Consumer protection act

1 Sep 2014

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Consumer protection act

  1.  CONSUMERISM  Consumerism is a movement directed to protect the consumer and ensure that the consumer gets the best return in exchange for the money he spends.  Consumer education for our country is a must for the:  Creation of critical awareness  Active consumer involvement  Imbibing social responsibility  Realizing ecological responsibility 2
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  3. Governments should develop, strengthen or maintain a strong consumer protection policy, taking into account guidelines set below:  Protect consumers from hazards to their health and safety.  Promotion and protection of the economic interests of consumers.  Access of consumers to adequate information to enable them make informed choices.  Consumer education.  Availability of effective consumer redress.  Freedom to organise consumer groups to present their views in decision making processes affecting them.
  4. Some of the problems faced by Indian consumers are:  Short supply of items of essential needs.  Lack of effective or workable competition.  Unfamiliarity of product features results in sale of substandard, inferior or even defective goods  Due to low literacy levels and unsatisfactory information flows, Indian consumers are not conscious of their rights.  Consumerism in India is not organised and developed.  Laws to safeguard interests of consumers are not effectively implemented.
  5.  The Consumer Protection Act 1986 is a social welfare legislation which was enacted as a result of widespread consumer protection movement. The main object of the legislature in the enactment of this act is to provide for the better protection of the interests of the consumer and to make provisions for establishment of consumer councils and other authorities for settlement of consumer disputes and matter therewith connected. In order to promote and protect the rights and interests of consumers, quasi judicial machinery is sought to be set up at district, state and central levels. The main object of these bodies is to provide speedy and simple redressal to consumer disputes. It is one of the benevolent pieces of legislation intended to protect the consumers at large from exploitation.
  6. Legal Environment CH-22 Consumer Protection Act 1986 The Consumer The term 'consumer' is defined in Section 2(d) of the Consumer Protection Act, 1986 in two parts. One is a consumer who purchases goods, the other is a person who hires services. a. "Consumer" means any person who: i. Buys any goods for a consideration that has been paid or promised or partly paid and partly promised, or under system of deferred payment and includes any user of such goods (other than the person 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 the buyer. But it does not include a person who obtains such goods for resale or for any commercial purpose.* ii. Hires or avails of any services for a consideration that has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary or such services other than the person who hires or avails of the services for consideration paid
  7. Legal Environment CH-22 Aims and Objectives of the Act The main objective of the Act (according to preamble to the Act) is to provide for better protection of the interest of consumers. Consumer councils and other authorities have been set up for settling the consumers' disputes and other matters. The objective of the Act of 1986 is as follows: 1. The foremost objective of the Consumer Protection Bill is to provide for better protection of the interest of the consumer and for that purpose, to make provisions for the establishment of Consumer Protection Councils and other authorities for the settlement of consumer disputes and for matters connected therewith. 2. The Act provided that for speedy and simple redressal at minimum expenses to consumer disputes, a quasi-judicial body is to be set up at the district, state and central levels.
  8. Legal Environment CH-22 Grounds for Appeal for the Jurisdiction to Redressal Forums Consumers can appeal for jurisdiction to the consumer redressal forums upon any of the five grounds: a. Consumer Act and Unfair Trade Practices b. False Offer or Bargain Price c. Offering of Gifts, Prizes etc., and Conducting Promotional Contests d. Product Safety Standards e. Hoarding or Destruction of Goods Act Cont….
