The formal business centres, shops, malls, retailers at the local level are limited to catering the necessities of the population within a confined geographical location compared to e-commerce websites that cater to a world with no barriers. With the advancement in technology, our way of life has changed drastically. With the growth of e-portals, the geographical distance has been reduced to a large extent, a variety of commodities and services can be procured at ease with the click of a button. This has an obvious impact on local businesses. The 21st century has witnessed a boom in the e-commerce business. This article aims to give a bird’s eye view on consumer protection in view of the digital market.
Legal framework governing e-commerce websites
India enacted the Information Technology Act, 2000 (IT Act) to give effect to Model Law on e-commerce (MLE) which was adopted by the United Nations Commission on International Trade and Law (UNCITRAL) India is a signatory to MLE. The IT Act provides a regulatory framework for online businesses and prescribes punishment for violations; the mechanism of authentication of digital records, digital signature, procedures to be followed by certifying authorities. The procedure of adjudication for the offence of data theft and appellate authorities has been specified. It further defines cybercrime and lays down the punishment. However, the IT Act does not have any provisions to safeguard the interest of the consumer who may have grievances of products or services purchased online.
The Consumer Protection Act, 1986 (CP Act, 1986) was the only recourse that a buyer/consumer could take for any kind of grievances of online transactions in absence of specific law governing the transactions made on e-commerce websites and the CP Act 1986 was archaic and old. With the advent of e-commerce websites and growth in the consumer making online transactions, there was a need felt to amend the CP Act 1986. Recognising the lacunae in the CP Act 1986 which did not cater to the needs of the digital world, the Central Government replaced the CP Act 1986 with the Consumer Protection Act 2019 (CP Act,2019), it received the presidential nod on 09.08.2019. However, the draft rules as per the Ministry of Consumer Affairs, Food & Public Distribution (Department of Consumer Affairs) are yet to be notified. The Central Government had set 20th July 2020 as the date for any provision of the CP Act 2019 to come into force.
Key features of the Consumer Protection Act 2019
Expanded the definition of consumer
The scope of the term consumer has been defined broadly by including even consumers who make online purchases. The CP Act 2019 defines the term consumer as a person who buys goods or services for a consideration which is paid or partly paid or promised to be paid, however, it does not include the goods and services bought for resale or any commercial purpose. The CP Act 2019 stipulates very clearly in the explanation that the terms “buy any goods” or “hires or avail any services” would include even online transactions made by electronic means or by telemarketing and teleshopping. A person placing an order based on a teleshopping sale and is unsatisfied with the product such a consumer can file a complaint in the consumer forum.
Wide scope of the term “deficiency”
The CP Act 2019 has enlarged the scope of the term “deficiency” by including an act of negligence, of omission or commission which results in loss or injury to the consumer, it further specifies that an act of withholding of relevant information from the consumer would amount to deficiency. This expansion of the definition is more relevant when many consumers are online shoppers, hiding any relevant information by the manufacturer or the seller or by the e-commerce website would impact the consumer’s decision. For instance, if a consumer purchases an electronic gadget online and the e-commerce portal fails to inform the consumer about the country of origin of the said electronic product. The information pertaining to the country of origin is crucial information for the consumer and if the information is suppressed and is hidden by the e-portal, it is possible for the consumer to raise grievances for the deficiency by withholding the crucial information pertaining to the country of origin.
The CP Act 2019 goes on to define the term “e-commerce” as buying or selling of goods or services including digital products over a digital or electronic network. The concept of e-commerce websites is introduced in the CP Act, 2019 by using the term “electronic service provider”, by defining it as a person who provides technologies or processes to enable a product seller to engage in advertising or selling goods or services to a consumer and includes any online marketplace or an online auction site. With the recognition of the concept of online consumers, it is a huge relief for those who make digital transactions to have a forum to raise their grievances in case of any deficiency in service or products.
Section 2(18) of the CP Act 2019 defines the term endorsement as to include:
- The message, verbal statement, demonstration,
- Depiction of the name, signature, likeness or other personally identifiable characteristics of an individual,
- Depiction of the name of the seal of an organisation or institution which makes the consumer feel that it reflects the view, belief, the experience of the person making such endorsement.
This provision could be used against websites promoting the sales of products or services by false and misleading advertisement. Companies making false claims of slim figures within a short period or making clothes white like snow, turning skin colour from dark to fair; these kinds of unrealistic claims made by companies should be watchful. Many television commercials, newspaper advertisements, advertisements on social media have celebrities endorsing the products or services, these celebrities will also now have to be extra careful before recommending. The e-commerce sites have to be careful while listing and endorsing their websites as they could also be made a party to the complaint.
Introduces product liability
With the introduction of the theory of “Product Liability,” the consumer can approach the product manufacturer, product service provider and also against the product seller which may include e-commerce websites for their grievances. Product liability provides avenues for making claims against any defective product. This concept of product liability is extremely essential for online consumers as the consumers are able to only view the product, the actual product may vary from the online version. A variation could be in the form of the texture, colour, size or the other features of the products. For instance, if a consumer has placed orders for a chandelier considering it to be big as shown online, however, on receipt of the product the chandelier is too small than what was depicted on the website and the measurements were also incorrectly provided, then the concept of product liability comes into play as the consumer can bring claims against the manufacturer as well as the e-commerce website for providing the defective product.
