Consumer to Consumer

Consumer to consumer, where the consumers are in direct contact with each other. No company
is involved. It helps people sell their personal goods and assets directly to an interested party.
Usually, goods traded are cars, bikes, electronics etc. OLX, Quikr etc follow this model.

4. Consumer to Business

This is the reverse of B2C, it is a consumer to business. So the consumer provides a good or
some service to the company. Say for example an IT freelancer who demos and sells his
software to a company. This would be a C2B transaction.

ADVANTAGES OF E-COMMERCE

E-commerce provides the sellers with a global reach. They remove the barrier of place
(geography). Now sellers and buyers can meet in the virtual world, without the hindrance of
location.

Electronic commerce will substantially lower the transaction cost. It eliminates many fixed
costs of maintaining brick and mortar shops. This allows the companies to enjoy a much higher
margin of profit.

It provides quick delivery of goods with very little effort on part of the customer. Customer
complaints are also addressed quickly. It also saves time, energy and effort for both the
consumers and the company.

One other great advantage is the convenience it offers. A customer can shop 24×7. The
the website is functional at all times, it does not have working hours like a shop.

Electronic commerce also allows the customer and the business to be in touch directly,
without any intermediaries. This allows for quick communication and transactions. It also gives
a valuable personal touch.

DISADVANTAGES OF E-COMMERCE

The start-up costs of the e-commerce portal are very high. The setup of the hardware and the
software, the training cost of employees, the constant maintenance and upkeep are all quite
expensive.

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 Although it may seem like a sure thing, the e-commerce industry has a high risk of failure.
Many companies riding the dot-com wave of the 2000s have failed miserably. The high risk of
failure remains even today.

At times, e-commerce can feel impersonal. So it lacks the warmth of an interpersonal

relationship which is important for many brands and products. This lack of a personal touch
can be a disadvantage for many types of services and products like interior designing or the
jewellery business.

Security is another area of concern. Only recently, we have witnessed many security
breaches where the information of the customers was stolen. Credit card theft, identity theft
etc.remain big concerns with the customers.

Then there are also fulfilment problems. Even after the order is placed there can be problems
with shipping, delivery, mix-ups etc. This leaves the customers unhappy and dissatisfied.

E-C OMMERCE UNDER CONSUMER PROTECTION ACT 2019

According to the Consumer Protection Act, 2019, "e-commerce" means buying or selling of
goods or services including digital products over digital or electronic network. Further, for the
purposes of preventing unfair trade practices in e-commerce, direct selling and also to protect
the interest and rights of consumers, the Central Government may take such measures
prescribed under Section 94 of the Act. To protect the interests of consumers, prevent their
exploitation and encourage free and fair competition in the market, Consumer Protection (E
Commerce) Rules, 2020 notified by the Government on July 23, 2019.

E-Commerce Entity

An e-commerce entity is defined as any person who owns, operates or manages digital or
electronic facility or platform for electronic commerce, but does not include a seller offering
his goods or services for sale on a marketplace e-commerce entity.
Consumer Protection (E-Commerce) Rules, 2020 shall not apply to any activity of a natural
person carried out in a personal capacity not being part of any professional or commercial
activity undertaken on a regular or systematic basis.

Duties of E-Commerce Entities

Every e-commerce entity shall provide the following information in a clear and accessible
manner on its platform, displayed prominently to its users, namely: legal name of the e
commerce entity, principal address of its headquarters and all branches; name and details of its
website; contact details like email address, fax, landline and mobile numbers of customer care
as well as of grievance officer.

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 E-commerce entity shall not adopt any unfair trade practice, whether in the course of
business on its platform or otherwise.

Every e-commerce entity shall establish an adequate grievance redressal mechanism having
regard to the number of grievances ordinarily received by such an entity from India, and shall
appoint a grievance officer for consumer grievance redressal, and shall display the name,
contact details, and designation of such officer on its platform.

Every e-commerce entity shall ensure that the grievance officer acknowledges the receipt of
any consumer complaint within forty-eight hours and redresses the complaint within one month
from the date of receipt of the complaint.

Where an e-commerce entity offers imported goods or services for sale, it shall mention the
name and details of any importer from whom it has purchased such goods or services, or who
may be a seller on its platform.

