Chapter 15: Consumer Protection

A sale looks complete the moment the money is handed over and the packet is carried out of the shop. In practice a great deal about that packet remains unknown to the person who has just paid for it — what it contains, how it was made, how long it will last, and what happens if it fails. The seller holds all of that information; the buyer holds only the price tag and the claim printed on the label. Trade cannot run for long on a bargain that one side understands and the other does not. Consumer protection is the machinery that commerce and the law have built to correct that imbalance. It works at three levels at once: business restraining itself through codes of conduct, buyers organising and informing themselves, and the State conferring enforceable rights and setting up commissions that hear complaints cheaply and quickly. This chapter examines why protection is needed, who counts as a consumer in law, the rights and responsibilities that attach to that status, the methods of protection in use, the redressal machinery available to an aggrieved buyer, and the control of misleading advertisements.

Figure

Fig. 15.0-1 — A Shopper Reading The Label On A Packaged Product Photograph of a customer in a retail store holding a packaged food item and reading the printed label, price and date of manufacture.

15.1 Why Consumers Need Protection

A sale is an exchange between two parties who are assumed to understand what they are agreeing to. The older rule of trade, caveat emptor, put the entire burden of inspection on the buyer: whatever the buyer failed to notice before paying was the buyer’s own loss. That rule was workable when goods were simple, unpackaged and bought face to face from a seller who lived in the same locality and depended on the same customers week after week.

It stopped being workable once goods began to reach the buyer sealed, branded, chemically processed and manufactured hundreds of kilometres away. The person paying can no longer test what is inside the packet, trace who made it, or judge whether the claim on the label is true. The seller knows all of this and the buyer knows almost none of it, and that gap is what the whole apparatus of consumer protection exists to close.

Consumer protection refers to the measures taken by business, by consumers themselves and by the State to safeguard buyers of goods and services against defective products, deficient services and malpractices in trade.

Figure

Fig. 15.1-1 — Loose Goods Being Weighed At A Neighbourhood Store Photograph of a shopkeeper weighing loose grain on a digital scale while a customer watches the reading.

15.1.1 The Consumer’s Case For Protection

The buyer stands on the weaker side of almost every retail transaction, and the weakness is structural rather than personal. A single purchaser faces an organised seller, and the disadvantage arises afresh in every one of the following ways.

Business Example

Jago Grahak Jago The Government of India has run the Jago Grahak Jago campaign through the Department of Consumer Affairs, using radio, television and print to tell buyers what their rights are and where a complaint may be taken. The campaign exists because the law is of little use to a consumer who does not know it exists.

Ignorance of rights — a buyer who does not know that a defective product must be replaced, or that a commission will hear the complaint without a fee for small claims, will simply absorb the loss. Rights that are unknown are not exercised.
Unorganised buyers — sellers of a product are few and organised into trade bodies, while its buyers are scattered and unconnected. A trader can withstand the displeasure of one customer easily; a customer acting alone has almost no bargaining strength against the trader.
Unequal information — the manufacturer knows the composition, shelf life and failure rate of the product, and chooses how much of that to disclose. The buyer works from the label and the advertisement, both of which the seller has written.
Complexity of goods — electronic appliances, processed foods, medicines and financial services cannot be judged by inspection at the counter. Because the buyer cannot verify quality, responsibility for safety has to be fixed on the producer instead.
Malpractices in trade — adulteration, underweighing, overcharging above the printed price, spurious goods and misleading advertisement are all forms of loss the buyer discovers only after payment, if at all.
Purchases made at a distance — goods ordered online are paid for before they are seen, and the buyer often does not know who the actual seller is or where a grievance may be taken. The ordinary safeguard of examining goods before buying is absent.

15.1.2 The Business’s Case For Protection

Consumer protection is usually presented as a restraint imposed on business from outside. It is also in the interest of the firm itself, for reasons that operate whether or not the law compels compliance.

Long-term interest — a business survives on repeat purchase, and repeat purchase depends on the customer being satisfied the first time. A firm that gains on one sale by cheating loses the stream of sales that would have followed.
Use of society’s resources — a firm draws its land, labour, capital and raw material from society. Having taken those resources, it is under an obligation to return goods and services that serve the public rather than harm it.
Duty towards stakeholders — owners, employees, suppliers, government and customers all have a stake in the firm. Customers are the group from which the firm’s entire revenue comes, which makes neglecting them the least defensible of all.
Avoiding intervention — where firms do not restrain themselves, the State steps in with licensing, inspection and penalties. Voluntary compliance is cheaper for the firm than regulation imposed after a scandal.
Pressure of competition — since the opening of the Indian economy, domestic firms have competed against imported and multinational products. Quality and fair dealing have become conditions of survival rather than gestures of goodwill.
Moral obligation — a business is run by people who are members of the same society as their customers. Profit earned by selling an unsafe or adulterated product cannot be justified merely because it was legally undetected.

15.2 Who Is A Consumer

The machinery of consumer protection is not available to everyone who buys something. It is meant for the person at the end of the chain of trade — the one who takes the goods out of the market and uses them, and who has no way of shifting the loss on to anybody else. A wholesaler who buys stock to sell again, or a factory that buys raw material to process, deals on roughly equal terms with its supplier, keeps its own lawyers and can sue on the contract in an ordinary civil court.

Because the Consumer Protection Act, 2019 gives quick and inexpensive relief, it had to state precisely who may use it. Every question in this chapter — which right applies, which commission has jurisdiction, what relief may be ordered — begins with whether the person before the commission is a consumer at all.

15.2.1 Meaning Of Consumer

A person qualifies as a consumer on four conditions, and all of them have to be satisfied together.

There is a purchase of goods or a hiring of services — the Act covers both. A person who buys a refrigerator and a person who hires a courier, a bank, an insurer, a hospital or an airline are equally within it.
There is a consideration — the price may have been paid, merely promised, partly paid and partly promised, or arranged under a system of deferred payment such as instalments. What matters is that something was agreed to be given in return, because the Act protects a bargain and not a gift.
The user need not be the buyer — any person using the goods, or benefiting from the service, with the approval of the buyer or the hirer is also a consumer. Without this, a machine bought by one member of a household and used by another would leave the injured user with no remedy.
The mode of the transaction is immaterial — goods bought across a counter, ordered online, obtained through teleshopping, direct selling or multi-level marketing are all covered, because the exposure of the buyer is the same or greater when the seller is not physically present.