Addresses misleading advertisement
Recognising the issue of advertisements making bogus and fictitious claims and duping innocent consumer, the notion of “misleading advertisement” has been defined in the CP Act, 2019 as advertisements in relation to product or service gives a false description, false guarantee to nature, substance, quality or quantity, and conveys an express or implied representation which, if made by the manufacturer or seller or service provider, would constitute an unfair trade practice or deliberately conceals important information. The Act prescribes penalties for false and misleading advertisements. With actions initiated against such advertisements, the manufacturers and producers of products may have to be meticulous about the contents and claims made in their advertisements.
Central Consumer Protection Authority (CCPA)
An additional authority has been added to the CP Act 2019 by the initiation of Central Consumer Protection Authority (CCPA) created to act as a regulatory authority, it shall be responsible for the protection of rights of the consumer as a class. The CCPA is to be constituted by the Central Government. This authority is empowered to regulate matters relating to violation prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers as a class. An appeal to an order passed by the CCPA on this issue can be filed under the National Commission within a period of 30 days from the date of receipt of such order. The CCPA shall have an investigation wing headed by a Director-General for the purpose of conducting inquiry or investigation under this Act as may be directed by the CCPA. The CCPA could use its powers and direct all the e-commerce websites to display the country of origin on all products listed on their portals. The CCPA could also ask all the e-commerce portals to put online the grievance mechanism that the consumers can access at the website and display name and designation of the grievances officer as well contact number if websites are not following it already.
Alternate dispute mechanism
The CP Act, 2019 has introduced “Mediation” as an alternative dispute resolution with the intention to reduce the delay in the disputes and provide the parties with a chance to discuss and negotiate without having to approach the Commissions. The Act also lists the type of cases that may not go for mediation, it stipulates that when the issues involved will affect a large number of people, matters relating to medical negligence leading to death or grievous injury. The growing number of online consumers could impact the rising number of complaints. The forum of mediation would save the time, cost and energy for the consumers, using mediation for settling their grievances would be a time saver for all kinds of consumers.
Unlike the previous CP Act 1986, the amended Act categorically states that the complaint can now also be instituted in a district commission within the local limits of whose jurisdiction the complainant resides or personally works for gain, apart from filing in the jurisdiction where the other side actually or voluntarily resides, or carries on business, or has a branch office or personally works for gain. This feature is an added advantage for online consumers as they can file complaints at a place wherever they reside or work or carry on business. This concept definitely is a consumer-friendly feature and is advantageous to all kinds of consumers.
The pecuniary jurisdictions of the Commissions at the District, State and National Commission has been enhanced. The District Commission is empowered to look into complaints of deficiency of products or services for which consideration paid by the consumer values up to 1 crore. The State Commission can take up complaints for which consideration is more than one crore and does not exceed 10 crores. For disputes which involve services or products value beyond 10 crores may approach the National Commission.
Other changes in the Consumer Protection Act 2019
- If anyone who is dissatisfied with the order of the District Commission can approach the State Consumer Commission, the limitation period for filing the appeal is increased from 30 days to 45 days.
- Section 49(2) and 59(2) of the CP Act 2019 gives power to the State Commission and the National Commission respectively to declare any terms of contract which is unfair to any consumers.
- A second appeal to the National Commission (NCDRC) cam is still exercised.
- Section 71 of the CP Act 2019 confers powers of execution as provided under order XXI, the Civil Procedure Code,1908 with such limitations as provided in the Section.
Impact of COVID-19
The outbreak of COVID-19 (Coronavirus Disease 2019) followed by the unprecedented closure of the entire nation for a period of 3 months in forms of lockdown made consumers opt for e-commerce platforms. With the social distancing norms due to COVID-19, many consumers opt to shop online. The e-commerce website offers a wide range of products, comparative prices can be easily checked at a click and also one can review the experiences of others who have used the products, find for better alternatives before selecting the product or service etc.
However, it was realised that when the products are purchased online there was a lack of information by the web-portals about the country of origin. For a purchase made physically, the details of the products can be checked in its entirety; however, when one depends on the websites such information is not available. The online consumers were enraged that vital information about the country of origin was suppressed by the e-portals. Recognising the importance of display of such information as necessary and to give impetus to the Atma Nirbhar Bharat (Self-reliant India) policy of the Central Government for encouraging the consumer to buy products made in India, the Government Procurement Portal made it a mandatory requirement to display country of origin on all e-commerce platforms. Writ Petitions were filed in various High Courts and Supreme Court seeking directions for a display of country of origin by web portals. Many web portals such as Flipkart have started displaying the country of origin on all the products and Amazon India has asked the seller to provide information on the country of origin for the products listing. If any e-commerce websites continue to suppress country of origin for products sold online, can the consumer file complaints with the respective consumer forum on the ground of concealment or suppression of essential information.
The CP Act 2019 has been crafted with the view to cater all varieties of consumer be it online, teleshopping or offline; suitable measures have been built in to reduce misleading advertisement. The Act caters to the needs of the online consumers and provides a speedier dispute mechanism for grievance redressal and also provides an innovative method of resolving disputes by way of mediation. Celebrities, websites, e-commerce sectors will have to be very careful and extra cautious before endorsing any products or services. Territorial and monetary Jurisdiction has been clarified. It’s time we wait and watch the implementation of the robust CP Act 2019 and how it will turn out to be in actual practice.
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