Definitions and new aspects of Consumer Protection Act 2019

In the 1986 Act, the definition of a consumer was only limited to buying goods or services and did not specifically include e-commerce transactions. However, this lacuna has been addressed by the New 2019 Act. Under the Consumer Protection Act 2019, a consumer is defined as a person who “buys any goods” and hires or avails of any service” for consideration but does not include a person who obtains goods for resale or goods or services for commercial purposes. Further, the 2019 Act seeks to widen the scope of this definition. Thus, a Consumer will now mean any person who “buys any goods” and “hires any service” which shall include both online and offline transactions through electronic means, teleshopping, direct selling, or multi-level marketing. E-commerce has been specifically mentioned and is defined as buying and selling of goods/services/digital products, online. Further, the Central government is empowered to take appropriate measures (framing of rules, regulations, guidelines, etc.,) to prevent unfair trade practices in e-commerce and direct selling.

The CPA 2019 (New Act) includes the definition of “food” as defined under the Food and Standards Act, 2006[5]. This has replaced the definition of “goods” under the 1986 Act. This would help in bringing the number of food delivery platforms to come under the ambit of consumer protection.

To bring the telecom services under the CPA 2019 (New Act), “telecom” has been added to the definition of “services” [6]. However, it would have been much better if such inclusion was added as “telecommunication service” as defined by the Telecom Regulatory Authority of India Act (TRA), rather than “telecom”. Hence, there is still lacunae as to what exactly “telecom” would mean and include.

“Product Manufacturer”[7] means a person who— (i) makes any product or parts thereof, (ii) assembles parts thereof made by others, or (iii) puts or causes to be put his own mark on any products made by any other person; or (iv) makes a product and sells, distributes, leases installs, prepares, packages, labels, markets, repairs, maintains such product or is otherwise involved in placing such product for commercial purpose; or (v) designs, produces, fabricates, constructs or re-manufactures any product before its sale; or (vi) being a product seller of a product, is also a manufacturer of such product.

“Product Seller”[8], in relation to a product, means a person who, in the course of business, imports, sells, distributes, leases, installs, prepares, packages, labels, markets, repairs, maintains, or otherwise is involved in placing such product for commercial purpose and includes— (i) a manufacturer who is also a product seller; or (ii) a service provider, but does not include— (a) a seller of immovable property, unless such person is engaged in the sale of constructed house or in the construction of homes or flats; (b) a provider of professional services in any transaction in which, the sale or use of a product is only incidental thereto, but furnishing of opinion, skill or services being the essence of such transaction; (c) a person who— (I) acts only in a financial capacity with respect to the sale of the product; (II) is not a manufacturer, wholesaler, distributor, retailer, direct seller or an electronic service provider; (III) leases a product, without having a reasonable opportunity to inspect and discover defects in the product, under a lease arrangement in which the selection, possession, maintenance, and operation of the product are controlled by a person other than the lessor.

“Product Service Provider”[9], in relation to a product, means a person who provides any service in respect of such product.

Consumer Rights [10]: Under the 1986 Act, the rights of the consumers were only found as a passing reference under the objects of the Consumer Protection Councils. However, the New Act has defined six specific consumer rights including the right to:

Be protected against marketing of goods and services which are hazardous to life and property;

Be informed of the quality, quantity, potency, purity, standard, and price of goods or services;

Be assured of access to a variety of goods or services at competitive prices;

Be heard and assured that the consumer’s interest will receive due consideration at appropriate fora;

Seek redressal against unfair or restrictive trade practices;

ADVERTISEMENT AND MISLEADING ADVERTISEMENT:

Under the CPA 2019 “advertisement[11]” shall mean any audio or visual publicity, representation, endorsement, or pronouncement made using light, sound, smoke, gas, print, electronic media, internet, or website and includes any notice, circular, label, wrapper, invoice or such other documents.

The CPA 2019 introduces, for the first time, a definition of misleading advertisement. Under the New Act “misleading advertisement[12]” to any product or service, means an advertisement, which— (i) falsely describes such product or service; or (ii) gives a false guarantee to, or is likely to mislead the consumers as to nature, substance, quantity or quality of such product or service; or (iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof would constitute an unfair trade practice; or (iv) deliberately conceals important information”.

PROACTIVE STEPS TO CURB MISLEADING ADVERTISEMENTS:

The Consumer Protection Act, of 2019, under which the new guidelines have been issued, already defines and prohibits misleading ads, but the guidelines get into the specifics by regulating surrogate, free claims, and bait advertisements and ads targeting children. The guidelines also lay out dos and don’ts for advertisers and endorsers, as well as what disclaimers in ads should contain.

In a bid to curb misleading ads, the Central Consumer Protection Authority (CCPA) on June 9 notified Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022.

“The guidelines seek to ensure that consumers are not being fooled with unsubstantiated claims, exaggerated promises, misinformation, and false claims. Such advertisements violate various rights of consumers such as the right to be informed, right to choose and right to be safeguarded against potentially unsafe products and services,” CCPA stated in an accompanying press release. Under the New Act (CPA 2019), the Central Consumer Protection Authority (“Central Authority”), has the power to issue directions and penalties against false and misleading advertisements [13]. The Central Authority is satisfied after the investigation that any advertisement is false or misleading and is prejudicial to the interest of any consumer or is in contravention of consumer rights, it may, by order, issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such advertisement or to modify the same in such manner and within such time as may be specified in that order.

If a misleading advertisement is found to be prejudicial to the interest of consumers, then the Central Authority may impose a penalty of up to Rs. 10,00,000 (Rupees Ten Lakhs) on a manufacturer. In case of a subsequent offence, the fine may extend to Rs. 50,00,000/- (Rupees Fifty Lakhs only)[14].

Separately, the CPA 2019 (New Act) has also made misleading advertisements a criminal offence to publish false or misleading advertisements for manufacturers and service providers. If found guilty, the offenders could be sentenced to imprisonment for up to 2 (two) years. In the case of a subsequent offence, the term of imprisonment may extend to five years [15].

If a misleading advertisement is found to be prejudicial to the interest of consumers, then the Central Authority may impose a penalty of up to Rs. 10,00,000/- (Rupees Ten Lakhs only) on the endorser. The Central Authority can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to 1 (one) year. For every subsequent offence, the fine may extend to Rs. 50,00,000/- (Rupees Fifty Lakhs only), and the period of prohibition may extend to 3 (three) years[16]. However, no endorser shall be liable to a penalty if he has exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by him [17].

No person shall be liable to such penalty if he proves that he had published or arranged for the publication of such advertisement in the ordinary course of his business, however, no such defence shall be available to such person if he had previous knowledge of the order passed by the Central Authority for withdrawal or modification of such advertisement [18].

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