Definition

Consumer A consumer is a person who buys goods or hires or avails services for a consideration paid, promised, partly paid or deferred, and includes any user of such goods or beneficiary of such services with the approval of the buyer or hirer. It does not include a person who obtains them for resale or for any commercial purpose.

15.2.2 Who Is Not A Consumer

Three categories of buyer fall outside the Act, and in each the reason is that the protective machinery is not needed or the bargain is not of the kind the Act was written for.

A buyer for resale — a retailer stocking goods to sell again is a trader dealing with a supplier, not a final user, and the two are matched in commercial strength.
A buyer for a commercial purpose — goods or services obtained to run a business or to produce further goods for profit are outside the Act, since the loss is a business loss recoverable under the ordinary law of contract.
A person who pays nothing — where goods or services are obtained free of any consideration, or where the goods are used without the approval of the buyer, there is no protected transaction at all.

The Self-Employment Exception

The exclusion of commercial purchases would have shut out the very people the Act was meant to reach — the tailor with one machine, the driver with one vehicle, the operator of a single small shop. The Act therefore provides that goods bought and used exclusively for earning a livelihood by means of self-employment are not treated as bought for a commercial purpose. The test is not the size of the purchase but whether the buyer personally works the goods to earn a living, or has turned them into an enterprise run by employed hands.

Table

Case Snippet

Case 15.1 — One Machine, Two Purposes Kamal buys a photocopying machine, keeps it in a small booth and operates it himself, and the copying charges he collects are his only earnings. Ranvir buys three identical machines, employs operators to run them and sells copies at four outlets he owns. Both machines develop the same fault within a month of purchase. Q. State which of the two buyers may complain before a Consumer Commission, and give the reason for the difference.

15.2.3 Who May File And Against Whom

Being a consumer and being able to complain are not the same thing. A consumer who has been injured may be unable to appear, may have died, or may be one of thousands affected by the same defect, and a complaint machinery restricted to the buyer alone would fail in exactly those cases. The Act therefore allows a complaint to be filed by any of the following.

The consumer himself.
A voluntary consumer association registered under any law for the time being in force, whether or not the affected consumer is its member.
The Central Government, a State Government or a Union Territory administration.
The Central Consumer Protection Authority.
One or more consumers on behalf of numerous consumers having the same interest, which allows a single complaint to cover a defect affecting an entire batch.
The legal heir or legal representative, where the consumer has died.
The parent or legal guardian, where the consumer is a minor.

A complaint may be filed against the trader or seller who sold the goods, the manufacturer who made them, the product seller in the chain of distribution, the service provider whose service was deficient, or the electronic service provider through whose platform the sale was made. The grounds are equally specific: an unfair or restrictive trade practice, a defect in the goods, a deficiency in the service, a price charged in excess of the price fixed by law or displayed or agreed, hazardous goods offered for sale, or harm caused by a defective product.

Definition

Complaint A complaint is an allegation made in writing by a complainant that an unfair or restrictive trade practice has been adopted, that goods bought suffer from a defect, that services hired suffer from a deficiency, that a price in excess of the price fixed, displayed or agreed has been charged, or that hazardous goods are being offered.

15.3 Rights Of Consumers

Saying that a buyer deserves fair treatment achieves nothing by itself. What makes the difference is that the Consumer Protection Act, 2019 converts those expectations into six specific rights, each of which places a matching obligation on the seller and can be enforced before a commission.

The six do not sit side by side as an unordered list. They follow the sequence in which a purchase actually unfolds: the goods must first be safe to use, the buyer must then be told what they are, must be free to pick among alternatives, must be able to object when the purchase goes wrong, must be able to obtain relief when the objection is ignored, and must know all of this in the first place. The set is shown together in FC 15.1.

Flowchart

FC 15.1 — The Six Rights Of Consumers Rights of consumers → Right to safety, Right to be informed, Right to choose, Right to be heard, Right to seek redressal, Right to consumer education

Right to safety — the right to be protected against goods and services that are hazardous to life, health or property. It is placed first because no other right is of any use to a buyer who has already been injured. A pressure cooker with a faulty valve, an appliance with defective wiring or a food product carrying a harmful additive causes a loss that no refund can undo, so the law fixes responsibility for safety on the producer, who alone can control it.
Right to be informed — the right to know the quality, quantity, potency, purity, standard, ingredients, date of manufacture and price of what is being bought. The buyer cannot test a sealed product at the counter, so the seller is required to disclose on the label and package what the buyer cannot discover unaided. This right is what makes labelling rules, expiry dates and printed maximum retail prices compulsory rather than optional.
Right to choose — the right of access to a variety of goods and services at competitive prices, and to select among them without pressure. High-pressure selling, refusal to show a displayed article, and tying an unwanted item to a wanted one all defeat this right. It also explains why competition matters to consumer protection: where a single supplier dominates, the buyer’s only protection is the assurance of fair quality at a fair price.
Right to be heard — the right to have a grievance received and given due consideration, and to have consumer interests represented in forums that frame policy. A complaint that nobody is obliged to listen to is no better than no complaint at all. The right is the reason firms maintain customer service and grievance cells, and the reason consumer representatives sit on bodies concerned with standards and prices.
Right to seek redressal — the right to obtain relief against defective goods, deficient services and unfair trade practices. Relief may take the form of repair of the defect, replacement of the goods, refund of the price, or compensation for the loss or injury suffered. Without an enforceable remedy at the end of the chain, the earlier four rights would be statements of principle only.
Right to consumer education — the right to acquire the knowledge and skill needed to remain an informed buyer throughout life. It is listed last but operates first, since a buyer who does not know the other five rights will not exercise any of them. Ignorance is heaviest among rural and first-time purchasers, which is why the State, consumer associations and the press all carry a share of this work.

