Highlights Of The New Consumer Protection Act, 2019

Published on 01 Sep 2019 by Shivi

In an effort to enhance the protection available to consumers from illicit activities of sellers and service providers, the Government of India introduced the new Consumer Protection Act, 2019 on August 9. The new consumer protection law comes with a wider scope of protection, more efficient consumer complaint redressal system and repeals the decades-old Consumer Protection Act, 1986.

The new consumer protection laws are passed with the objective of providing faster consumer dispute settlement mechanism, protect additional rights of consumers and making the process of consumer complaint filing simpler. In order to expand the scope of the laws and matching the complex rights and interests in the current e-commerce driven economy, the following have been included under the ambit of the Act:

  1. E-marketplaces

  2. Product Service Providers

  3. Electronic Service Providers who provide technologies or processes to enable a product seller to engage in advertising or selling goods or services to a consumer.

  4. Online Auction Sites

  5. Online Service Aggregators

  6. Intermediaries

  7. Endorsers.

Central Consumer Protection Authority

The new Consumer Protection Act, 2019 now lays down the laws relating to the establishment of a new central body named as the Central Consumer Protection Authority for promoting and enforcing the rights of consumers and preventing the unfair trade practices of sellers and services providers. 

Under the new Act, the Central Authority has the power to initiate an inquiry into the violations of consumers’ rights suo motu, after receiving a complaint or on the directions of the Central Government. The authority can also initiate an inquiry into any unfair trade practices adopted by any goods seller or service provider.

Product Liability

The new consumer protection laws also lay down the concept of product liability under which, a consumer can claim compensation from the service provider or seller for any harm caused due to the deficiency in the goods or services. The new Act also defines what qualifies as harm and lays down that harm would include any stress and mental agony caused to the consumer due to such deficiency. 

Unfair Contracts

The Consumer Protection Act, 2019 also includes the concept of unfair contracts and states that any contracts between a manufacturer/seller/service provider and the consumer would be held as unfair if they have a negative impact on the consumer’s rights or one-sidedly favour the manufacturer/seller/service provider.

Under the concept of unfair contract, the homebuyers who are trapped by builders in unilaterally benefitting builder-buyer agreements would have the option to drag the builders to consumer court and claim compensation for such unfair contract. In terms of real estate, the following may be considered as valid grounds to render a builder-buyer agreement as an unfair contract: 

  1. Excessive security deposit to be paid by the buyer.

  2. Unilateral termination of the agreement upon any late payments.

  3. Inequal proportions of penalty to be paid by builder in case of delay and by buyer in case of late payment.

  4. Unreasonable or additional charges imposed on the buyer. 

False Advertisement Or Description

Under the new consumer protection laws, a consumer can also file a consumer complaint with the Central Authority against an advertisement or false description provided by the seller or service provider that may constitute unfair trade practice. The authority can order an investigation into the complaint if a prima facie case found against the advertiser. 

Mediation In Consumer Disputes

The new Act provides for the establishment of a consumer mediation cell in every District and State Consumer Forum. It also lays down mediation as an ADR method of resolving any consumer disputes. If the District Forum is of the belief that a mutual settlement can be done between the consumer and company, it may direct them to settle their dispute by mediation by giving their written consent.

New Pecuniary Jurisdiction Of Consumer Courts In India

The new 2019 Act has drastically increased the pecuniary jurisdiction of the consumer courts. The new threshold for filing consumer complaints on the basis of pecuniary jurisdiction is as follows:

  1. District Consumer Dispute Redressal Commission: Cases up to INR 1 Crore.

  2. State Consumer Dispute Redressal Commission:  Cases above INR 1 crore and less than INR 10 crore.

  3. National Consumer Dispute Redressal Commission: Cases above INR 10 Crore.

The new Act also determines the manner in which the pecuniary jurisdiction is to be decided. Previously, the pecuniary jurisdiction was determined as per the value of goods or services as well as compensation claimed. Now, pecuniary jurisdiction will be determined only on the basis of the value of goods or services paid as consideration by the consumer.

For more information on the new consumer protection laws, you can talk to Legistify’s consumer law experts in India at 846-883-3013 or send us an email at [email protected]

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