The Consumer Protection Act, 2019: The

Gateway To Modern Day Consumer

Problems
By Joy Bose1

Abstract

With the advent of Globalization in India, the process of buying and selling has changed
significantly. In India, consumer laws are governed by the Consumer Protection Act, 1986. Even
though this Act has been amended three times, the act is unable to cope with modern consumer
problems. The consumers are being duped by unsolicited telemarketing and E-commerce. The
consumer has become vulnerable to these new forms of unfair trade and unethical practices. The
proposed new Bill aims to solve all these problems. It contains fresh laws made specifically for
these types of consumer problems. The Consumer Protection Bill 2018 was introduced in the
Lok Sabha on January 5, 2018, to substitute the current Act. This paper focuses on how the new
bill will help the consumers protect their rights and armor them against new types of consumer
problems such as misleading advertisements, E-commerce frauds etc.

Keywords – Consumer Protection, E-commerce, unsolicited marketing, Misleading

advertisement.

BBA. LL.B 6th Semester, Amity University, Chhattisgarh

1

Email joybose227@gmail.com

1
 Introduction
For more than 3 decades, The Consumer Protection act, 1986 has been serving as the definite
solution for consumer problems in India. The main aim of this act was to protect the consumer’s
right and the shift the balance from Caveat emptor2 to Caveat Venditor3. But now this age old act
is unable to cope up with the Information Technology age based consumer problems. The
problems which the consumer is facing nowadays can’t even be defined through the current act.
The complexity of the products has changed and the services provided by various companies
have reached myriads. The ascent of international trade, business coupled with various
government plans like the Foreign Direct Investment, the rise of E-commerce, have made the
process of buying and selling more intricate. Amidst all these the consumer courts are delayed in
announcing judgments. The act was amended 3 times, but still it was not enough, so in August
2015, The consumer protection bill, 20154 was presented before the Lok Sabha. This bill was
then sent to the Standing Committee on Food, Consumer Affairs and Public distribution for
ratifications required. The standing committee submitted its report5 on 26th April, 2016. After the
review of the standing committee the ministry of consumer affairs and Food distribution
introduced The Consumer Protection Act, 20196 on 5th January, 2018 after withdrawing the 2015
bill. This bill was passed in the Lok Sabha on December 12, 2018.

Objectives of the Study :

1. To know the viability of fresh laws, inserted for E-commerce frauds and direct selling

2. To know the need for the establishment of the Central Consumer Protection Authority
(CCPA)

3. To Analyze the violation of separation of power in this Bill.

2
Caveat Emptor is a legal maxim which means 'Let the buyer be aware'
3
Caveat Venditor is a legal maxim which means 'Let the seller beware'
4
http://www.prsindia.org/uploads/media/Consumer/Consumer%20Protection%20bill,%202015.pdf
5
http://www.prsindia.org/uploads/media/Consumer/SCR-%20Consumer%20Protection.pdf
6
http://www.prsindia.org/sites/default/files/bill_files/Consumer%20Protection%20Bill%2C%202018.pdf

2
Data Collection Method

The present study is based on secondary data. It is collected through various sources like
internet, journals, magazines, reference books and Newspapers

Insertion of E-commerce in the Bill

The word” E-commerce” has been introduced in the bill in the section 2(16) “e-commerce”
means buying or selling of goods or services including digital products over digital or electronic
network”7.

Section 94 of the bill states that “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 in the manner as may be prescribed”. However the bill
does not describe as to what amounts to “unfair trade and practices in e- commerce”. The bill is
ambiguous about the punishments regarding the e-commerce and direct selling frauds. The ambit
of this section is very wide and it will become troublesome for the courts to come to a decision.

Currently there is no single set of laws and regulation which governs e-commerce and direct
selling. But with this bill, both these will come under one umbrella. The law is vague regarding it
because no guideline can be issued at the present moment. It will highly depend on the
Honorable Court to provide guidelines.

Expansion of Territorial Jurisdiction

The current act requires the consumer to file a case only from where the product is bought or
where the service is availed. This limited the online purchaser as the products or services
belonged to a distant place. This has been ratified as the current bill will allow the consumer to
file the case from anywhere. Now the online consumer can file a case within his area of local
jurisdiction.