Rights Turned Into Marks On A Package

The right to safety and the right to be informed are enforced in everyday trade largely through certification marks. A mark tells the buyer that an independent agency, and not the seller, has verified the product against a published standard, which is precisely the verification the buyer cannot carry out.

Business Example

Marks A Buyer Can Check The ISI mark and the Hallmark are issued under the Bureau of Indian Standards, AGMARK applies to graded agricultural produce, and packaged food sold in India carries the licence number of the Food Safety and Standards Authority of India. Each mark converts an unverifiable claim on a package into one the buyer can rely on.

Figure

Fig. 15.3-1 — Certification Marks On Consumer Packaging Photograph of the printed panel of a packaged product showing certification marks alongside the maximum retail price, net weight and date of manufacture.

Definition

Unfair Trade Practice An unfair trade practice is a trade practice which, for the purpose of promoting the sale, use or supply of any goods or services, adopts a deceptive or unfair method, such as a false representation about quality or standard, a misleading advertisement, refusal to issue a bill or cash memo, or refusal to take back defective goods within the stipulated period.

Case Snippet

Case 15.2 — The Label Turned Away Meher asks a shopkeeper for the list of ingredients and the date of manufacture of a packaged snack. The shopkeeper turns the pack over, tells her that the brand is well known and that the details are of no consequence, and presses her to take a larger pack instead of the one she has picked up. Q. Name the two consumer rights affected here and state what each of them requires the shopkeeper to do.

15.4 Responsibilities Of Consumers

Rights conferred by a statute do not enforce themselves. A commission can order a refund only if somebody files a complaint, and it can order it only against a seller whose dealing with this particular buyer can be proved. Almost every fact a commission needs — what was bought, from whom, at what price, on what date, with what assurance — exists only because the buyer preserved it at the time of the purchase.

Consumer responsibilities are therefore not moral advice added to the end of the chapter. They are the conditions under which the six rights can actually be used, and each of them corresponds to a specific way in which a claim otherwise fails.

Being aware of the rights — a buyer who does not know that defective goods must be replaced, or that a commission hears small claims cheaply, will treat the loss as final. The right to redressal is worth nothing to a person unaware of it.
Asking for full information — the seller is obliged to disclose quality, quantity, price and composition, but in practice discloses what is asked for. Enquiring about ingredients, warranty terms and after-sales service before paying is what turns the right to be informed into information actually received.
Looking for quality certification — choosing goods that carry the ISI mark, AGMARK, the Hallmark or a food licence number transfers the task of testing to an independent agency. It is the only practical check available on adulteration and spurious goods at the point of sale.
Insisting on a cash memo — the bill is the evidence that the transaction took place at all. Where a seller denies the sale, or claims the goods came from elsewhere, a complaint without a bill usually collapses on that single point.
Reading labels carefully — net weight, maximum retail price, date of manufacture, date of expiry and directions for use are printed precisely so that the buyer may compare and verify. Overcharging above the printed price and the sale of expired stock are both detected at this stage or not at all.
Treating advertisements with caution — an advertisement is written by the seller to promote a sale, not to describe the product neutrally. Comparing competing products and asking for the claim to be substantiated is the buyer’s own defence against a misleading advertisement.
Asserting the claim for a fair deal — where goods are defective, the first approach is to the seller, and it should be firm rather than apologetic. Many grievances are settled at the counter, and a buyer who accepts a refusal without protest converts a valid claim into an accepted loss.
Filing complaints for genuine grievances — a consumer who ignores a small loss because pursuing it seems troublesome leaves the practice profitable for the trader, and the next buyer meets the same practice. Complaints of small value matter for exactly this reason.
Dealing honestly and acting collectively — buying from legitimate sources discourages hoarding, black marketing and counterfeit trade, and joining a consumer association gives an individual grievance the weight of an organised body.

Trade Term

Cash Memo A bill issued by the seller at the time of a cash sale, stating the goods sold, the quantity, the price and the date, and serving as the buyer’s proof of purchase.

Business Example

Where A Grievance Can Be Registered First The Department of Consumer Affairs operates a National Consumer Helpline through which a buyer may register a grievance and have it taken up with the company concerned. Many disputes are settled at this stage, without the buyer having to approach a commission at all.

Rights And Responsibilities Compared

The two sets look similar in wording and are easily confused, but they differ in origin and in legal force, as set out in Table 15.2.

Table

15.5 Methods Of Consumer Protection

No single agency can protect a buyer at every stage of a transaction. A statute can punish a trader after the harm is done, but it cannot stand at the counter; a buyer can refuse to be cheated at the counter, but cannot test a sealed medicine; an association can test the medicine, but cannot compel the manufacturer to withdraw it. Protection therefore works through four agencies at once, each covering what the others cannot reach. The four are set out in FC 15.2.

Flowchart

FC 15.2 — Methods Of Consumer Protection Consumer protection → Self-regulation by business, Consumer self-help, Consumer associations and NGOs, Government measures; Self-regulation → Codes of conduct, Grievance cells, Trade association guidelines; Government measures → Legislation, Regulatory authority, Redressal machinery, Awareness and testing measures

15.5.1 Self-Regulation By Business

The first restraint on a trader is the trader’s own interest. A firm that expects to sell to the same market for years cannot afford a reputation for adulteration, short weight or evasive after-sales service, because the customers it loses do not return and the customers they speak to never arrive.

Self-regulation takes three practical forms. A firm adopts a code of conduct governing how its products are described, priced and serviced. It sets up customer service and grievance cells so that a complaint is settled internally instead of reaching a commission. And the trade association or chamber of commerce to which it belongs lays down standards binding on all its members, which prevents an honest firm from being undercut by a dishonest competitor in the same trade.

The limitation is equally clear. Self-regulation is voluntary, has no penalty behind it, and is weakest exactly where it is needed most — in unorganised trade and among firms that do not expect repeat custom.

