What is Consumer Protection? Malpractices, System, Right, Methods

What is Consumer Protection?

Safeguarding consumers (buyers) of goods and services from unfair practices and fraudulent methods are referred to as consumer protection. It prevents consumers from being exploited or misled by business enterprises and enables them to make the best choices based on their interests and needs.

Consumer protection ensures that the business entities can be held responsible for their actions and the policies provide protection to the public through various laws and regulations for the welfare of the people.

The need for adopting measures for protecting the interest of consumers arises due to their own ignorance and due to unfair business practices adopted by the business entities. Consumers have the basic right to be protected against exploitation, loss or injury caused on account of defective goods or deficiency of services. But due to a lack of awareness and ignorance, the consumers are unable to make use of their rights.

The consumers in the country have to fulfil the following basic responsibilities:

• Being aware of their safety
  
  
• Being aware of the quality of products and services before purchasing
  
  
• Think independently about what they want and need and accordingly make independent choices
  
  
• Being fearless and speaking about their grievances
  
  
• Convey to the traders what they exactly want
  
  
• Express and file their complaints regarding their dissatisfaction with goods or services
  
  
• Being ethical, fair, and not engaging in any deceptive practice

Consumers require protection from unscrupulous and unethical malpractices by businesses. Also, it is necessary to providing speedy solutions to their grievances.

Some of the common forms of business malpractices leading to consumer exploitation are as follows:

• Sale of adulterated goods and spurious goods. For example, a person selling fruit juice may add inferior quality sugar in the juice. The juice may taste good but is adulterated and may cause food poisoning.
  
  
• Sale of sub-standard goods and duplicate goods. For example, a seller may offer products which do not conform with the prescribed quality standards and the product may pose risk to well being of consumer.
  
  
• Use of false weights and measures leading to underweight. For example, a shopkeeper may tamper with weight scales and the actual weigh will differ from item weighted. This is a serious malpractice done by shopkeepers.
  
  
• Hoarding and black-marketing leading to scarcity and a rise in price. For example, vegetable traders may form a cartel and start to hoard vegetables for some time. When there will be less supply and more demand, the traders will then sell the produce at higher prices which is unethical.
  
  
• Charging more than the Maximum Retail Price (MRP) fixed for the product. For example, the MRP of a product is marked at ₹100/-, but the shopkeeper is selling it at higher price for ₹150/-. The shopkeeper is cheating the customer.
  
  
• Supply of defective goods For example, while shopping online a vendor may offer defective product. As the customer cannot physically inspect the product prior to purchase, the online seller may offer non functioning product.
  
  
• Misleading advertisements falsely claiming a product or service to be of superior quality, grade or standard

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Consumer Rights

Every country establishes a set of rights for its consumers in order to protect them against any form of fraud or unfair practices. The first and foremost four types of consumer rights were given by John F. Kennedy, the former President of the United States.

These include:

• Right to safety
• Right to be informed
• Right to choose
• Right to be heard

Thereafter, in 1985, the United Nations added the following four more rights to protect consumers:

• Right to satisfaction of basic needs
• Right to redress
• Right to consumer education
• Right to a healthy environment

Eight Types of Consumer Rights

Right to Safet

This right protects the consumers against the marketing of goods and services which might be hazardous to their life and property. The goods purchased and/or services availed by the consumers should meet the immediate needs of consumers in addition to fulfilling their long-term interests.

Consumers must ensure the quality of the products before purchasing in addition to receiving the guarantee of the products and services. The sellers should provide consumers with reliable and quality products in the right quantity. The sellers must also guarantee the performance of their products and services.

Right to Choose

Consumers have the right to choose (wherever possible) from a variety of goods and services at competitive prices. In the case of monopoly products, it implies the right to be assured of satisfactory quality and service at a fair price. These rights can be better exercised in a competitive market where a variety of goods are available at competitive prices.

Right to Be Informed

Consumers have the right to be well informed with respect to quality, quantity, potency, purity, standard and price in addition to unfair trade practices. The consumer should insist on getting all the information about the product or service before making any purchase decision. Having information enables the consumers to act wisely and responsibly. In addition, being well-informed also saves them from falling prey to high-pressure selling techniques.

Right to Be Heard

The right to be heard is necessary to protect the interests of consumers and the consumers’ voice must be heard at appropriate forums. It includes the right to be represented in various forums formed for considering consumer’s welfare. There should be other forms of non-political and non-commercial consumer organisations that can be given representation in various committees that are formed by the Government and other bodies in matters relating to consumers.

Right to Consumer Education

Consumers have the right to acquire knowledge and skills so that they can make well-informed decisions. At most times, ignorance and lack of education of consumers especially the rural consumers lead to their exploitation. When people should know their rights and exercise them, only then, they would be able to achieve real consumer protection.

