Unit 5

CONSUMER PROTECTION ACT, 1986 AND AMENDMENT, 2002

5.1 CONSUMER PROTECTION

Introduction to Consumer Protection

A consumer is the one who assumes to be treated like a King as they bring business to the seller. Previously “consumer was requested to beware” but these days fingers have been pointed to seller “let seller be beware” as due to policies introduced, authorities laws, consumer protection, NGO and the increased competition in the market.

Consumer Protection is a term given to a exercise wherein we need to protect the consumer from the unfair practice, teaching them about their rights and responsibilities and also redressing their grievances.

In today’s world, the protection of the consumer is regarded to be of utmost importance. All around the world, mechanisms have been pondered upon in order to uphold the satisfaction of the consumer.

The main objectives of the Consumer Protection Act are:

(a) Providing better and all round protection to consumer.

(b) Providing machinery for the speedy redressal of the grievances.

(c) Creating framework for customers to seek redressal.

(d) Providing rights to consumers.

(e) Safeguarding rights of Consumers.

To ensure fair, competitive and responsible markets that work well for consumers and promote ethical business practices.

To promote and protect economic interest of consumers.

To improve access to information that consumers require, to make knowledgeable choices according to their individual needs.

To protect buyer from hazards.

5.2 REASON FOR ENACTING CONSUMER PROTECTION ACT

The enactment of Consumer Protection Act succeeded in bringing pressure on business firms as well as government to correct business conduct which may additionally be unfair and against the interests of consumers at large. The enactment of COPRA has led to the setting up of separate departments of Consumer Affairs in central and state governments to spread information about legal process which people can use. This information is spread through posters and advertisements on tv channels.

The Consumers were the worst affected out of a trade cycle procedure as they could be effortlessly duped by the sellers or producers of products. Before the enactment of this act the consumers were easy targets as victims of the producers in the following ways-

1. Non-awareness regarding the market price of a particular product: A consumer who's no longer used to the duping techniques of sellers could be easily fooled by means of some clever sellers making easy money through demanding higher price for the same exact being sold at a much cheaper rate somewhere else. The price of a commodity in a perfectly competitive market is bound to be the same everywhere, sellers demanding higher fees will lose customers. But people who are not aware of the prevailing market price of the commodity they want to buy might be fooled.

2. Quality of the product- The quality of the good is a very important fact affecting the price of the commodity. If the quality is not equivalent to the price asked for the good then the buyer's interests will be toyed with towards which the government should be considerate towards.

3. Adulteration of goods: To protect the consumer's rights from being hampered severely stringent steps must be taken in order to protect the goods from being tampered with through adulteration. Adulteration might have an effect on health due to the harmful substances mixed to get the desired apparent appearance.

4. Forum for the redressal of the grievances of the consumers: The act also helped in establishing a permanent forum where the aggrieved consumers could lodge cases against sellers and goods sold.

5.3 INTRODUCTION - CONSUMER

In simple words, a consumer is any person who purchases a product and uses the product. He or she is the individual that consumes the good or service being offered for sale by the seller.

Section 2(1)(d) of the Consumer Protection Act, 1856 stresses on the nuances of the definition of a consumer of goods and services. It defines consumer as a person who:

Buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred price and includes any user of such goods other than the individual who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or hires or avails of any offerings for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who 12 [hires or avails of] the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose.

According to this clause, a patron of a good, that is a tangible product, is one who buys the good from the seller for a considerable amount that he has:

Any device of deferred or future payment will also qualify the buyer to be a consumer. Any other person who, with the buyer’s permission, uses the good, is also a consumer. However, those who purchase items in order to sell them again or for a commercial purpose will be excluded from the definition of a consumer. Laxmi Engineering Works vs P.S.G. Industrial Institute defines the commercial motive and separates it from self-employment activities.

Similar is the definition of the consumer of a service that is intangible, where the buyer hires or avails of the service in the aforementioned methods of payment. Any other user of the service too, with the permission of the buyer, is a consumer. However, those who avail or appoint such services for a commercial purpose are not consumers. Where the person consumes for self-employment, he is still considered to be a consumer, as seen in Abhay Kumar Panda v. Bajaj Auto Limited.

Examples of Goods and Services:

A good refers to a tangible object that can be touched, viewed and felt. They can be stored and transferred in physical form. Examples of goods are books, clothes, tables and so on.

Services are those that are intangible, that is, they cannot be touched or seen. They can only be felt. The quality of the service differs across distinctive service providers and they cannot be separated from their providers. For example, banking, financing, insurance, transport and so on, as mentioned below Section 2(1)(o) of the Consumer Protection Act, 1986.

5.4 CONSUMER DISPUTE

Consumer dispute, means a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint. [Consumer Protection Act, 1986 (68 of 1986), s. 2 (1) (e)].

The Consumer Protection Act, 1986 made the provision for setting up a three-tier system of consumer courts at the national, state and district levels. This lead to the formation of the National Consumer Commission at the national level, State Consumer Commission at the state level, and District Forum at the district level.

Consumer grievances and complaints against traders are checked at these three levels. Also they provide comfort and compensation to the affected consumers. Currently, there are more than 500 district courts functioning in the three tier system of India.