Business Example

Codes Written By Industry Itself Apex industry bodies such as the Federation of Indian Chambers of Commerce and Industry and the Confederation of Indian Industry have framed codes of conduct to guide their member firms in dealings with customers. Compliance rests on membership and reputation rather than on any statutory penalty.

15.5.2 Consumer Self-Help

The second line of defence is the buyer. Self-help costs nothing, operates before the loss occurs rather than after it, and is the only method available at the moment of purchase.

It consists of the responsibilities examined in the previous section, applied consistently: enquiring before buying, checking certification marks, taking the bill, reading the label, refusing goods that are defective, and pursuing a genuine grievance instead of absorbing it. A trader adjusts to the buyers he faces, and a market of alert buyers leaves far less room for malpractice than one of indifferent buyers.

Its limitation is that it depends entirely on awareness, and awareness is unevenly distributed. A first-time or rural purchaser has the same rights as any other buyer and far less practical ability to use them.

15.5.3 Consumer Associations And NGOs

An individual buyer cannot have a food sample analysed in a laboratory, cannot pursue a manufacturer through successive appeals, and carries no weight in a committee that frames standards. A consumer association exists to supply exactly what the individual lacks — money, technical capacity, continuity and collective voice.

These are voluntary, non-political, non-commercial bodies formed by consumers themselves. Several have worked in India for decades, among them the Consumer Guidance Society of India in Mumbai, the Consumer Education and Research Centre in Ahmedabad, the Consumer Unity and Trust Society in Jaipur, and Voice and Common Cause in New Delhi. The Consumer Coordination Council functions as an apex body for consumer organisations in the country.

Their work falls into the following heads.

Educating buyers — organising talks, seminars, workshops and exhibitions on spurious and adulterated goods, so that awareness reaches people who would not otherwise seek it out.
Testing and publishing — having products tested in authorised laboratories and publishing the results in journals and newsletters, which is the only independent check most buyers will ever see.
Assisting complainants — providing legal advice and aid, running counselling and guidance centres, and filing complaints before commissions on behalf of consumers.
Acting collectively — organising protests against adulteration, underweighing and price rigging, and filing suits and writ petitions where a large number of buyers is affected by the same practice.
Representing consumers — placing the consumer’s point of view before government committees and other bodies concerned with standards, prices and policy.

Non-government organisations and the press work alongside them. Most national newspapers carry a regular consumer complaint column, which secures for an ordinary grievance the one thing a firm reacts to quickly, namely publicity.

Figure

Fig. 15.5-1 — A Consumer Awareness Exhibition Photograph of a public exhibition stall displaying posters on adulterated goods, quality marks and consumer rights, with visitors reading the panels.

15.5.4 Government And Legislative Measures

The State supplies what the other three agencies cannot: compulsion. Its measures fall under four heads.

Legislation — the Consumer Protection Act, 2019 confers enforceable rights, defines defect, deficiency and unfair trade practice, and fixes liability for defective products. Other statutes support it in specific fields such as food, drugs, weights and measures, and standards.
Regulation — the Central Consumer Protection Authority investigates violations of consumer rights, orders the recall of unsafe goods, and acts against misleading advertisements, so that a wrong affecting many buyers can be stopped without waiting for individual complaints.
Redressal machinery — the three-tier commissions established under the Act settle individual disputes cheaply and quickly, and Consumer Protection Councils at the Central, State and District levels advise on the promotion and protection of consumer rights.
Awareness and support measures — publicity through radio, television and print, the eco-mark scheme for environmentally safer products, a Consumer Welfare Fund used for consumer education and product testing facilities, and lok adalats, at which an aggrieved consumer may present a grievance directly and have it settled on the spot.

Business Example

The Eco-Mark Scheme Under the eco-mark scheme introduced by the Ministry of Environment, a producer whose product satisfies the prescribed environmental conditions may carry the eco-mark label. It works in the same way as a quality mark, telling the buyer something about the product that no amount of inspection at the counter would reveal.

15.6 The Consumer Protection Act, 2019

The Consumer Protection Act, 1986 was written for a market in which a buyer walked into a shop, examined the goods and paid a seller whose premises could be pointed at. Three decades later a large part of retail trade was being conducted through electronic platforms, tele-shopping, direct selling and multi-level marketing, in which the buyer sees a photograph rather than the goods, the seller may be in another state, and the product reaching the door may have been made by somebody the platform has never met.

The old machinery answered none of this. It had no regulator who could act against a defect affecting an entire market, no provision fixing liability on the maker of a defective product, and no way for a buyer in one town to sue a seller registered in another without travelling there. The Consumer Protection Act, 2019 replaced it in 2020 for these reasons.

The Scope Of The Act

It extends to the whole of India and applies to all goods and services, except those specifically exempted by the Central Government.
It covers every sector — private, public and cooperative — so that a public utility is answerable to its users on the same terms as a private firm.
It applies to transactions conducted offline and online alike, since the buyer’s exposure does not diminish because the sale was made through a screen.
The remedy it gives is in addition to remedies available under other laws, and is compensatory in nature rather than a substitute for criminal proceedings.
It confers the six consumer rights, establishes the Central Consumer Protection Authority, sets up the three-tier redressal machinery, and provides for Consumer Protection Councils at the Central, State and District levels as advisory bodies.
It introduces product liability, mediation and specific obligations for electronic commerce, none of which existed under the earlier Act.

The Act also treats adulterated and spurious goods as a matter for punishment and not merely compensation. On a first conviction, a competent court may suspend any licence issued to the person concerned for a period of up to two years; on a second or subsequent conviction, the licence may be cancelled permanently. The reasoning is that a seller who profits by endangering health cannot be allowed to continue in the same trade.

15.6.1 The Central Consumer Protection Authority

Complaint machinery is reactive by design. It waits for an aggrieved buyer to come forward, decides that buyer’s case, and grants that buyer relief. When a defect runs through an entire batch, or a misleading advertisement is seen by millions, individual complaints are a slow and wasteful way of dealing with what is really one wrong repeated many times.