Right to Seek Redressal

Consumers have the right to seek redressal against unfair trade practices or unscrupulous exploitation. It also includes the right to fair settlement of genuine grievances of consumers for which they must make a complaint to appropriate authorities. Many times, the consumer complaints are quite small or may involve small value but they may have a significant impact on society as a whole. Consumers usually take the help of consumer redressal agencies for seeking redressal of their grievances.

Right to Satisfaction of Basic Needs

Consumers have the right to access basic or essential goods and services, including food, clothing, shelter, healthcare, education, public utilities, water and sanitation.

Right to a healthy environment

Consumers have the right to receive products and services that are non-threatening to the well-being of present and future generations.

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Protection of Consumer Rights

The consumers might be exploited by malpractices of manufacturers, shopkeepers, traders, dealers and other services providers. There are many forms of regulations and laws that exist for the protection of the consumers.

There are several regulations, rules and laws that seek to protect the rights of consumers. Some of these laws and regulations are summarised as follows:

Consumer Protection Act, 2019

The Consumer Protection Act, 2019, seeks to protect and promote the interests of consumers by safeguarding them from exploitation, defective goods, deficient services, unfair trade practices, etc. The Consumer Protection Act, 2019, has been enacted for protecting the interests of consumers by establishing various provisions, consumer councils, commissions and a central authority for settling disputes of consumers.

The Consumer Protection Act, 2019, formed the Central Consumer Protection Authority (CCPA) which is responsible for promoting, protecting and enforcing the rights of consumers. This is considered as the ‘Magna Carta’ (royal charter of rights) in the context of consumer protection.

Indian Contract Act, 1872

According to this act, two parties must enter into a contract for carrying out a transaction. The promises made by parties to a valid contract are binding on both parties. This also specifies the remedies available to parties in case of breach of contract.

Sale of Goods Act, 1930

This act contains provisions for safeguarding and providing relief to the buyers of the goods in case the goods purchased do not comply with express or implied conditions or warranties.

Essential Commodities Act, 1955

The Act focuses on controlling production, supply and distribution of essential commodities, checking inflationary trends in their prices and ensuring equal distribution of essential commodities. The act also provides for action against anti-social activities of profiteers, hoarders, and black marketers.

The Agricultural Produce (Grading and Marking) Act, 1937

The act lays down conditions for grade standards of agricultural commodities and livestock products. The act stipulates the conditions which govern the use of standards and lays down the procedure for grading, marking, and packing of agricultural produce. The quality mark provided under the Act is known as AGMARK, which is an acronym for Agricultural Marketing.

Prevention of Food Adulteration Act, 1954

The focus of this Act is to check adulteration of food articles and ensure their purity to maintain public health.

Standard of Weights and Measures Act, 1976

It protects consumers against the malpractice of underweight or under-measure. The provisions of this Act are applicable in case of those goods which are sold or distributed by weight, measure or number.

Trade Marks Act, 1999

This Act has repealed and replaced the Trade and Merchandise Marks Act, 1958. The Act prevents the use of fraudulent marks on products and thus, protects the consumers against such products.

Competition Act, 2002

This act has repealed and replaced the Monopolies and Restrictive Trade Practices Act, 1969. The Act protects consumers from ill practices adopted by business firms that hamper competition in the market.

Bureau of Indian Standards Act, 1986

The Bureau of Indian Standards has been set up under the Act where the bureau has two important activities of formulation of quality standards for goods and their certification through the BIS certification scheme. Manufacturers are permitted to use the ISI mark on their products only after ensuring that the goods conform to the prescribed quality standards. The Bureau has also set up a grievance cell where consumers can make a complaint about the quality of products carrying the ISI mark.

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Methods of Consumer Protection

With specific consideration for India, many consumers live below the poverty line and are unaware of their rights. A vast majority of these consumers are illiterate and are easy targets who can be exploited by traders, sellers and shopkeepers. Therefore, these consumers need to be protected from unjust and unethical practices of producers and traders.

Many consumers are often uninformed about their rights and methods of redressal. Therefore, there are many governments and non-government organisations formed for protecting the consumers against malpractices. The consumers need to be made aware of their rights and methods of redressal for their grievances by providing them proper education and guidance.

Some of the important methods and means for protecting the rights of the consumers are as follows:

• Lok Adalat: The Lok Adalats are formed for an effective and economical system for quick redressal of public grievances. It is also referred to as ‘people’s court and it is established by the government to settle the disputes by compromise. The aggrieved party can approach the Lok Adalats directly with their grievances and their problems are discussed on the spot and decisions are taken quickly.
  