5.5 UNFAIR TRADE PRACTICE

Unfair trade practice refers to the use of various deceptive, fraudulent, or unethical methods to obtain business. Unfair trade practices include misrepresentation, false advertising or representation of a good or service, tied selling, false free prize or gift offers, deceptive pricing, and noncompliance with manufacturing standards. Such acts are regarded unlawful by statute via Consumer Protection Law, which opens up recourse for consumers by way of way of compensatory or punitive damages. An unfair trade practice is sometimes referred to as a “deceptive trade practice” or an “unfair business practice.”

Understanding Unfair Trade Practices

Unfair trade practices are commonly seen in the purchase of items and services by consumers, tenancy, insurance claims and settlements, and debt collection. Most states’ unfair trade practices statutes were originally enacted between the 1960s and 1970s. Since then many states have adopted these laws to prevent unfair alternate practices. Consumers who have been victimized should examine the unfair trade practice statute in their nation to determine whether they have a cause of action.

Unfair trade practices are usually seen in the purchase of goods and services with the aid of consumers, tenancy, insurance claims and settlements, and debt collection.

In the United States, unfair trade practices are addressed in Section 5(a) of the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” It applies to all individuals engaged in commerce, inclusive of banks, and sets the legal standard for unfair trade practices, which may be deemed unfair, deceptive, or both. Below are lists of unfair and deceptive practices as per the rule:

Unfair Practices

An act is unfair when it meets the following criteria:

It causes or is likely to cause widespread injury to consumers.

It cannot be reasonably avoided by way of consumers.

It is not outweighed by countervailing benefits to consumers or to the competition.

Deceptive Practices

An act or practice is deceptive when it meets the following criteria:

A representation, omission, or practice misleads or is likely to mislead the consumer.

A consumer’s interpretation of the representation, omission, or exercise is considered reasonable under the circumstances.

The misleading representation, omission, or practice is material.

5.6 CONSUMER PROTECTION COUNCIL AND REDRESAAL AGENCIES

Three Tier Consumer Grievances Machinery under the Consumer Protection Act!

1. District Forum:

District forum consists of a president and two other members. The president can be a retired or working judge of District Court. They are appointed by using state government. The complaints for goods or services worth Rs 20 lakhs or less can be filed in this agency.The agency sends the goods for testing in laboratory if required and gives decisions on the basis of facts and laboratory report. If the aggrieved party is not cosy by the jurisdiction of the district forum then they can file an appeal against the judgment in State Commission inside 30 days by depositing Rs 25000 or 50% of the penalty amount whichever is less.

2. State Commission:

It consists of a president and two other members. The president must be a retired or working decide of high court. They all are appointed by state government. The complaints for the goods really worth more than Rs 20 lakhs and less than Rs 1 crore can be filed in State Commission on receiving complaint the State commission contacts the party against whom the complaint is filed and sends the goods for testing in laboratory if required.In case the aggrieved party is not satisfied with the judgment then they can file an appeal in National Commission within 30 days by depositing Rs 3500 or 50% of penalty amount whichever is less.

3. National Commission:The national commission consists of a president and four members one of whom shall be a woman. They are appointed by Central Government. The complaint can be filed in National Commission if the value of goods exceeds Rs 1 crore.

If aggrieved party is not satisfied with the judgment then they can file a grievance in Supreme Court within 30 days.

SUMMARY

Consumer Protection Act

Consumer Protection Act has been implemented(1986) or we can bring into existence to protect the rights of a consumer. It protects the consumer from exploitation that business practice to make profits which in turn harm the well being of the consumer and society.

CONSUMER PROTECTION ACT

This right help to educate the consumer on the right and responsibilities of being a consumer and how to seek help or justice when faced exploitation as a consumer. It teaches the consumer to make right choices and know what is right and what is wrong.

Who is a consumer according to the Consumer Protection Act, 1986? A consumer is one that buys good for consumption and not for the resale or commercial purpose. The consumer also hires service for consideration.

If any defect found the seller should remove the mentioned defects from the whole batch or the goods affected. For example, there have been cases where car manufacturing unit found a defect in parts of the vehicle usually they remove the defect from every unit or they call of the unit.

They should replace the defective product with a nondefective product and that product should be of similar configuration or should be the same as the product purchased.

Redressal: Three Tier System Under Consumer Act

District Forum: These fora are set by the district of the state concerned in each district wherein it consists of President and two members of which one should be a woman and is appointed by the State Government. In this, the complaining party should not make a complaint more than 20 Lacs and once the complaint is filed the goods are sent for testing and if they found defective the accused party should compensate and if the party is dissatisfied can make an appeal with state commission within 30 days.

State Commission: This is set up by each state It consists of President and two members. Complains should be at least 20 lacs and exceed not more than 1 crore. The goods are sent for testing and if found defective are asked for replacement or compensation. If not satisfied can make an appeal within 30 days in front of the National Commission.

National Commission: Consist of President and 4 members. The complaint must exceed an amount of 1 crore. The goods are sent for testing and if found defective are asked for replacement or compensation