The Central Consumer Protection Authority was created to act on that class of wrong. It regulates matters relating to violation of consumer rights, unfair trade practices and false or misleading advertisements that are prejudicial to the public interest, and it may act on a complaint or on its own motion. Its powers include the following.

To conduct inquiries and investigations into violations of consumer rights and to institute complaints or prosecution.
To order the recall of goods or the withdrawal of services that are unsafe or hazardous.
To order the discontinuance of an unfair trade practice or of a false or misleading advertisement.
To order reimbursement of the price paid to the purchasers of such goods or services.
To impose penalties on the manufacturer, the advertiser, the publisher and the endorser of a misleading advertisement.

15.6.2 Product Liability

Under the ordinary law of contract, a buyer injured by a defective product could look only to the person who sold it, because that is the only party with whom a contract existed. The manufacturer, who alone controlled how the product was designed, made and labelled, stood one step removed from the injured user.

Product liability closes that gap. The manufacturer, the product service provider and the product seller are all made liable to compensate for harm caused, and the injured consumer may proceed against the party actually responsible instead of against the shop counter. An action lies on any of the following grounds.

A manufacturing defect in the product.
A defect in the design of the product.
A deviation from the manufacturing specifications.
Failure of the product to conform to an express warranty.
Failure to contain adequate instructions for correct use, or a warning against improper use.
A service that is faulty, imperfect or deficient.

Definition

Product Liability Product liability is the responsibility of a product manufacturer, product service provider or product seller to compensate a consumer for any harm caused by a defective product manufactured or sold, or by a deficiency in the service rendered.

15.6.3 E-commerce And Mediation

An online purchase reverses the ordinary order of a transaction: the buyer pays first and inspects afterwards, and often cannot tell which of several parties on the platform is the actual seller. The rules notified under the Act therefore require an electronic commerce entity to disclose, before the order is placed, the particulars a buyer would otherwise have obtained by handling the goods and speaking to the shopkeeper.

Details of return, refund, exchange, warranty and guarantee, delivery and shipment, and the modes of payment accepted.
The security of payment methods, charge-back options and the country of origin of the goods.
The grievance redressal mechanism, so that a complaint has a stated address to go to.
A prohibition on refusing to take back goods, withdraw services or refund the price where the goods or services are defective, deficient, delivered late, or do not match the description on the platform.
A prohibition on manipulating the price of goods or services to obtain unreasonable profit.

These rules are mandatory and not advisory, which is what distinguishes them from a platform’s own return policy.

Business Example

Country Of Origin On A Listing An online listing in India is required to state the country of origin of the goods offered. The particular has no bearing on how the product works, but it is one of the things a buyer would have read off the carton in a shop and cannot read off a photograph.

Settlement Through Mediation

Litigation is slow even when it is cheap, and many consumer disputes turn on a fact neither side seriously denies. The Act therefore provides for mediation. Where a commission finds that there are elements of a settlement acceptable to both sides, it may refer the complaint to mediation with the written consent of the parties. The mediation is conducted in mediation cells established under the aegis of the commissions, and there is no appeal against a settlement arrived at in this manner, since the parties have agreed to its terms themselves.

15.7 Consumer Dispute Redressal Machinery

A right without a forum is an argument. Ordinary civil courts were always open to a buyer with a defective purchase, but a suit there is slow, needs a lawyer, costs a court fee and can be appealed for years — which is a rational course for a dispute over a consignment and an absurd one for a dispute over a mixer grinder. The value of most consumer claims is small; the cost of the ordinary remedy is not.

The Consumer Protection Act, 2019 therefore creates a separate machinery of three tiers: the District Consumer Disputes Redressal Commission at the district level, the State Commission at the state level, and the National Commission for the country as a whole. The tiers are not stages a complaint must climb. A complaint begins at whichever tier the value of the transaction places it in, and moves upward only on appeal.

Figure

Fig. 15.7-1 — A Consumer Commission In Session Photograph of a consumer commission hearing room with the bench seated and a complainant presenting papers from the floor.

Where And When A Complaint Is Filed

Under the earlier Act a complaint had to be filed where the opposite party carried on business, which meant that a buyer in a small town could be required to travel to the city where a company was registered — a cost that quietly defeated most small claims. The 2019 Act allows the complaint to be filed where the complainant resides or personally works for gain. A complaint may be filed electronically, and hearings may be conducted through video-conferencing, so that distance ceases to decide whether a claim is worth pursuing.

The complaint must be filed within two years from the date on which the cause of action arose. There is no fee for filing where the value of the claim is small, and a complainant may appear in person without engaging a lawyer.

Business Example

Filing Without Travelling Consumer complaints in India can be filed online through an electronic filing portal maintained for the consumer commissions, with documents uploaded and the fee paid digitally. For a buyer disputing the price of a small appliance, the saving in travel and time is often larger than the claim itself.

15.7.1 District Commission

A District Commission is established by the State Government in each district. It consists of a President and not less than two members, the number being as prescribed in consultation with the Central Government.

It entertains complaints where the value of the goods or services paid as consideration does not exceed ₹50 lakh. This is the tier that handles the overwhelming majority of consumer disputes, and the whole design of the Act — low cost, local filing, no compulsory lawyer — is aimed at it.

On receiving a complaint, the Commission refers it to the opposite party for a version. Where the complaint alleges a defect in goods that cannot be determined without proper analysis, the Commission obtains a sample, seals it and sends it to an appropriate laboratory for testing, and then decides after considering the test report and hearing both sides. Where the dispute concerns a service, there is nothing to test, and it is settled on the evidence brought before the Commission.

Definition

Defect A defect is any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard of goods which is required to be maintained by or under any law for the time being in force, or under any contract, or as is claimed by the trader in relation to those goods.

15.7.2 State Commission

A State Commission is established by the State Government and its jurisdiction extends to the boundaries of that state. It consists of a President and not less than four members, or such higher number as may be prescribed in consultation with the Central Government.

It entertains complaints where the value of the goods or services paid as consideration exceeds ₹50 lakh but does not exceed ₹2 crore. It also hears appeals against the orders of the District Commissions within the state, which means it functions both as a court of first instance for medium-value claims and as the first appellate tier.