No more an Intermediary

According to the IT Act, 2008, online marketplaces are intermediary and the Act exempts the
intermediaries from any liability. However, the new bill is set out to replace this and the online
marketplaces will be included as intermediary. According to Clause 2 (17) of the 2018 Bill states
that "electronic service provider" means a person who provides technologies or processes to
enable a product seller to engage in advertising or selling goods or services to a consumer and
includes any online market place or online auction sites.

7
http://www.prsindia.org/sites/default/files/bill_files/Consumer%20Protection%20Bill%2C%202018.pdf

3
Disclosure of details

Under the new rules, e-commerce companies may also need to submit self-declared forms
disclosing all details about their businesses, which could require these platforms to register with
the consumer affairs department, said an executive with an internet company. Another provision
under the new law would require e-commerce companies to disclose how they use the volumes
of customer data harvested from their platforms, particularly how they share this information
with advertisers.8

Direct Selling

In India in the name of Direct selling people are being fooled for years. Multi level marketing
and direct selling have never been properly regulated by our country’s government. These
concepts are often under a false presumption by the society and the body of law as Ponzi or
pyramid scheme or chit fund. Even though both these concepts are fairly new in India, it is
seeing a growth in these sectors. On 9 th September, 2016, The Ministry of Consumer Affairs,
Food and Public Distribution issued a Model Framework for Guidelines on Direct Selling 9.
These Guidelines were not mandatory and the states had the choice whether to issue it or not. In
The Consumer Protection Act, 2019, clause 2 (13) 10 direct selling has been defined. Section 94 11
of the act gives power to the Central Government to take steps in preventing frauds in Direct
selling. After the commencement of the bill, direct selling will directly fall under an act and all
the guidelines issued afterwards will be mandatory and each and every state will have to follow
it.

Powers of Central Consumer Protection Authority (CCPA)

Regulator

The CCPA will be established to promote, protect and enforce the rights of consumers; make
interventions when necessary to prevent consumer detriment arising from unfair trade practices
and to initiate class action, including enforcing recall, refund and return of products, etc. There
was no regulating authority before CCPA. At present there is no authority for the prevention of
unfair trade practices.

Overriding Authority
8
See at https://economictimes.indiatimes.com/industry/services/retail/new-law-may-unbox-stronger-shield-for-
ecommerce-customers/articleshow/63389687.cms by mugdha veriar
9
https://consumeraffairs.nic.in/sites/default/files/file-uploads/direct-selling/Direct%20Selling%20Guidelines
%20Final%20.pdf
10
http://www.prsindia.org/sites/default/files/bill_files/Consumer%20Protection%20Bill%2C%202018.pdf
11
Ibid

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According to Clause 18 (2)(c) the central authority has the power to , “intervene in any
proceedings before the District Commission or State Commission or National Commission, as
the case may be, in respect of any allegation of violation of consumer rights or unfair trade
practices”. The matter can then be reviewed by the director general or by the district collector of
the central authority.

Complaints to Authority

A complaint relating to violation of consumer rights or unfair trade practices or false or

misleading advertisements which are prejudicial to the interests of consumers as a class, may be
forwarded either in writing or in electronic mode, to any one of the authorities, namely, the
District Collector or the Commissioner of regional office or the Central Authority12.

Cases in consumer courts are piling up. The time taken in delivering justice is long. The Central
Authority now allows the consumer to directly approach the central authority for redressal. This
will help in swift and quick delivery of justice.

Recalling of products

The Central Authority after its investigation, if satisfied that a consumer's right is violated or
unfair trade practice has taken place, then it may pass an order according to Clause 20 13 of the
bill, which includes a class action suit. Here the liability of the manufacturers or service provider
will not be limited only to a certain group of customers but to all those customers who were
affected by the product or service. This will include recalling of defective, dangerous and
hazardous product or services and reimbursing the prices of the goods so recalled to the
purchaser. At present a class action suit can be initiated through section 12(1)(c) of the Consumer
Protection act, 198614.

