New consumer protection bill: Keeping up with times

By Deepak Sabharwal, Deepak Sabharwal & Associates
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Globalization and the growth of the internet has led to a drastic shift in consumer behaviour. It has also made consumers more vulnerable to new forms of unfair trade practices. To address these emerging issues the government of India passed the Consumer Protection Bill, 2018 (bill), in December last year. The key highlights of the bill are:

  • Section 2(5): The definition of complainants has been amended to include a “minor”, by stating that if the consumer is a minor, then the parent or legal guardian can also be a complainant.
  • Section 2(7): An explanation has been added to the definition of consumer to include people who transact online and through electronic means, teleshopping, multi-level marketing or direct selling.
  • Section 2(16): E-commerce has been defined as buying or selling of goods or services, including digital products over a digital network.
  • Section 2(17): An electronic service provider has been defined as a person who provides technologies or processes to enable a seller to engage in advertising or selling of goods or services to a consumer and includes any online marketplace or online auction sites.
  • Section 2(34) and 82-87: Product liability has been defined to mean the responsibility of a manufacturer or a seller of a product or service to compensate for the harm caused to consumers by defective products, or due to the deficiency in services. Additionally, sections 82 and 83 provide for action on product liability. Section 84 provides for liability of the manufacturer, section 85 of the service provider and section 86 of the product seller, who is not a manufacturer. Section 87 provides for exceptions to product liability.
  • Sections 3(1), 6(1), 8(1) and 10: Create central, state and district consumer protection councils and a central authority. The councils and the authority will promote, protect and enforce the rights of consumers. The consumer authority will have an investigation wing, headed by a director general, which may conduct inquiries, regulate matters related to violation of consumer rights, unfair trade practices and misleading advertisements.
  • Sections 74-81: A provision for mediation and the establishment of mediation centres attached to consumer forums has been brought in .
  • Sections 40, 50 & 60: The bill provides for the power to review an order passed by the forums if there is an error, either of their own motion or on an application made by any of the parties within 30 days of an order.
  • Sections 2(28) and 89: Contain provisions for imposing penalties on manufacturers or service providers who make misleading advertisements. It defines misleading advertisements as those which – falsely describe a product or service; give false guarantees about a product or service; make representations that, if made by the manufacturer, seller or a service provider would constitute an unfair trade practice; and deliberately conceal important information.
Deepak-Sabharwal-Lawyer-Law-Business-India
Deepak Sabharwal
Partner
Deepak Sabharwal & Associates

Section 89 provides for imprisonment of up to two years and a fine of up to `1 million (US$ 14,000) in case of misleading advertisements. Sections 21(2) and (3) make brand ambassadors liable for the claims made in an advertisement and provide for a penalty of up to `5 million and a ban of up to three years on a subsequent offence. The manufacturers, sellers and even celebrity endorsers will be answerable for false advertisements of products being sold by them.

Jurisdiction

Section 34(1) provides that the district forum will entertain complaints where the value of goods and services does not exceed `10 million. In accordance with section 47(1)(a), the state commission will hear complaints when the value is more than `10 million but does not exceed `100 million and in accordance with section 58(1)(a), complaints with value of goods and services over `100 million will be heard by the national commission.

Appeal

An appeal against a district forum order can be made to the state commission within 45 days and an appeal against a state commission order can be made to the national commission within 30 days. An appeal against a national commission order can be made within 30 days, subject to a deposit of 50% of the amount of the award.

The bill seeks to curb unfair trade practices and to allow the legislative framework of consumer protection laws to keep pace with the changing dynamics of the market. Companies will face added accountability and will have to realign their strategies in line with the bill.

Deepak Sabharwal is the managing partner of Deepak Sabharwal & Associates.

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