15.7.3 National Commission

The National Commission is established by the Central Government and has jurisdiction over the whole country. It consists of a President and not less than four members, or such number as may be prescribed.

It entertains complaints where the value of the goods or services paid as consideration exceeds ₹2 crore, and hears appeals against the orders of the State Commissions. Being the apex commission, it also decides questions on which the state-level commissions have taken differing views.

The point on which candidates most often go wrong is the basis of the division. Jurisdiction is fixed by the value of the consideration paid for the goods or services, and not by the amount of compensation the complainant chooses to claim. A buyer cannot move a complaint to a higher commission by inflating the claim. Table 15.3 sets out the three commissions together.

Table

Case Snippet

Case 15.3 — A Small Car And A Large Claim Sunehri buys a car from Meridian Motors for ₹18 lakh. A defect in the braking system causes an accident in which she is injured, and she claims ₹3 crore as compensation for the injury, loss of earnings and medical expenses. Q. Name the commission before which the complaint must be filed, and state the rule by which that commission is identified.

15.7.4 Appeals And Reliefs

A party dissatisfied with the order of a District Commission may appeal to the State Commission within 45 days of the order. An appeal against an order of the State Commission lies to the National Commission within 30 days, and an appeal against an order of the National Commission lies to the Supreme Court within 30 days. The tiers thus provide a correction for error without allowing a dispute over goods to travel indefinitely.

A commission that finds the complaint proved may pass one or more of the following orders.

To remove the defect in the goods, or the deficiency in the service complained of.
To replace the goods with new goods of similar description, free from defect.
To refund the price paid for the goods or the charges paid for the service.
To pay compensation for the loss or injury suffered by the consumer due to the negligence of the opposite party.
To discontinue an unfair or restrictive trade practice and not to repeat it.
To withdraw hazardous goods from sale, to cease their manufacture, and not to offer hazardous services.
To issue a corrective advertisement neutralising the effect of a misleading advertisement.
To pay adequate costs to the appropriate party.

Definition

Deficiency A deficiency is any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance of a service which is required to be maintained by or under any law for the time being in force, or which has been undertaken to be performed under a contract or otherwise.

The path a complaint takes, from filing to final appeal, is summarised in FC 15.3.

Flowchart

FC 15.3 — Route Of A Consumer Complaint Complaint filed before the commission having jurisdiction → notice issued to the opposite party → reference to mediation where both parties consent → sample sent for laboratory analysis where a defect must be tested → hearing of both parties → order granting relief → appeal to the next higher commission → final appeal to the Supreme Court

15.8 The 1986 Act And The 2019 Act Compared

The Consumer Protection Act, 1986 was not replaced because it failed. It created the first specialised machinery in the country for consumer disputes, established the three-tier forums, and made it possible for an ordinary buyer to obtain a remedy without a civil suit. What it could not do was keep pace with the market it was written for.

Three developments left it behind. Trade moved online, so the seller ceased to be a person the buyer could locate; advertising moved to celebrity endorsement, so a claim could reach millions of buyers without anyone being answerable for its truth; and manufacturing chains lengthened, so the party responsible for a defect was rarely the party who handed over the goods. The 2019 Act answers each of these by adding a regulator, a product liability action and a set of obligations for electronic platforms, none of which the earlier Act contained.

It also corrected two practical obstacles that had quietly defeated small claims. Filing was shifted to the place where the complainant resides or works, and the money limits of the commissions were revised and tied to the consideration actually paid rather than to the compensation claimed. The 2019 Act repealed and replaced the Act of 1986, which is no longer in force; it survives in this chapter only as the measure against which the present law is understood. The differences are set out in Table 15.4.

Definition

Pecuniary Jurisdiction Pecuniary jurisdiction is the money limit, fixed by reference to the value of the goods or services paid as consideration, within which a particular consumer commission is competent to entertain a complaint.

Table

15.9 Misleading Advertisements And Endorsements

An advertisement reaches the buyer earlier than the goods do. It is written by the seller, it is the only description most buyers will ever read, and by the time the product is in hand the purchase has already been made on the strength of it. Every other safeguard in this chapter operates after money has changed hands; control of advertising is the one that operates before.

The loss caused by a false claim is also of a different order from that caused by a single defective article. One misleading claim reaches millions of buyers at once, and each of them suffers a loss too small to litigate over. This is exactly the wrong that individual complaints cannot correct, which is why control of advertising rests largely with the Central Consumer Protection Authority rather than with the commissions alone.

15.9.1 When An Advertisement Is Misleading

The guidelines issued by the Central Consumer Protection Authority for the prevention of misleading advertisements and endorsements set out the conditions an advertisement must satisfy. An advertisement is valid where it meets all of the following.

It is truthful and honest in what it states about the goods or services offered.
It does not exaggerate or misrepresent the facts concerning the product, its performance or its composition.
It does not present the consumer’s legal rights, such as a warranty or the right to a refund, as though they were a special feature of that particular product.
It does not claim universal acceptance of the product where expert opinion on the matter is divided.
It does not exaggerate the risk to the personal or family safety of the buyer if the product is not purchased, since fear is the crudest way of removing a buyer’s judgement.
It does not mislead on the strength of unverified claims drawn from publications the buyer cannot check.
It complies with the rules and regulations framed by the Government in the field concerned.

Definition

Misleading Advertisement A misleading advertisement is one which falsely describes a product or service, gives a false guarantee likely to mislead the consumer as to its nature, quantity or quality, conveys an express or implied representation that would amount to an unfair trade practice, or deliberately conceals important information.

Separate guidelines govern advertising by coaching centres, an area in which the claim advertised and the result obtained are unusually hard for a family to verify. A coaching centre advertising successful candidates must state the rank, the name, the course taken, its duration and whether that candidate paid for the course; disclaimers must appear in the same font size as the other important information rather than in small print; the services, facilities and infrastructure described must exist; approval by the relevant regulatory authority must be stated accurately; and no assurance of guaranteed placement or selection may be given.