Every e-commerce entity shall endeavour on a best effort basis to become a partner in the
convergence process of the National Consumer Helpline of the Central Government. E-
commerce entities shall not impose cancellation charges on consumers cancelling after
confirming purchase unless similar charges are also borne by the e-commerce entity, if they
cancel the purchase order unilaterally for any reason.
Every e-commerce entity shall only record the consent of a consumer for the purchase of
any good or service offered on its platform where such consent is expressed through an explicit
and affirmative action, and no such entity shall record such consent automatically, including in
the form of pre-ticked checkboxes.

ELECTRONICS SERVICE PROVIDERS

Consumer Protection Act, 2019 expands the concepts that would be covered by the Act, for
example, product liability, e-commerce, etc. The protection provided by the Act is for the goods
bought or service utilised. Section 2(o) of the Consumer Protection Act, 1986 defines services,
while Section 2(42) of the current Act defines the same.

Service means any kind of service which is made available to the consumers for their use for
payment of consideration. The definition can be divided into three parts: descriptive part,
inclusive part and exclusionary part..

The descriptive part says that service includes any kind of service, which has been availed by
a potential consumer. This means that any and every kind of service shall come within the
definition. The inclusive part is the list of those that have been mentioned in the statute. CPA,
2019 includes e-commerce as a new service under the statute. The telecom sector was
considered as a service and has now been explicitly mentioned in the statute now. The

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 exclusionary part is that part to determine those services whether hired for free or not and for
personal service or not.

Banking

Banking is a transaction dealing with money and there are a number of banks that have been
set up to provide services relating to money, in the form of cheques or loans or accepting
deposits, lockers facility, investment, etc. Any service which is provided by banks is not free
of cost and there will be some percentage of transaction fees deducted by them.

Thus, the service is not free of charge. A basic activity like opening a savings account is
considered to be a service rendered by banks. The bank shall have a creditor-debtor relationship
where the bank gives loans or lends money on overdraft facilities or vice versa. Reserve Bank
of India has also been considered to fall within the definition of service. In this case, RBI was
held liable for deficiency of service as there was a delay in providing loans to the employees
for their housing facilities.

Insurance

Insurance is an agreement between one party, the insurer, to indemnify the insured in cases of
any financial loss according to the terms and conditions of the contract. If the insurance
company defrauds the insured or due to negligence from the company, the loss has been
incurred by the beneficiaries, then the insurance company can be sued.

For example, if the goods are lost in transit by a transport company, then the insurance company
can claim the loss incurred by the traveller due to the negligence of the transport company.

In a recent case, the definition of consumer who availed the services of insurance has been
interpreted to include beneficiaries of the agreement as well. The Supreme Court has held that
the coverage given by the insurance agreement can include more people than just the insured.

E-commerce

E-commerce is a new concept that has been included in the CPA, 2019. E-commerce is buying
or selling goods or utilising services online through digital media or electronic service
providers. The services provided by e-commerce entities may not be according to the quality
assured by them and thus protection has to be given to the consumers.

The Consumer Protection (E-Commerce) Rules, 2020 was passed recently in line with the
CPA, 2019 to facilitate the online services provided. The rules extend to those e-commerce
entities which do not have a company registered in India but provides services in India. It is
mandatory for all the e-commerce entities to mention their name, address, address of the
website, contact details like mail address, number.

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 A grievance redressal system has to be put in place by every e-commerce entity and a grievance
redressal officer has to be appointed to confirm the grievance within 2 days and provide a
solution for the grievance within 30 days. Consent of the consumers for availing services
cannot be taken automatically but has to be given by consumers explicitly. The cancellation
charges imposed by e-commerce entities should be equivalent to the amount they have incurred
due to the cancellation.

E-commerce entities have been differentiated as e-commerce inventory entities that directly
provide services to the consumers and e-commerce marketplace entities where e-commerce
entities act as a platform for many other services. These rules are subject to the provisions of
the Consumer Protection Act, 2019.

Telecom sector
There have been a number of disputes before the CPA, 2019 with respect to whether telecom
disputes can be adjudicated by consumer fora. The Telecom Consumers Protection and
Redressal of Grievances Regulations, 2007 has provided that consumers can seek redressal for
their grievances under Consumer Protection Act. There are many areas in which jurisdiction of
consumer forum has been invoked, like the excessive billing of telephone carriers,
administrative problems such as delay in the processing of the application for change of address
of telephone line or telephone line is out of order, broadband services by telephone companies
like BSNL, fraudulent message received by the consumers due to default of telephone company
like Bharathi Airtel etc.