  
• Public Interest Litigation (PIL): This is a scheme under which any person can move to the court of law in the interest of society. It is a legal action that is initiated in the court of law and its aim is to provide a legal remedy to the un-represented groups of the society. The party that is not related to the grievance can also file public interest litigation. In some cases, it is filed in the High Court and the Supreme Court.
  
  
• Consumer Protection Councils (CPCs), Consumer Disputes Redressal Commissions (CDRCs) and Central Consumer Protection Authority (CCPA): Under the Consumer Protection Act 2019, the government has constituted multiple bodies for redressing consumer disputes. At the base level, Consumer Protection Councils (CPCs) would be set up at three levels namely district, state and national level.
  
  These will basically serve as advisory councils and will provide advice to the Central Government for the promotion and protection of consumers’ rights under this Act at the national, state and district levels. After the CPCs, the second level of the consumer redressal is the Consumer Disputes Redressal Commissions (CDRCs) that will be set up at three levels. This is also called the three-tier Consumer Dispute Redressal Commission. All the consumer dispute complaints are submitted in these Commissions (Courts).
  
  The complaints may be sent to the district level, state-level or national commission based on the pecuniary jurisdiction. One of the most important features of this act is that it calls for the setting up of a regulatory body known as the Central Consumer Protection Authority (CCPA) as the central regulator to look after the consumer rights issues.
  
  
• Awareness programme: The awareness programs are made by the Government of India to increase the level of awareness among consumers through various publicity measures. An educated consumer who is well-aware of his rights and responsibilities cannot get exploited easily. The government regularly brings out journals, brochures, booklets, posters, etc.
  
  depicting the rights and responsibilities of consumers, redressal machinery, etc. Many video and audio programs on consumer awareness are broadcasted through different television channels such as All India Radio and other FM channels. The Government has also instituted National Awards for the persons who have done outstanding work in this field to encourage the participation of the public in the field of consumer protection.
  
  
• Consumer organisations: Various consumer organisations have been actively promoting and protecting consumer interests. Several organisations been set up in recent years in different parts of India such as Consumer Education and Research Centre (CERC), Ahmedabad and Voluntary Organisation in the Interest of Consumer Education (VOICE), New Delhi, Consumer Guidance Society of India (CGSI), Mumbai and Consumer Action Group (CAG), Chennai, etc. for this purpose.
  
  
• Consumer Welfare Fund (CWF): The consumer welfare fund is created by the Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution for providing financial assistance to the rural areas and to strengthen the voluntary consumer movement. The funds are used for training and research for consumer education, complaint handling, counselling, etc.
  
  
• Legislative measures: The Indian Government has enacted various laws for safeguarding the interest of the consumers and protecting them from being exploited and from unethical practices of business entities. Some of these laws include the Sale of Goods Act, 1930, the Consumer Protection Act, 2019, the Standard of Weights and Measures Act, 1976, the Prevention of Food Adulteration Act, 1954; and the Essential Commodities Act, 1955.

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Consumer Protection Act, 2019

The first Consumer Protection Act came into existence and was implemented in 1986, for protecting for preventing consumers from fraud and unfair practices. The Consumer Protection Act, 2019 has replaced the old Consumer Protection Act, 1986 after the President gave his assent to the bill on Aug 06, 2019.

The Consumer Protection Act safeguards the rights of the consumers and gives opportunity to the consumers to speak against unfair means and flaws in goods and services. This act protects the consumers from any kind of foul and wrong trade practices by traders, manufacturers and distributors. This act has provisions for compensating consumers for grievances and eliminates lengthy lawsuits.

This act has a wide scope and it applies to all types of undertakings from public to private sectors and also to co-operative sectors, big and small. It involves the manufacturers, distributors, and traders supplying goods or providing services. The act provides a platform for a consumer to file their complaints. The consumers can get compensation for the problems they have gone through due to goods or services of the supplier.

The act confers six rights to consumers for empowering them and to protect their interests as follows:

• Right to safety
• Right to be informed
• Right to choose
• Right to be heard
• Right to seek redressal
• Right to consumer education

This act confers these rights on the consumers and empowers them to fight against any unscrupulous, exploitative and unfair trade practices adopted by sellers.

The main objectives of the consumer protection act are:

• To provide a simple and effective consumer grievance redressal process
  
  
• To dispose-off all the consumer grievance complaints in the least amount of time
  
  
• To ensure effective disposing of all the cases pending in the consumer courts
  
  
• To conduct investigations into violations of consumer rights and institute complaints
  
  
• To order the recall of unsafe goods and services
  
  
• To order the discontinuance of unfair trade practices and misleading advertisements
  
  
• To impose penalties on manufacturers/endorsers/publishers of misleading advertisements
  
  
• To promote and protect all the six rights of the consumers

According to the Consumer Protection Act, a person is called a consumer who avails the services and buys any good for self-use. This definition covers all types of transactions involving the consumers through offline, online, direct selling, and multi-level marketing or through teleshopping.