15.9.2 Dark Patterns

An online interface can mislead without stating anything untrue at all. The wording, the layout, the colours and the order of the screens can be arranged so that a buyer agrees to something never intended — an extra item, a recurring payment, a costlier option. A dark pattern is a deceptive design practice of this kind, and the Central Consumer Protection Authority has notified the following as examples for guidance.

False urgency — creating a false impression of scarcity or of time running out, to force an immediate purchase.
Basket sneaking — adding items, services or donations to the cart so that the amount payable rises without the user’s permission.
Confirm shaming — using wording or images that create guilt or fear, so that declining the purchase is made to feel improper.
Forced action — requiring the buyer to take something additional and unwanted in order to obtain the product actually chosen.
Subscription trap — making a subscription easy to begin, unclear in its terms and difficult to cancel.
Interface interference — placing text, colour and buttons so as to steer the user towards the choice the seller prefers.
Bait and switch — attracting the buyer with one product and then diverting the choice to a costlier one on the plea of unavailability.
Drip pricing — withholding part of the cost until the buyer is well into the transaction, so that the price first seen is not the price paid.
Disguised advertisement — presenting an advertisement as an article, a review or an item of ordinary content.
Nagging — interrupting the user repeatedly with requests that were neither asked for nor permitted.
Trick question — framing a question in confusing language so that the user gives an answer never intended.
Recurring billing for software supplied as a service — taking payments over a long period while making exit long and complicated.
Rogue malware — convincing users that their system carries viruses in order to sell them software they do not need.

Trade Term

Dark Pattern A deceptive design practice used in a website or application interface which misleads or tricks a user into an action never intended, such as an unwanted purchase, an added item or a continuing subscription.

15.9.3 Liability Of Endorsers

An advertisement carries weight because somebody stands behind it. Where a well-known person recommends a product, the buyer relies on that person’s judgement rather than on the manufacturer’s, and for a long time the endorser collected the fee while bearing none of the consequences if the claim proved false.

Responsibility now attaches to everyone in the chain by which the claim reaches the buyer. The Central Consumer Protection Authority may impose penalties on the manufacturer, the advertiser, the publisher and the endorser of a misleading advertisement, and may order that the advertisement be discontinued or that a corrective advertisement be issued. An endorser is expected to exercise due diligence — to satisfy himself of the claim being made, and to disclose any material connection with the advertiser that the audience would not otherwise know of.

The measure introduced in 2023 carries this further, proposing to extend the punishment for false, misleading and surrogate advertisements to advertisers, advertising agencies and endorsers alike. The principle behind it runs through the whole chapter: liability should rest where control lies, and the buyer who can verify nothing should not be the party left bearing the loss.

Trade Term

Surrogate Advertisement An advertisement that promotes a product whose direct advertising is prohibited, by carrying the same brand name on a permitted product, so that the restricted product is kept before the buyer indirectly.

Case Snippet

Case 15.4 — Seven Days, Guaranteed An advertisement for Auralis skin cream assures every user of visible results within seven days, describes the claim as universally accepted although expert opinion on it is divided, and prints the disclaimer in type too small to read. A well-known personality appears in the advertisement recommending the cream, having been paid for the appearance and having tested nothing. Q. State two grounds on which this advertisement is misleading, and name the parties against whom action may be taken.

15.10 Summary

The old rule of trade, caveat emptor, placed the burden of inspection on the buyer. It broke down once goods began to reach the buyer sealed, branded and made far away, because the seller then held all the information about the product and the buyer held almost none.
Protection is needed from the consumer’s side because buyers are ignorant of their rights, unorganised against organised sellers, unable to verify complex goods, exposed to malpractices such as adulteration, underweighing and overcharging, and unable to inspect goods bought at a distance.
Protection is also in the interest of business, since a firm depends on repeat purchase, draws its resources from society, owes a duty to its stakeholders, avoids regulation by restraining itself, faces competition in which quality decides survival, and is morally answerable for what it sells.
A consumer under the Consumer Protection Act, 2019 is a person who buys goods or hires services for a consideration paid, promised, part-paid or deferred, and includes any user or beneficiary with the approval of the buyer or hirer, whether the transaction is made offline or online.
A buyer for resale or for any commercial purpose, and a person who obtains goods or services without consideration, are not consumers. Goods bought and used exclusively for earning a livelihood by self-employment are not treated as bought for a commercial purpose.
A complaint may be filed by the consumer, a registered consumer association, the Central or a State Government, the Central Consumer Protection Authority, one or more consumers on behalf of numerous consumers having the same interest, the legal heir of a deceased consumer, or the guardian of a minor.
The Act confers six rights on the consumer:

Right to safety — protection against goods and services hazardous to life, health or property.
Right to be informed — disclosure of quality, quantity, potency, purity, standard and price.
Right to choose — access to a variety of goods at competitive prices, free of pressure.
Right to be heard — a grievance received and given due consideration.
Right to seek redressal — relief against defects, deficiencies and unfair trade practices.
Right to consumer education — the knowledge needed to use the other five rights.

Consumer responsibilities are the conditions under which those rights can be used — being aware of them, asking for full information, looking for certification marks, insisting on a cash memo, reading labels, treating advertisements with caution, asserting a claim, filing genuine complaints and acting collectively. They are not enforceable, but a claim usually fails where they have been neglected.
Consumer protection works through four agencies at once:

Self-regulation by business, through codes of conduct, grievance cells and trade association standards.
Consumer self-help, which alone operates at the moment of purchase.
Consumer associations and NGOs, which supply the testing, legal aid and collective voice an individual lacks.
Government measures — legislation, regulation, redressal machinery, and awareness and support measures.

