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July 20, 2020

New Consumer Protection Act to come into force from July 20, 2020 Know What is New

by Mahesh Mara in Compliance Law

New Consumer Protection Act to come into force from July 20, 2020 Know What is New

The newly enacted Consumer Protection Act, 2019 which replaces the Consumer Protection Act, 1986, comes into force on 20th July, 2020. Consumer Protection Act, 2019 was signed into law by President Ram Nath Kovind in August last year. It seeks to make corporates accountable for the quality of goods being sold or manufactured by them. The Act provides for protection of interests of consumers, establishment of a central consumer protection authority, mechanism to settle consumer disputes and specifically regulates product liability and misleading advertisements.

Key Highlights of Consumer Protection Act, 2019:-

Enhancement of Scope of certain terms

  • The provisions notified by the government under this Act are related to consumer protection councils, consumer disputes redressal forum, mediation, liability of services or products, penalty for manufacturing, selling, distributing etc goods or products which contain adulterant.
  • The definition of ‘consumer’ has now being widened. The earlier Act did not specifically include e-commerce transactions. The definition now includes any person who buys any goods, whether through offline or online transactions, electronic means, teleshopping, direct selling or multi-level marketing.
  • The new Act introduces a specific broad definition of Unfair Trade Practices, which also includes 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 Act introduces a provision that safeguards consumers against unfair contracts by declaring them to be illegal. An unfair contract covers contracts between manufacturer/ trader and a consumer that causes significant changes in the rights of the consumer such as by way of – imposing unreasonable obligation or condition on the consumer which puts consumer to disadvantage, reserving right to unilateral termination or assignment without consent in the contract, imposing a penalty for breach which is disproportionate to loss caused etc.
  • The New Act has introduced the concept of product liability and brought within its fold not just the product manufacturer and product service provider but the product seller as well. A product liability action for compensation can now be formally made on grounds of defectiveness of good or deficiency of services that has caused harm to a person or his/her property on grounds.
  • The scope of defect and deficiency has been expanded to include non-conformance to express warranty or specifications, design defect, failure to provide adequate instructions or warnings to prevent any harm.

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Formation of CCPA

  • A new regulatory authority has been established known as the Central Consumer Protection Authority (CCPA), which will have wide powers of investigation including the power of search and seizure.
  • The CCPA will have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into violation of consumer rights or unfair trade practices.

Revised pecuniary limits have been fixed

  • The district forum can now entertain consumer complaints where the value of goods or services paid does not exceed Rs 1 crore.
  • The State Commission can entertain disputes where such value exceeds Rs 1 crore but does not exceed Rs 10 crore
  • The National Commission can exercise jurisdiction where such value exceeds Rs 10 crore.

Penalty

  • Whoever manufactures for sale or stores or sells or distributes or imports any product containing an adulterant shall be punished, if such act:-
  • does not result in any injury to the consumer, with imprisonment which may extend to 6 months and with fine which may extend to Rs 1 lakhs
  • causing injury not amounting to grievous hurt to the consumer, with imprisonment which may extend to 1 year and with fine which may extend Rs 3 lakhs
  • causing injury resulting in grievous hurt to the consumer, with imprisonment which may extend to 7 years and with fine which may extend to Rs 5 lakhs
  • results in the death of a consumer, with imprisonment which shall not be less than 7 years, but which may extend to imprisonment for life and with fine which shall not be less than Rs 10 lakhs
  • Any manufacturer or service provider who causes a false or misleading advertisement to be made which is prejudicial to the interest of consumers shall be punished with imprisonment which may extend to 2 years and with fine which may extend to Rs 10 lakhs and for every subsequent offence, be punished with imprisonment which may extend to 5 years and with fine which may extend to Rs 50 lakhs
  • Specific offences (such as causing misleading advertisements by manufacturers, or failure to comply with an order passed by an authority under the Act) are compoundable on payment of the amount which will be prescribed, either before or after institution of prosecution.
  • Compounding is not possible if the person commits the same or similar offence within 3 years from the date on which the first offence was compounded.

Redressal of Grievances

  • The new law will ensure that complaints can be filed at a district or state consumer commission from the location where the complainant resides rather than from where the service or product was bought. The New Act also contains enabling provisions for consumers to file complaints electronically and for hearing and/or examining parties through video-conferencing. This is aimed to provide procedural ease and reduce inconvenience and harassment for the consumers.
  • The new Act provides for mediation as an Alternate Dispute Resolution mechanism, making the process of dispute adjudication simpler and quicker. This will help with the speedier resolution of disputes and reduce pressure on consumer courts, who already have numerous cases pending before them.

The Act aims at protecting and strengthening the rights of the consumers by establishing authorities, imposing strict liabilities and penalties on product manufacturers, electronic service providers, misleading advertisers, and by providing additional settlement of consumer disputes through mediation.

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