The various provisions of the Act are:

• The act provides for the establishment of the ‘Central Consumer Protection Authority’ (CCPA) as a regulatory authority for protecting, promoting, and enforcing the rights of consumers and regulate cases related to unfair trade practices, misleading advertisements and violation of consumer rights.
  
  
• The Central Consumer Protection Authority (CCPA) has the authority to take ‘Suo Moto’ actions, recall products, order reimbursement of the price of goods/services, cancel licenses, impose penalties and file class-action suits.
  
  
• The CCPA also has the provision of having an investigation wing for conducting an independent inquiry or investigating consumer law violations.
  
  
• The CDRCs can entertain complaints related to:
  
  • Overcharging or deceptive charging
    
    
  • Unfair or restrictive trade practices
    
    
  • Sale of hazardous goods and services which may be hazardous to life
    
    
  • Sale of defective goods or services

According to the rules of the Consumer Disputes Redressal Commission, no fee is charged for filing cases up to ` 5 lakh. The amendment in the new act provides flexibility and enables the provision to the consumers to file complaints electronically and for hearing or examining parties through video-conferencing.

The act has also introduced the concept of product liability where the manufacturer or product service provider or product seller will now be responsible to compensate for injury or damage caused by defective products or deficiency in services to the consumer. The CCPA has the authority to impose a penalty on a manufacturer or an endorser, for a false or misleading advertisement and may also sentence them to imprisonment.

The act has also provided for mediation as an Alternate Dispute Resolution (ADR) mechanism with a strict timeline fixed in the rules and these will be held in the mediation cells to be established under the aegis of the Consumer Commissions. There can be no appeal against settlement through mediation.

The act has armed the authorities to take action against unfair trade practices through a broad definition of unfair trade practices. This act defines Unfair Trade Practices which include sharing of personal information given by the consumer in confidence unless such disclosure is made in accordance with the provisions of any other law.

This act empowers the Central Government to establish a Central Consumer Protection Council headed by the Union Minister of Consumer Affairs, Food and Public Distribution with the Minister of State as Vice Chairperson and 34 other members from different fields.

This act applies to all the products and services unless the Central government has debarred any product or service out of the scope of this Act.

Consumer Protection Act, 2019, includes new provisions with respect to the following:

• The new definition of the consumer includes online purchases
  
  
• Definition of goods includes food
  
  
• Provisions covering endorsement of goods and service
  
  
• Definition of the electric service provider
  
  
• Provisions for product liability and product liability action for goods and services
  
  
• Wide definition of unfair trade practices

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MRTP Act

The Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, was enacted for preventing the concentration of economic power in the hands of few business houses. This act provides for control of monopolies, probation of monopolistic, restrictive and unfair trade practices in addition to protect consumer interests.

The main objectives of the Monopolistic and Restrictive Trade Practices (MRTP) Act, 1969, are:

• Prevention of concentration of economic power to the common detriment
  
  
• Control of monopolies
  
  
• Prohibition of Monopolistic Trade Practices (MTP)
  
  
• Prohibition of Restrictive Trade Practices (RTP)
  
  
• Prohibition of Unfair Trade Practices (UTP)

The MRTP Act, 1969 made sure that there is no concentration of economic power at a single place by checking the restrictive, monopolistic and restrictive trade practices. There were three regulatory provisions in the MRTP Act.

The MRTP Commission was the main body that had the authority to inquire into any complaint related to monopolistic trade practices and it also had the right for making recommendations of any effective plans for taking any action to the central government.

The MRTP Commission is the only body that has the authority to inquire, cease or award compensation in cases where there are certain restrictive and unfair trade practices being practiced.

The different components that are addressed under the provisions of the act are:

• Command and control: According to the act, it is compulsory for organisations having assets over ` 20 crores to take the approval of the Central Government before they get into any form of corporate restructuring or takeover.
  
  
• Monopolistic trade practices: According to provisions of the Act the monopolistic trade practices are covered under Chapter IV of the MRTP Act. These are the activities that are undertaken by large business houses by taking undue advantage of their market position that leads to hampering or eliminating healthy competition in the market.
  
  
• Restrictive trade practices: Restrictive trade practices refer to the activities that obstruct the flow of capital or profits in the market. Some firms tend to control the supply of goods or products in the market by restricting production or controlling the delivery.
  
  
• Unfair trade practices: Section 36-A of the Act prohibits organisations from indulging in Unfair Trade Practices through the act of false, deceptive, misleading, or distorted representation of facts about goods and services by the firms.