The Consumer Protection Act, 2019 extends to the whole of India, covers all goods and services and every sector, applies to online and offline transactions alike, and gives a remedy in addition to those available under other laws.
The Act introduced four things the earlier law did not contain — the Central Consumer Protection Authority, which acts against unsafe goods and misleading advertisements on its own motion; product liability, under which the manufacturer, product service provider and product seller are liable for harm caused by a defective product; disclosure and refund obligations on electronic commerce entities; and settlement through mediation, against which no appeal lies.
Redressal is provided by three commissions. The District Commission entertains complaints where the consideration paid does not exceed ₹50 lakh, the State Commission where it exceeds ₹50 lakh but not ₹2 crore, and the National Commission where it exceeds ₹2 crore. Jurisdiction rests on the consideration paid, not on the compensation claimed.
A complaint may be filed where the complainant resides or works for gain, within two years of the cause of action arising, and may be filed electronically. Appeal lies from the District Commission to the State Commission within 45 days, from the State to the National Commission within 30 days, and from the National Commission to the Supreme Court within 30 days.
A commission may order removal of the defect or deficiency, replacement of the goods, refund of the price, compensation for loss or injury, discontinuance of an unfair trade practice, withdrawal of hazardous goods, a corrective advertisement, and payment of costs.
The 2019 Act replaced the Consumer Protection Act, 1986, adding a regulator, product liability, e-commerce obligations, mediation and power to set aside unfair contract terms, revising the money limits of the commissions, and shifting the place of filing to the complainant’s own district.
An advertisement is misleading where it exaggerates, conceals, misrepresents, presents legal rights as special features, claims universal acceptance where expert opinion differs, or rests on unverified claims. Dark patterns mislead through interface design rather than through statements, and penalties for a misleading advertisement may fall on the manufacturer, the advertiser, the publisher and the endorser.

Flowchart

FC 15.4 — Consumer Protection At A Glance Consumer protection → Self-regulation by business, Consumer self-help, Consumer associations and NGOs, Government measures; Government measures → Consumer Protection Act, 2019; Consumer Protection Act, 2019 → Six consumer rights, Central Consumer Protection Authority, Product liability, Three-tier commissions; Three-tier commissions → District up to ₹50 lakh, State above ₹50 lakh up to ₹2 crore, National above ₹2 crore

15.11 Points To Ponder

Self-regulation by business carries no penalty behind it, and is weakest in unorganised trade where malpractice is commonest. Does a voluntary code of conduct achieve anything the law would not achieve anyway, or does it work only among firms that already expect to be regulated?
Jurisdiction now rests on the consideration paid rather than on the compensation claimed, so a serious injury caused by an inexpensive appliance is heard by the District Commission while a routine dispute over a costly one goes to the National Commission. Which of the two measures better matches the seriousness of a case, and what would be lost by returning to the earlier basis?
An endorser who recommends a product usually has no laboratory, no access to the manufacturing process and no means of verifying what the advertisement claims. On what reasoning can such a person be made answerable for the claim, and how far should that answerability extend?
Consumer responsibilities are not legally enforceable, and a buyer who took no bill and read no label may still succeed if the facts can otherwise be proved. Would relief be more fairly distributed if a commission could reduce it where the buyer took no ordinary precaution, or would that quietly restore the rule of caveat emptor?
Every shop is laid out to encourage buying, and no seller is obliged to present a product neutrally. At what point does the arrangement of a screen or a shelf stop being persuasion and become a dark pattern, and who should decide where that line falls?
The disclosure, refund and grievance obligations imposed on electronic platforms raise the cost of selling through them, and that cost is passed down to small sellers and eventually into prices. Is a consumer who pays a little more for every purchase getting value for the protection, and does the answer differ for high-value and low-value goods?

15.12 Objective Questions

Under the Consumer Protection Act, 2019, the commission before which a complaint must be filed is decided by: [1]

the amount of compensation claimed by the complainant
the value of the goods or services paid as consideration
the price at which the goods were advertised
the extent of the injury suffered by the consumer

An appeal against an order of the State Commission lies to the National Commission within: [1]

15 days
30 days
45 days
60 days

Assertion (A): A tailor who buys one sewing machine and works it himself is a consumer under the Consumer Protection Act, 2019. Reason (R): Goods bought and used exclusively for earning a livelihood by means of self-employment are not treated as bought for a commercial purpose. [1]

Both (A) and (R) are true and (R) is the correct explanation of (A).
Both (A) and (R) are true but (R) is not the correct explanation of (A).
1. is true but (R) is false.
1. is false but (R) is true.

Match Column I with Column II and choose the correct option: [1]

Column I	Column II
a. Central Consumer Protection Authority	i. Consideration above ₹2 crore
b. Mediation cell	ii. Recall of unsafe goods
c. District Commission	iii. Consideration up to ₹50 lakh
d. National Commission	iv. Settlement with the consent of both parties

a-ii, b-iv, c-iii, d-i
a-i, b-iii, c-iv, d-ii
a-ii, b-iii, c-i, d-iv
a-iv, b-ii, c-iii, d-i

State whether the following statement is true or false: A settlement arrived at through mediation under the Consumer Protection Act, 2019 may be appealed against before the next higher commission. [1]

True
False

15.13 Check Your Concepts

State any two grounds on which a product liability action may be brought against a manufacturer. [2]
Distinguish between a defect in goods and a deficiency in service, giving one example of each. [3]
State the procedure a District Commission follows on receiving a complaint that alleges a defect which cannot be determined without proper analysis of the goods. [3]
Explain any four responsibilities of a consumer, naming in each case the right that the responsibility makes workable. [4]
Why was the Consumer Protection Act, 1986 replaced? Explain any six points of difference between that Act and the Consumer Protection Act, 2019. [6]

15.14 Case-Based Questions

Harsimran, who lives and works in Kota, orders a mixer grinder for ₹4,200 through an electronic platform. The listing describes the appliance as having three jars and a two-year warranty. What arrives is a single-jar model with no warranty card, and the jar is cracked. The platform refuses a refund on the plea that the goods were supplied by an independent seller registered in Surat, and its listing stated neither the seller’s particulars nor any grievance redressal mechanism.

Name the commission before which Harsimran may file her complaint and state the place at which she may file it, giving the rule that applies in each case. [2]
State two obligations laid on an electronic commerce entity which this platform has failed to meet. [2]