On July 20th, 2020, the new Consumer Protection Act, 2019 came into force in India, replacing the previous enactment of 1986. The new Act overhauls the administration and settlement of consumer disputes in India. It provides for strict penalties, including jail terms for adulteration and for misleading advertisements. More importantly, it now prescribes rules for the sale of goods through e-commerce. The consumer is now truly the king!

Here are some of the highlights:

  • An aggrieved consumer can file complaints about a defect in goods or deficiency in services from where she lives, instead of the place of business or residence of the seller or service provider. The new law provides for e-filing of consumer complaint as well.
  • No fees are required to be paid if the claim is within Rupees 5 lakhs (approximately 3500 USD).
  • A consumer can conduct her own case via video conferencing. Engaging a lawyer is optional.
  • A concept of product liability has been introduced by the new law, thereby allowing aggrieved consumers to claim significant compensation as a relief due to the negligence of the manufacturer or service provider.
  • A group of aggrieved consumers can join hands and file a class action suit (like in the US) to reduce costs and improve chances of redressal or settlement.
  • Producers of spurious goods may be punished with imprisonment.
  • Misleading advertisements may be punished with imprisonment. Celebrities endorsing a product may not be punished but can be barred from endorsing if the advertisement is misleading.
  • E-commerce is now tightly regulated, and e-commerce companies are now expected to disclose all relevant product information, including country of origin, and respond to the grievance of consumers withing prescribed timelines.
  • Settlement of consumer disputes through mediation i.e. with the help of a neutral intermediary outside the consumer court is encouraged under the new law, thus saving time and resources of disputing parties which would otherwise have been spent on dispute resolution through a formal mechanism.
  • Consumers now have several protected rights, including the right to safety, information, choice, redressal as well as right to be heard, to be educated as a consumer, and to a mediated settlement.

Corporates entities that cater to consumers will have to exercise greater care and caution in terms of quality, quantity, and product safety. The boards of corporates that manufacture or trade consumer goods must create a Consumer Affairs Committee to periodically review consumer complaints and address the need to proactively offer mediated settlements by holding online mediation and save themselves the expenses of defending a matter in Consumer Courts, in some remote part of India besides incurring the collateral damage to reputation.