  9. Legal Environment CH-22 UN Guidelines for Consumer Protection, 1986 - General Principles  Governments should develop, strengthen or maintain a strong consumer protection policy, taking into account the guidelines set out below. In so doing, each government must set its own priorities for the protection of consumers in accordance with the economic and social circumstances of the country, and the needs of its population, and bearing in mind the costs and benefits of proposed measures.  The legitimate needs, which the guidelines are intended to meet, are the following: a. The protection of consumers from hazards to their health and safety; b. The promotion and protection of the economic interests of consumers; c. Access of consumers to adequate information to enable them to make informed choices according to individual wishes and needs; d. Consumer education; e. Availability of effective consumer redress; f. Freedom to form consumer and other relevant groups or organizations and the opportunity of such organizations to present their views in decision-making processes affecting them.  Governments should provide or maintain adequate infrastructure to develop, implement and monitor consumer protection policies. Special care should be taken to ensure that measures for consumer protection are implemented for the benefit of all sections of the population, particularly the rural population.  All enterprises should obey the relevant laws and regulations of the countries in which they do business. They should also conform to the appropriate provisions of international standards for consumer protection to which the competent authorities of the country in question have agreed.  The potential positive role of universities and public and private enterprises in research should be considered when developing consumer protection policies.
  10. Legal Environment CH-22 Restrictive Trade Practices Section 2(1) (nn) of the Act provides that "restrictive trade practice" means "any trade practice which requires a consumer to buy, hire or avail of any goods or, as the case may be, services as a condition precedent for buying, hiring or availing of other goods or services". Goods and Defect [Section 2 (1)(i)&(f)] Goods: The consumer protection act doesn't define the term 'goods'. It says that 'goods' means that as defined in the Sale of Goods Act, 1930. Section 2(7) of the Sale of Goods Act defines it such: "Goods means every kind of movable property other than actionable claims and money, and includes stock and shares, growing crops, grass , and things attached to or forming part of land which are agreed to be severed before sale or under the contract of sale". Defect: Under Section 2(1)(f) of the Act 'defect' means - "any fault, imperfection or shortcoming in quality potency, purity or standard which is required to be maintained by or under any law, for the time being in force or as is claimed by the trader in any manner whatsoever in relation to the goods." Cont….
  11. Legal Environment CH-22 Deficiency in Services [Section 2(1)(o)& (g)] Deficiency in Service: According to Act "deficiency means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.“ Charging of Excessive Price over that Fixed by Law or Displayed A complaint may be made against a trader who has charged in excess of the price: 1. Fixed by or under any law for the time being in force, or 2. Displayed on the goods, or 3. Displayed on any package containing the goods. Hazardous Goods The consumer protection act in spite of recognising the right of consumer to be protected against marketing of goods, which are hazardous to life and property did not provide any preventative mechanism in favour of the consumer. The term 'hazardous goods' has not been defined in the Act.
  12. Legal Environment CH-22 Who can File a Complaint [Section 2 (b) & 12] A complaint in reference to any goods sold or delivered or services rendered may be filed by any of the following: a. By the consumer himself to whom such goods have been sold or delivered Cont…. or such service rendered; b. Any voluntary consumer association registered under Companies Act, 1956 or under any other law for the time being in force; or c. One or more consumers, where there are numerous consumers having the same interest; d. The Central and state government. In addition to the above, the following are also considered as a consumer an hence they may file a complaint: Beneficiary of goods/services, legal representative of the deceased consumer, legal heirs of the deceased consumer, spouse of the consumer, a relative of consumer, and insurance company.
  13. Legal Environment CH-22 Relief Available Against Complaint [Section 14 & 22] If the firm is convinced that the goods were really defective or that the complaint about the service is proved, the forum shall have to order any of the following things to be done by the opposite party: a. To remove the defect pointed out by the appropriate laboratory for the goods in question. b. To replace the goods with new goods of similar description that shall be free form any defect. c. To refund to the complainant the amount paid as price, or as the case may be, the charges paid by the complainant. d. To pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party. e. To remove the defects or deficiencies in the services in question. f. To discontinue the unfair trade practice or the restrictive trade practice or not to repeat it. g. Not to offer the hazardous goods for sale.
  14. Legal Environment CH-22 Consumer Protection Councils These councils work towards the promotion and protection of consumers. Consumer councils are created to advise and assist the consumers in seeking and enforcing their rights. We have consumer protection councils both at the center level and state level. Central Consumer Protection Council The Central government was authorised to establish the Central Council that has come to existence w.e.f. April 15, 1987 through the framing of the (Central) Consumer Protection Rules (1987). Composition [Section 2 and Rule 3] Member of the councils are selected from various areas of consumer interest, who are whenever possible, leading members of statewide organizations representing segments of the consumer public, so as to establish a broadly-based Cont…. representative consumer council.