Electricity sector

Electricity is governed by the Electricity Act, 2003 but it also provides for filing of complaints
in other statutes and the Consumer Protection Act is one of them. Electricity and other energy
sectors have been included in the definition and consumers who face deficiency in electricity
service or anything related to it can file a case in consumer fora, NCDRC has affirmed that
Consumer Protection Act cannot have any jurisdiction over matters pertaining to tampering of
meters, unauthorized use of electricity etc. Supply of electricity falls within the purview of
CPA and a case regarding delay in releasing the electricity connection for a flour mill was held
to be deficiency of service.

HARM AND INJURY UNDER CPA, 2019

Section (22) "harm", in relation to a product liability, includes:

I. Damage to any property, other than the product itself,

II. Personal injury, illness or death;
III. Mental agony or emotional distress attendant to personal injury or illness or damage to
property; or

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 IV. Any loss of consortium or services or other loss resulting from a harm referred to in sub
clause (i) or sub-clause (ii) or sub-clause (iii), but shall not include any harm caused to
a product itself or any damage to the property on account of breach of warranty
conditions or any commercial or economic loss, including any direct, incidental or
consequential loss relating thereto;

(23) "Injury" means any harm whatever illegally caused to any person, in body, mind or
property.
(24) "Manufacturer" means a person who:
I. Makes any goods or parts thereof; or
II. Assembles any goods or parts thereof made by others; or
III. Puts or causes to put his own mark on any goods made by any other person.

MISLEADING ADVERTISEMENT

Under the Consumer Protection Act 2007, advertising is seen as misleading if it involves false,
misleading or deceptive information that is likely to cause the average consumer to act in a way
they might otherwise not. Advertising may also be considered misleading if important
information that the average consumer needs to make an informed decision is left out.
Misleading advertising covers claims made directly to consumers by manufacturers,
distributors and retailers,as well as in advertisements, catalogues, websites etc.

Examples of misleading advertising

A false claim about the characteristics of the goods or service, e.g. -a product is a different
colour, size or weight to what is advertised.
The price or way the price is calculated is misrepresented, e.g.-products are advertised at sale
prices, but turn out not to be.

The way the goods or service are supplied is misrepresented, e.g. - free delivery is advertised,
but the delivery actually involves some sort of fee or charge.

Any aspect about the advertiser is misrepresented, e.g. - the business is presented as
being a member of a trade association, when they are actually not.

The advertisement creates a false impression about a product or service, even if the
information given is correct.

Any important information is hidden or left out.

Forms of advertisement

Remember that advertisements may take many different forms, such as:

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 a) Press advertisements in newspapers or magazines
b) Television or radio commercials
c) Posters telling the public about an event or concert
d) Digital advertisements on websites or mobile phones
e) Websites
f) Shop signs (giving information unique to a particular shop)
g) Sales/direct mail letters
h) Faxes of promotional material
i) Catalogues

PRODUCT LIABILITY

CPA 2019 defines product liability as "the responsibility of a product manufacturer or product
seller, of any product or service, to compensate for any harm caused to a consumer by such
defective product manufactured or sold or by deficiency in services relating thereto”.

A product liability action can be filed against a 'product manufacturer' or a 'product service
provider' or a 'product seller, as the case may be. CPA 2019 defines each of these expressions
in very wide terms to bring within their fold every possible aspect of a product liability claim.
CPA 2019 also delineates the situations in which they will be held liable.

Few such situations are summarised below. While the situations envisaged under the CPA 2019
are quite exhaustive, there is nothing to indicate that these would be the only situations where
liability will arise. It, however, remains to be seen how the courts will interpret these
provisions.

Liability of a product manufacturer

A product manufacturer shall be liable, if -

(i) the product contains a manufacturing defect; or

(ii) the product is defective in design; or
(iii) there is a deviation from manufacturing specifications; or
(iv) the product does not conform to the express warranty; or
(v) the product fails to contain adequate instructions of correct usage to prevent harm or any
warning regarding improper or incorrect usage.

