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Lok Sabha Passes Consumer Protection Bill, 2018

New Delhi, December 21: The three-decade-old law, Consumer Protection Act, 1986,  is being changed.

In an effort to protect consumers’ interest, Lok Sabha on Friday passed the Consumer Protection Bill, 2018. If adopted in Rajya Sabha, it will replace archaic Consumer Protection Act, 1986.

The bill deals with product liability, class action, false advertisement, endorsement by celebrities etc. It adds various provisions for consumer protection that were absent in the 1986 Act.

To mediate consumer complaints, the new measure provides for the establishment of an executive agency, Central Consumer Protection Authority (CCPA)  and forum at the district, state, and national level. The agency devised on the lines of highly efficient US Federal Trade Commission will intervene to protect consumers from unfair trade practices. If a company is found to be indulging in any unfair practices, the agency will have authority to launch a strict action against it. It has the power to recall products found to be unsafe and to direct discontinuation of the business. These consumer commissions will be attached to consumer mediation cells so that they do not get pilled up with excessive work.

In case of any malpractice, the bill proposes that the manufacturer will not be accountable to only one or a group of consumers but toward all the consumers and they all will become beneficiaries in a class action suit.

The bill taking e-commerce into consideration has squashed the current law which gives power to the consumer to initiate legal action against a marketer only in the case where the transaction has taken place. The consumer will now have a choice to initiate a complaint from his/ her own residence, electronically, or at consumer court.

E-commerce platforms will also have to ask for consent from the customer at the time of checkout to be able to access their data. Apart from this, companies will have to reveal their business details and seller agreement.

The bill also addresses the issue of misleading advertisement.

‘Misleading advertisement’ is defined under Clause 2(28) of the bill as (i) falsely describes such product or service; or (ii) gives a false guarantee to or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or (iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or (iv) deliberately conceals important information. According to the bill, if the manufacturer publishes misleading or fabricated advertisement, they will be penalized with imprisonment for a term which may extend to two years, with a fine of 10 lakh rupees.

Celebrities endorsing products will have a hard time now if the advertisement turns out to be frivolous. “Endorsement” is defined under Clause 2(18) as (i) any message, verbal statement, demonstration; or (ii)depiction of the name, signature, likeness or other identifiable personal characteristics of an individual; or (iii)depiction of the name or seal of any institution or organisation,which makes the consumer to believe that it reflects the opinion, finding or experience of the person making such endorsement. However, there will be penalties but no jail term.

Moreover, to curb frivolous complaints, the bill levies a penalty from Rs. 10,000 to Rs. 50,000.

Background

In August 2015, to repeal a thirty-year-old consumer protection act, 1986, the Consumer Affairs Ministry introduced the consumer protection bill in Lok Sabha. A year after that, a Parliamentary Standing Committee submitted its recommendations. Following that, on December 20, 2017, the Union Cabinet approved the bill.

A drastic change in the consumer market, false and misleading advertisement with the emergence of online shopping has necessitated the need for a new law.

 

 

 

 

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