  15. Legal Environment CH-22 State Consumer Protection Council Under Section 7 of the Act, state governments are required to establish their respective protection councils. The rules regarding its composition and other modalities are to be established by the respective state government. The objectives of the State Consumer Protection Council are described in Section 7 to be the same as those of the Central Council, namely, the points enumerated in Section 6. Working Groups The Central government may constitute from amongst the members of the Council a standing Working Group, under the Chairmanship of the Member Secretary of the Council. The Standing Working Group shall consist of not more than 30 members and shall meet when considered necessary by the Central government.
  16. Legal Environment CH-22 Consumer Disputes Redressal, Agencies Under the Consumer Protection Act, 1986 (CDRA) Under this Act, Consumer Disputes Redressal Agencies have been established. The Consumer Protection Act provides for a 3-tier approach in resolving consumer disputes. These three tiers are: 1. A Consumer Disputes Redressal Forum to be known as the "District Forum". This is to be established by the state government in each district of the state by means of a notification. 2. A Consumer Disputes Redressal Commission to be known as the "State Commission". This has also to be established by the state government in the state by means of a notification. 3. A National Consumer Disputes Redressal Commission to be established by the Central government by means of a notification. The Act thus envisages a hierarchy of three redressal forums:  District Forum  State Forum  National Forum
  17. Legal Environment CH-22 Jurisdiction The question of has to be jurisdiction considered with reference to the value, place, and nature of the subject matter: District Forum: A District Forum deals with cases where the value of claim is upto Rs. 20 lakhs. Territorial Jurisdiction: A case is supposed to fall within the purview of District Council when, at the time of the institution of the complaint: a. The party against whom the claim is made actually and voluntarily resides or carries on business, or has a branch office or personally works for gain in that area, or b. Where there are more than one opposing or contesting parties , each such Cont…. party actually and voluntarily resides or carries on business or c. Where there are more than one opposing or contesting parties, and any such party actually and voluntarily resides or carries on business or has a branch office, or personally works for gain in that area; provided the other parties not so residing or working agrees. d. The cause of action, wholly or in part, arises in that area.
  18. Legal Environment CH-22 State Commission Cases having a claim exceeding rupees 20 lakhs but upto the limit of Rs. 1 crore can go to the State Commission. The Consumer Protection Act does not specifically provide for the territorial jurisdiction of the State Commission. Broadly, these are on similar lines on which the territorial jurisdiction of district forum is based. National Commission National Commission is the highest level of consumer forums. It may entertain all matters where the value of claim exceeds Rs. 1 crore. The territorial jurisdiction of the National Commission is whole of India except the state of Jammu & Kashmir.
  19. CONSUMER PROTECTION "The purpose of any business is to create a customer. It is the customer who determines what a business is. It is the customer and he alone, who, through being willing to pay for a good or services, convert economic resources into wealth, things into goods. What a business thinks it produces is not of first importance - especially not to the future of the business and to its success. What the customer thinks he is buying - what he considers value, is decisive; it determines what it produces and whether it will prosper". -Peter F. Drucker
  20.  For consumer protection Business, Government and consumers are equally responsible.  Business, comprising producers and all elements of distribution channels have to pay due regard to consumer rights.  Producer should not charge excessive prices in a sellers market.  Hoarding and black marketing is illegal.