Liability of a product seller

A product seller (who is not a product manufacturer) shall be liable, if

(i) he has exercised substantial control over the designing, testing, manufacturing, packaging
or labelling of a product that caused harm; or

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 (ii) He has altered or modified the product and such alteration or modification was the
substantial factor in causing the harm; or
(iii) He has made an express warranty of a product independent of any express warranty made
by a manufacturer and the product failed to conform to such warranty, or
(iv) the product has been sold by him and the identity of product manufacturer of such product
is not known, or if known, the service of notice or process or warrant cannot be effected on
him or he is not subject to the law which is in force in India or the order, if any, passed or to be
passed cannot be enforced against him; or
(v) He failed to exercise reasonable care in assembling, inspecting or maintaining such a
product.

Liability of a product service provider

A product service provider shall be liable, If

(i) The service provided by him was faulty in quality, nature or manner of performance; or
(ii) There was an act of omission or commission or negligence or conscious withholding of any
information which caused harm; or
(iii) The service provider did not issue adequate instructions or warnings to prevent any harm
or
(iv) The service did not conform to express warranty or the terms and conditions of the contract

UNFAIR TRADE PRACTICE

An unfair trade practice refers to that malpractice of a trader that is unethical or fraudulent.
These practices cause an inconvenience or grievance to consumers.

An unfair trade practice is defined under Section 2(1)(r) of the Consumer Protection Act. 1986.
According to this definition, it is a trade practice carried out for the promotion of sale. It is the
distribution or utilisation of any good or service by adopting a deceptive method or practice.

The following practices fall under unfair trade practice:

1. An oral or written statement or visible representation that:
● Falsely represents a good or service to be of a particular standard, quality, grade and so
on.
● Falsely represents any re-built, second-hand, reconditioned, renovated or old goods as
new. Represents that a good or service has sponsorship, approval, uses, benefits and so
on which they do not have. The same could apply to the seller or service provider.
● Makes a misleading or false representation regarding the need and usefulness of any
good or service.
● Provides to the public any warranty or guarantee of the performance of the length of
the life of the product. A service can be continued till deemed satisfactory.

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 ● Gives a misleading image of the good, service or trade like the price of the product.
● For the above clauses, any statement made via expression by sellers on the wrapper or
container of the item can qualify for unfair trade practice. The information of the
product is
● also placed inside the item, attached to the product, or accompanying it.

2. An advertisement published in any newspaper or other means of communication to the

generalpublic may also result in unfair trade practice of the price communicated is misleading
or a bargain price. This means that an unfair trade practice would be when a rational
individual onreading, hearing or seeing the advertisement would think to be a bargain price as
compared tothe product's ordinary sale price.

3. Wrongful or deceitful permissions or expressions like:

● Offering gifts, prizes and so on without any intention of actually fulfilling the
expression.
● Putting across a product as free of charge when it is actually not as the cost is being
covered partly or wholly in the transaction amount.
● Conducting games of chance or skill like the lottery in order to promote a particular
product directly or indirectly.
● Not granting participants of a scheme their prize by closing the information about the
final
● results of the scheme.

4 Allowing the sale of products, having the knowledge or reason to believe that the product is
not up to the standards of a competent authority. This could be in terms of design, contents,
packaging, etc.

5 Permitting the hoarding or destruction of products with the intention of the goods.

ILLUSTRATIONS OF UNFAIR TRADE PRACTICES

A dress has been used for 2 months and is now being sold by a seller as a new dress The battery
of a mobile phone is guaranteed to work well for one year but wears away in a
month.

A geyser that is not 151 approved has an ISI mark

A table of Rs. 500 is sold online with Rs 600 delivery charge, but the good is claimed by the
seler to be free of cost.

RESTRICTIVE TRADE PRACTICE

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 A restrictive trade practice is defined under Section 2(1)(nnn) of the Consumer Protection Act,
1986. The section covers all the price related deceit that the traders may indulge in to maximise
their profits.

Restrictive trade practices are targeted at the consumers who are burdened with restriction and
unjustified costs through the practices of the trader. The trader manipulates the price or the
conditions of delivery of the product which results in restrictive trade practice. This affects the
supply of goods and services in the market and includes:
A likely or definite rise in the price of a commodity due to the delay of the trader to provide
the good or service.
A compulsion to purchase, hire or avail any good or service in order to obtain any other good
or service.

ILLUSTRATIONS OF RESTRICTIVE TRADE PRACTICES

A trader accumulates his stock of food grains in order to increase the price of the grains in the
market so that he can sell it at a higher price.

