The new Consumer Protection Act was passed by the parliament in 2019 and it came into effect recently on 20th July 2020. The Act replaces the older consumer protection act of 1986 which had become redundant in its application to modern consumerism and emerging consumer disputes. The object of the act is to protect the interests of the consumers and to provide for speedy and effective redressal in case of complaints. The new law calls for a holistic approach to enforce the rights of consumers.
Caveat Emptor a Latin term which means “let the buyer beware”. It is an age-old principle applied to resolve disputes related to goods, services and property. According to this principle, the seller is not liable for any product which is damaged, defective or does not meet the expectations of the buyer. The principle originally intended for the buyer to use his knowledge in order to make an informed and careful purchase. Over time, it became a tool for misuse by the sellers and an acceptable defence for the courts as well. The onus was thus placed on the consumers, to carry out due diligence even in cases where information asymmetry persisted.
The evolution of this principle to the modern rule of Caveat Venditor took place through judicial discourse and with the realisation that the former was inconsistent with the law of equity. Caveat Venditor simply means “let the seller beware”, which imposes a greater responsibility on the sellers themselves for the goods and services that they sell. According to this rule, there is an implied warranty existing in each product and the buyer need not perform due diligence to check the quality of such products. The onus is now on the sellers to make sure the buyer makes a reasonably informed choice and to compensate for defective products.
Through this article, the author argues that with the new consumer protection act in force, India has successfully completed its transition from caveat emptor to caveat venditor and kept up with the progressive principles necessary for the conditions of modern trade and commerce.
What has changed?
Broadening the definition of ‘consumer’, Section 2(7) of the act provides recognition to buyers who were previously excluded from the ambit of a consumer and had no recourse -such as those involved in buying goods and availing services through direct selling, e-commerce, multi-level marketing and teleshopping.
The Act establishes a Central Consumer Protection Authority to protect and enforce the rights of consumers under Section 10. The authority will act like a regulatory body which can initiate action against unfair trade practices, recall unsafe goods and impose penalties for false and misleading advertisements.
The act also brings about the concept of ‘product liability’ through Section 83 which was absent in the previous law. Consumers can now seek compensation for a ‘harm’ caused to them due to a defective product or deficiency in service from the manufacturers, sellers and service providers. It is pertinent to note that the term ‘harm’ is broadly defined under Section 2(22) so as to include mental agony and emotional harm apart from other physical damages and personal injuries.
In the Act of 1986, there was no provision pertaining to unfair contractual terms. However, under the new law, unfair contracts which are in favour of manufacturers and are averse to the interests of the consumers, can be challenged. In furtherance to all such provisions, this Act lays down a comprehensive set of fines and imposition of penalties for any violation by the seller or manufacturers.
How will it benefit the consumers?
The act in its spirit is based on the principle of caveat venditor. This is because it not only prioritises the rights of consumers but at the same time seeks to empower them through a dogmatic approach. This is done by providing for an inclusive definition which increases the number of persons who come under the ambit of consumers in the modern world and also by expanding the scope of grievances that the consumers can seek redressal against. The biggest takeaway for consumers is to complain and receive compensation for not only defective goods and deficient services, but also spurious goods, unfair contract terms and for harm caused through product liability. False and misleading advertisements made by sellers are also punishable under the act. This shows the obligations that sellers and manufacturers have to fulfil in order to avoid being dragged to dispute redressal commissions which essentially requires for the seller to beware.
The framework of the law adopts a design which can systematically advantage the consumer. Consumers can now file complaints from where they reside, thus significantly changing its stance from the earlier law wherein it was necessary for the complaint to be initiated only where the transaction took place. The act also provides for filing of complaints electronically. Such provisions provide flexibility to the consumer and seeks to eliminate non-maintainability of complaints on technical and jurisdictional grounds.
The Act further empowers the Central Consumer Protection Authority to file complaints on behalf of consumers for violation of their rights. This is done in order to ensure that the rights of consumers to file class-action complaints are not subverted. Thus the new act insulates within it, the interests of consumers by disposing off the age-old rule of caveat emptor.
What role does it play in facilitating consumerism during the pandemic?
Since the new act recognises e-commerce markets and considers those who make online purchases as consumers, it is obvious that e-commerce platforms shall be liable in the same manner for their products, services and advertisements as other sellers. Owing to the Covid-19 pandemic and the subsequent lockdowns imposed in the country, there has been a major change in the consumer behaviour. Consumers are abandoning physical shopping and instead turning to shop online. This means that a huge chunk of the transactions happen online. In the erstwhile law, a consumer making purchases online had no recourse to unfair trade practices by online platforms. However, this conscious change brought about amidst a pandemic is certainly welcome as it widens the scope of protection to all those consumers facing grievances while purchasing goods from online platforms.
According to a study, Indian consumers’ need for online shopping will increase from 46% to 64% in the coming months. Keeping in mind the wide range of products and services availed online, the act subjects e-commerce platforms to more scrutiny than ever in order to bring transparency into the sector after years of letting it go unregulated due to want of legal provisions. Further the new Consumer Protection (E-Commerce Rules) 2020 lays down a comprehensive set of rules for ‘online businesses’. These include prohibiting cancellation fee charges on consumers, unfair trade practices, displaying country of origin of products, information relating to the goods and services, acknowledging receipt of complaints, and ensuring that there are no false advertisements. All these directly point towards making the sector consumer friendly and to better define legal powers of consumers.
ConclusionThe new act is a welcome change brought about under the ambit of consumer protection. It rightfully completes the transition of caveat emptor to caveat venditor by broadening the scope of consumers, goods and disputes. Although it is likely that the result will be an increase in the number of consumer disputes as the scope has been broadened. However, Section 37 of the Act takes care of redressals by way of alternate dispute resolution practices, such as mediation. Chapter V also seeks to establish a Consumer Mediation Cell for speedy disposition of justice. It is further likely to lead to an increase in the spirit of consumerism in businesses and commercial transactions. This will in turn lead to the vendors being beware by improving their services, the quality of goods and by avoiding fraudulent practices. Therefore, we see a significant departure from the concept of caveat emptor to caveat venditor by virtue of the newly enforced law.
Sarah Ayreen Mir is a penultimate year law student at Christ University.