Misleading Advertisement

Misleading Advertisement is one of the emerging consumer problems in recent times.The bill
comes up with very stringent laws relating to misleading advertisements. Clause 21 15 of the bill
gives the central authority to take actions against misleading advertisements. According to
Clause 21(1) it states that “Where the Central Authority is satisfied after investigation that any
advertisement is false or misleading and is prejudicial to the interest of any consumer or isin
contravention of consumer rights, it may, by order, issue directions to the concerned trader or
manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such
advertisement or to modify the same in such manner and within such time as may be specified in
that order”.
12
Section 17 of the Bill
13
Ibid
14
See at http://ncdrc.nic.in/bare_acts/consumer%20protection%20act-1986.html
15
http://www.prsindia.org/sites/default/files/bill_files/Consumer%20Protection%20Bill%2C%202018.pdf

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The Central Authority has the power to impose penalties up to ten lakh rupees on a Manfacturers
or endorsers in respect of a false or misleading advertisement. For every subsequent
contravention, the penalty on a manufacturer or endorser can go up to fifty lakh rupees.

The central authority can impose a ban on the endorser for endorsing any product or service up
to one year as a punishment for endorsing a false or misleading advertisement. For every
subsequent contravention, the ban on the endorser for endorsing any product or service can
increase up to three years. This law will directly affect the celebrities who endorse products and
services. However, there is an exception to this law where the person endorsing the product or
service has to prove that he/she had paid due diligence to find any irregularity regarding the
product or service. The burden of proof will lie upon the endorser.

Penalty for non-compliance of direction of Central Authority

Clause 8816 states that any person who fails to comply with any direction given by the central
authority under clause 20 and 21 shall be punished with 6 months of imprisonment for a term
which may extend to six months or with fine which may extend to twenty lakh rupees, or with
both.

Violation of Separation of Power in CCPA

The Central Government may, by notification, make rules to provide for the qualifications for
appointment, method of recruitment, procedure for appointment, term of office, salaries and
allowances, resignation, removal and other terms and conditions of the service of the Chief
Commissioner and Commissioners of the Central Authority.17

The power to appoint members of the Commission is vested with the executive. The Central
authority has the power to pronounce orders and judgements. This is a direct violation of
separation of powers, which is a part of the basic structure of The Constitution of India. The
Executive can never hold the power of the Judiciary.

The executive can take advantage of this when the government is itself the service provider. For
example, when a case is filed against the railways which is a government body. This not only
violates the separation of power, but the principles of natural justice are also violated(No one can
be a judge in his own cause). Justice done will not be fair. Section 99 18 of the bill curtails the
CCPA as it directs it to work according to the central government.

No qualification for appointment of members of the commission have been specified in the bill.
As the functions of the members will be adjudicatory in nature, it would be good for everyone if
the members hail from the judiciary itself.
16
Ibid
17
Section 11 of the bill
18
http://www.prsindia.org/sites/default/files/bill_files/Consumer%20Protection%20Bill%2C%202018.pdf

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 Conclusion

The changes required in the field of consumer protection were long overdue. New type of
consumer problems started taking birth in this IT Age. The new bill addresses many of these
issues. It seeks to extend its scope by directly addressing issues like E-commerce and Direct
Selling.These issues were unaddressed for a long time and the consumer forums were facing
problems in solving disputes regarding this. Even though these issues are addressed in the bill,
some ambiguity in these sectors still remain. The need for a separate regulating body was much
needed and the establishment of the Central Consumer Protection Authority solves the issue.The
bill has introduced concepts such as “class action suit” which addresses the grievances of
consumers at large. The CCPA as an a regulating body has various responsibilities for consumer
protection. Previously, guidelines were issued but they were not mandatory in nature.The CCPA
has the power to issue mandatory guidelines according to the need of the current times. The
process of establishment of CCPA and its functioning is in question as it violates the concept of
separation of power and principles of natural justice. These issues can be solved with
amendments. The whole act does not need to go down. The bill aims to protect consumer rights and
once it gets passed it will definitely be a step forward in the protection of consumer and their rights.

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References

1. https://www.thehindu.com/news/national/the-hindu-explains-consumer-protection-bill-
2018/article25787482.ece
2. https://www.indiatoday.in/fyi/story/consumer-protection-bill-2018-7-key-rules-that-will-
help-consumers-1414882-2018-12-21
3. http://www.mondaq.com/india/x/704090/Dodd-
Frank+Wall+Street+Reform+Consumer+Protection+Act/Highlights+Of+The+Consumer+P
rotection+Bill+2018
4. http://www.mondaq.com/india/x/769928/Dodd-
Frank+Wall+Street+Reform+Consumer+Protection+Act/Consumer+Protection+Bill+2018+
Highlights+And+Analysis?type=relatedwith
5. https://blog.ipleaders.in/consumer-protection-bill-2018/

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