DIFFERENCE BETWEEN UNFAIR TRADE PRACTICE AND RESTRICTIVE

TRADE PRACTICE

An unfair trade practice is the deceitful and misleading representation of goods and services
which portrays a false image of the product. Information regarding utility, quality and standard,
style etc of goods and services may be twisted under this practice.

Restrictive Trade Practice, however, is when traders try to change the flow of money in the
market in order to maximize their profits and to gain an upper hand in the market competition.
Here, independent sellers hike their collective profits by limiting supply by controlling selling
prices or the prices of purchased inputs. This is the primary difference in unfair trade practice
and restrictive trade practice.

An unfair trade practice is defined under Section 2(1)(r) of the Consumer Protection Act, 1986,
whereas, Restrictive trade practice is defined under Section 2(1)(nnn).

CONSUMER DISPUTE REDRESSAL FORUMS

The Consumer Protection Act, 2019 promulgates a three-tier quasi-judicial mechanism for
redressal of consumer disputes namely district commissions, state commissions and national
commission. The Act also stipulates the pecuniary jurisdiction of each tier of consumer
commission. As per the existing provisions of the Act, District Commissions have jurisdiction

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 to entertain complaints where value of the goods or services paid as consideration does not
exceed one crore rupees. State Commissions have jurisdiction to entertain complaints where
value of the goods or services paid as consideration, exceeds 1 crore rupees, but does not exceed
10 crore rupees and National Commission has jurisdiction to entertain complaints where value
of goods or services paid as consideration exceeds 10 crore rupees.

After the Act came into force, it was observed that the existing provisions relating to
pecuniary jurisdiction of consumer commissions were leading to cases which could earlier be
filed in National Commission to be filed in State Commissions and cases which could earlier
be filed in State Commissions to be filed in District Commissions. This caused a significant
increase in the workload of District Commissions, leading to rise in pendency and delay in
disposal of cases, defeating the very object of securing speedy redressal to consumers as
envisaged under the Act.

With regard to revision of pecuniary jurisdiction, the Central Government held wide
consultation with States/UTS, consumer organisations, law chairs etc. and examined the issues
that had created long pendency of cases in detail.

With notification of the aforementioned rules, the new pecuniary jurisdiction, subject to other
provisions of the Act, shall be as under:

District Commissions shall have jurisdiction to entertain complaints where value of the goods
or services paid as consideration does not exceed 50 lakh rupees.

State Commissions shall have jurisdiction to entertain complaints where value of the goods or
services paid as consideration exceeds 50 lakh rupees but does not exceed 2 crore rupees.

National Commission shall have jurisdiction to entertain complaints where value of the goods
or services paid as consideration exceeds 2 crore rupees.

It may be mentioned that the Consumer Protection Act, 2019 stipulates that every complaint
shall be disposed of as expeditiously as possible and endeavour shall be made to decide the
complaint within a period of 3 months from the date of receipt of notice by opposite party
where the complaint does not require analysis or testing of commodities and within 5 months
if a requires analysis or testing of commodities.

The Act also provides consumers the option of filing complaint electronically. To facilitate
consumers in filing their complaint online, the Central Government has set up the E-Daakhi
Portal, which provides a hassle-free, speedy and inexpensive facility to consumers around the
country to conveniently approach the relevant consumer forum, dispensing the need to travel
and be physically present to file their grievance. E-Daakhil has many features like e-Notice,
case document download link & VC hearing link, filing written response by opposite party,
filing rejoinder by complainant and alerts via SMS/Email. Presently, facility of E-Daakhil is

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 available in 544 consumer commissions, which includes the National Commission and
consumer commissions in 21 states and 3 UTS. So far, more than 10,000 cases have been filed
using the E-Daakhil Portal and more than 43000 users have registered on the portal.

JURISDICTION

The consumer protection act. 2019 replaced the Act of 1986 to adapt to the changing
environment. The new Act includes, in its ambit, e-commerce transactions. The act has also
modified the definition of the complainant to include a parent or legal guardian in case the
complainant is a minor.

Certain significant amendments have been brought by the 2019 Act, with respect to the
Consumer Redressal Forums, also. These are:

Territorial Jurisdiction-The Consumer Protection Act, 2019 now provides that the consumers
can register their complaints at a place where all or one of the opposite parties resides or carries
on business, or the place of cause of action or where the complainant is residing or works for
gain unlike the 1986 Act (which mandated filing of a complaint by the complainant at a place
of residence or business of the respondent only), thus increasing the scope of territorial
jurisdiction The ultimate objective behind this is to remove the difficulties and problems faced
by the consumers in seeking redressal against businesses.

