06 Jan 2018 12:26 IST

With new Bill, govt moves to tighten consumer protection rights

Seeks to put in place Central Consumer Protection Authority to enforce rights

Manufacturers and service providers who repeatedly make false or misleading advertisements may attract a term of five years in jail and a fine up to ₹50 lakh, if a new consumer protection Bill is passed by Parliament.

The Consumer Protection Bill, 2018, that Minister of Food and Consumer Affairs Ram Vilas Paswan placed in the Lok Sabha on Friday, also envisages the creation of an agency with sweeping executive powers to protect consumer rights in the country. The proposed Bill sought to establish the Central Consumer Protection Authority (CCPA), which would have adequate powers to investigate violations of consumer rights, recall unsafe goods and order misleading advertisements to be pulled out.

Conceived on the lines of the US Federal Trade Commission, the CCPA would have powers to take swift action against all States of consumers’ engagement with market — before, during and after.

Misleading ads

False and misleading ads at first instance would attract a two-year jail term and a fine up to ₹10 lakh, which would go up to five years and ₹50 lakh for every subsequent offence. Similarly, failure to comply with the orders of the authority can lead to imprisonment of six months or a fine of ₹20 lakh or both.

Once passed by Parliament, the Bill would repeal the Consumer Protection Act, 1986, which is said to have several shortcomings, the chief one being slow disposal of consumer disputes. Consumer markets have undergone drastic transformations since the enactment of the 1986 Act. The emergence of global supply chains, rise in international trade and the rapid development of e-commerce have led to new delivery systems for goods and services.

“This has rendered the consumer vulnerable to new forms unfair trade and unethical business practices. Misleading advertisements, tele-marketing, direct selling and e-commerce pose new challenges for consumer protection and will require appropriate and swift executive intervention,” the Minister said while stressing the need for replacing the existing act.

The CCPA would be empowered to make interventions to “prevent consumer detriment” arising from unfair trade practices and to initiate class action including enforcing recall, refund and return of products. “This fills an institutional void in the regulatory regime extant. Currently, the task of prevention of or acting against unfair trade practices is not vested in any authority,” it was explained in the Bill.

The proposed Bill also has provisions for product liability action on account of harm caused to consumers due to a defective product or deficiency in services.