  21.  The Act aims to provide better and all-round protection to consumers. All suppliers of goods and services, both in the private and in the public sector and the cooperative sector, are covered by the Act.  It provides effective safeguards to the consumers against different types of exploitation such as -defective goods, unsatisfactory (or deficient) services and unfair trade practices.  It is indeed a very unique and highly progressive piece of social welfare legislation and has made the consumer movement really going and more powerful, people- oriented. In fact, the Act and its Amendment in 1993 have brought fresh hopes to the Indian consumer.  This is the only law which directly pertains to market place and seeks to redress complaints arising from it. 22
  22. For enforcement of the rights of the consumers, the Act has created special consumer Courts.  As Act provides for a three-tier consumer grievance redressal machinery with :  THE DISTRICT FORUMS At the base,  THE SLATE COMMISSION At the middle level and  THE NATIONAL COMMISSION At the apex level.  The State and national level bodies also function as appellate authorities. Any verdict given by the National Commission can be challenged in the Supreme Court. The cost of goods or services and compensation asked for is the criterion for filing the complaint with the above Redressal Forum.  No court fee or any other charge is to be paid in respect of any complaint or petition of appeal or revision, Thus, the Act provides a simple, speedy and inexpensive redressal of consumer grievances relating to defective goods. 23
  23.  The complaint need only set out the grievances in the simplest form and furnish the name and address of the opposite party against whom the complaint is made.  It may even be in the form of a letter to the concerned Redressal Forum and no formalities of any type would be insisted upon.  Appearance may be by the complainant himself in person or by agent duly authorized by him. It is not obligatory to engage any advocate. Thus, it is a far more convenient law for consumers 24
  24. Subject to the other provisions of this Act, the District Forum shall have jurisdiction:  to entertain complaints where the value of the goods or services and the compensation, if any, claimed upto 5 lakhs. 25
  25. Subject to the other provisions of this Act, the State Commission shall have jurisdiction:-  Claims from Rs 5 to 20 lakh  appeals against the orders of any District Forum within the State; and 26
  26. The National Commission shall have jurisdiction—  complaints where the value of the goods or services and compensation, is above Rs. 20 lakh  appeals against the orders of any State Commission 27
  27.  A complaint, hand written or typed, can be filed by a consumer, a registered consumer organisation, central or state Government and one or more consumers, where there are numerous consumers having the same interest.  No stamp or cour t fee is needed.  The nature of complaint must be clearly mentioned as well as the relief sought by the consumer. 28
  28. Nature of complaint:  Any unfair trade practice or restrictive trade practice adopted ;by the trader  Defective goods  Deficiency in service  Excess price charged ;by the trader  Unlawful goods sale, which is hazardous to life and safety when used. 29
  29. GRANT OF RELIEF:  Repair of defective goods  Replacement of defective goods  Refund of the price paid for the defective goods or service.  Removal of deficiency in service  Refund of extra money charged.  Withdrawal of goods hazardous to life and safety.  Compensation for the loss or injury suffered by the consumer due to negligence of the opposite party.  Adequate cost of filing and pursuing the complaint 30
  30.  Consumer should not make vague or general complaints and should also have supporting information and proof such as a bill.  Consumer should try to understand the viewpoint of the seller.  Consumers in asserting their rights should not inconvenience or hurt other sections of the public like, bandh etc.  Consumers should complain against a system and not attack individuals.