The complaints are registered at appropriate forums based on the limit of pecuniary jurisdiction.

Pecuniary Jurisdiction - Certain significant modifications have been brought forth by the Act
of 2019 concerning the pecuniary jurisdiction for all the forums i.e. the District, State, and
National Commissions, respectively.

The upper limit of pecuniary jurisdiction for the District Commission has been increased from
Rs.20, 00,000 to Rs.100, 00,000 as per Section 34, Consumer Protection Act, 2019.

The limit of pecuniary jurisdiction for the State Commission has been increased from
Rs. 100, 00,000 to Rs.10, 00, 00,000 as per Section 47. Consumer Protection Act, 2019 and,

The limit of pecuniary jurisdiction for the National Commission has been increased from above
Rs. 10, 00, 00,000 to above Rs.10, 00, 00,000 as per Section 58, Consumer Protection Act,
2019.

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 COMPOSITION

1. District Consumer Dispute Redressal Forum

Each district forum would comprise of:

A President who is qualified, or has been qualified, to be a district judge, and Two other
members, having ability, integrity and standing and possess knowledge and experience in
dealing with problems related to economics, law, commerce etc. and one of whom shall be a
woman.

2. State Consumer Dispute Redressal Forum

The state consumer dispute redressal forum, established in each state, should comprise of A
president, who is or a person who has been a Judge of a High Court and is appointed by the
government of the respective state. These appointments are made only after consultation with
the Chief Justice of the High Court, and

Two other members have ability, integrity and standing and also possess knowledge and
experience in dealing with problems related to economics, law, commerce, public affairs,
administration, etc. and one of whom shall be a woman. These appointments, as mentioned,
shall be mandatorily made only after consultation and recommendation of a selection
committee comprising of:
President of the state commission,
Secretary of the law department of the State,
Secretary in charge of the department dealing with consumer affairs in the respective state.

3. Nation Consumer Dispute Redressal Forum

Over and above the state consumer forum, lies the national consumer dispute redressal forum.
As per the Act, the forum shall comprise of:
A president appointed by the central government, who is a judge or has been a judge of the
Supreme court and these appointments are to be mandatorily made after consulting the Chief
Justice of India.
Four other members have the ability, integrity and standing and also possess knowledge and
experience in dealing with problems related to economics, law, commerce, public affairs,
administration, etc. and one of whom shall be a woman.

The CCPA may impose a penalty on a manufacturer or an endorser of up to Rs 10 lakh and

imprisonment for up to two years for a false or misleading advertisement. In case of a
subsequent offence, the fine may extend to Rs 50 lakh and imprisonment of up to five years.

CCPA can also prohibit the endorser of a misleading advertisement from endorsing that

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 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. However, there are certain exceptions when
an endorser will not be held liable for such a penalty. Jurisdiction of CDRCs: The District
CDRC will entertain complaints where value of goods and services does not exceed Rs one
crore. The State CDRC will entertain complaints when the value is more than Rs one crore but
does not exceed Rs 10 crore. Complaints with value of goods and services over Rs 10 crore
will be entertained by the National CDRC.

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 REVIEW QUESTIONS

Conceptual Type Questions

1. Define the Consumer Protection Act, 2019.

2. What is Complaint?
3. Give the meaning of Consumer.
4. What is Consumer Dispute?
5. What are Consumer Rights?
6. Give the meaning of Defect.
7. What is Deficiency?
8. What is Direct Selling?
9. Define the term E-commerce.
10. What is Misleading Advertisement?
11. Give the meaning of Product Liability.
12. What is Restrictive Trade Practice?
13. Give the meaning of Unfair Trade Practice (UTP).
14. What is Consumer Dispute Redressal Forum?
15. What is Penalty under the Consumer Protection Act, 2019?

Descriptive Type Questions

1. Explain the key features of the Consumer Protection Act, 2019.

2. Discuss the objectives of the Consumer Protection Act, 2019.
3. Explain the important terms related to the Consumer Protection Act, 2019.
4. Discuss E-commerce under the Consumer Protection Act, 2019.
5. Explain the Electronics Service Providers under the Consumer Protection Act, 2019.
6. Write note on: Misleading Advertisement.

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