  31. CONSUMER RIGHTS  Every year, March 15 is observed as "World Consumer Right Day".  Its significance is that in 1962 on this day, John Fitzgerald Kennedy, the president of the US declared four consumer rights.  Later, International Organization of Consumers Union (IOCU) added three more rights to the list . The govt of India too included these rights .These have also been incorporated in the United Nations Charter of Human Rights. These are:
  32. 33 1. Right to Safety 2. Right to be Informed Mentioned by President Kennedy 3.Right to Choose 4. Right to be Heard 5. Right to Redressal 6. Right to Healthy Environment Added by International Organization of 7. Right to Consumer Education Consumers Union (IOCU)
  33. 1. RIGHT TO SAFETY  According to the Consumer Protection Act 1986, the consumer right is referred to as ‘right to be protected against marketing of goods and services which are hazardous to life and property’.  Assure that products are safe and match to safety standards.  Consumers receive information on proper use of goods and risks involved.  Ensure there are national standards for safety and quality of goods and services. 34
  34. Distribution facilities for essential goods and services,  Especially to consumers who are disadvantaged, e.g., in rural areas 35
  35. 2. RIGHT TO INFORMATION  The right to information is defined as ‘the right to be informed about the quality, quantity, potency, purity, standard and price of goods or services  In the market place of India, consumers get information by two ways namely advertising and word of mouth however these sources are considered to be unreliable but still this word of mouth is quite common here. Because of this, the Indian consumers hardly have precise and complete information for assessing the true value, safety, suitability, reliability of any product. Usually the hidden costs can be found, lack of suitability, quality problems and safety hazards only after the purchase of the product. 36
  36.  There is another right claimed by Indian government on paper, this right must ideally make sure that all consumable products have been labeled in a standard manner containing the cost, quantity, the ingredients and instructions given to use the product safely.  The right to information gives the power to the consumers to have an easy access to information which is necessary for the consumer. 37
  37.  The RTI Act was passed in 2005,( this law practically came into force on 12th October 2005.) with an aim to provide effectual access to information for Indian citizens, so that there is accountability and transparency of working of public authority. 38
  38. 3. RIGHT TO CHOOSE  The definition of Right to Choose as per the Consumer Protection Act 1986 is ‘the right to be assured, wherever possible, to have access to a variety of goods and services at competitive prices’.  For regulating the market place, there is just one factor required and that is competition. 39
  39. 4. RIGHT TO BE HEARD  As stated in the Consumer Protection Act 1986, ‘the right to be heard and to be assured that consumer's interests will receive due consideration at appropriate forums’ is the definition of the right to be heard.  This right helps to empower the consumers of India for putting forward their complaints and concerns fearlessly and raising their voice against products or even companies. 40
  40. 5. RIGHT TO REDRESSAL  Government has set the judicial system at the level of central, district and state for hearing of the grievances of the consumers.   In order to report the problems of the consumers, a 24 x 7 Customer Care Number is provided by the National Consumer Helpline in order to cure the problem or in order to provide the advice to the consumer regarding .  The Department of Consumer Affair established a helpline in the campus of the Delhi University by the India’s Government support in order to get a fund for Welfare of the Consumers 41
  41. National Consumer Helpline Toll free Number 1800-11-4000 (BSNL/MTNL)  National Consumer Helpline Number: 011-270065000  National Consumer Helpline SMS: <Name><city>to 8800939717 42
  42. 6. RIGHT TO HEALTHY ENVIRONMENT  The eight consumer right is THE RIGHT TO A HEALTHY ENVIRONMENT which is the right to live and work in an environment which is neither threatening nor dangerous and which permits a life of dignity and well-being. WHAT TO DO:  Be aware of the kind and extent of pollution occurring in your locality like air pollution , noise / odor etc. so that you would be able to address the problem.  Do your share in caring for our environment by practicing the 3R's of environmental protection: REDUCE - the source of solid wastes by buying earth friendly products. These are products that could be disposed properly without harming our environment. REUSE - products and containers as much as possible. RECYCLE - because using recycled products and recycling per use, will prolong the life of our landfills. 43
  43.  Consumer education is not the same thing as consumer information- “Consumer education improves consumer’s ability to use information”. Objectives of consumer education are:  Develop skills to make informed decisions in the purchase of goods and services in light of:  Maximum utilization of resources  Available alternatives  Ecological considerations 44
  44.  The right makes sure that the consumers in the country have informational programs and materials which are easily accessible and would enable them to make purchasing decisions which are better than before.  Consumer education might refer to formal education through college and school curriculums as well as consumer awareness campaigns being run by non-governmental and governmental agencies both.  The Ministry of Consumer Affair of India through their Logo ‘Jago Grahak Jago’ proved their contribution to create a hardcore awareness among the people of India for the rights of the consumers. 45
  45. Strategies for implementing consumer education  A comprehensive program is directed to all consumers.  Schools  Skills to make decisions  Skills to understand the impact of decisions of individuals, businesses and governments on the lives of others  Special focus on-  Rural areas  Low income  Vulnerable groups (seniors; disabled) 46