Central Consumer Protection Authority (CCPA)

CONTEXT:

Central Consumer Protection Authority (CCPA) issued notices to some of the advertisements running around that claimed misleading facts about the Covid virus and asked them to withdraw those ads.

About CCPA

• The CCPA was established under the provisions of the Consumer Protection Act, 2019, that came into force from July 20, 2020.
• Aim: To protect the rights of the consumer by cracking down on unfair trade practices, and false and misleading advertisements that are detrimental to the interests of the public and consumers.

Functions include:

• Inquire or investigate into matters relating to violations of consumer rights or unfair trade practices suo motu, or on a complaint received, or on a direction from the central government.
• Recall goods or withdrawal of services that are “dangerous, hazardous or unsafe.
• Pass an order for refund the prices of goods or services so recalled to purchasers of such goods or services; discontinuation of practices which are unfair and prejudicial to consumer’s interest”.
• Impose a penalty up to Rs 10 lakh, with imprisonment up to two years, on the manufacturer or endorser of false and misleading advertisements. The penalty may go up to Rs 50 lakh, with imprisonment up to five years, for every subsequent offence committed by the same manufacturer or endorser.
• Ban the endorser of a false or misleading advertisement from making endorsement of any products or services in the future, for a period that may extend to one year. The ban may extend up to three years in every subsequent violation of the Act.
• File complaints of violation of consumer rights or unfair trade practices before the District Consumer Disputes Redressal Commission, State Consumer Disputes Redressal Commission, and the National Consumer Disputes Redressal Commission

Composition

• It will have a Chief Commissioner as head, and only two other commissioners as members — one of whom will deal with matters relating to goods while the other will look into cases relating to services.
• The CCPA will have an Investigation Wing that will be headed by a Director General.
• District Collectors too, will have the power to investigate complaints of violations of consumer rights, unfair trade practices, and false or misleading advertisements.

About Consumer Protection Act 2019

Definition of consumer:

• A consumer is defined as a person who buys any good or avails a service for a consideration.
• It does not include a person who obtains a good for resale or a good or service for commercial purpose.
• It covers transactions through all modes including offline, and online through electronic means, teleshopping, multi-level marketing or direct selling.

The Act defines “misleading advertisement” in relation to any product or service, as “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 the 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”.

Rights of consumers:

• Six consumer rights have been defined in the Act, including the right to:

• Right to Safety.
• Right to be Informed.
• Right to Choose.
• Right to be heard.
• Right to seek Redressal.
• Right to Consumer Education.

• Consumer Disputes Redressal Commission: Consumer Disputes Redressal Commissions (CDRCs) will be set up at the district, state, and national levels. A consumer can file a complaint with CDRCs in relation to:

1. unfair or restrictive trade practices;
2. defective goods or services;
3. overcharging or deceptive charging; and
4. the offering of goods or services for sale which may be hazardous to life and safety.

• Complaints against an unfair contract can be filed with only the State and National Appeals from a District CDRC will be heard by the State CDRC. Appeals from the State CDRC will be heard by the National CDRC. Final appeal will lie before the Supreme Court.
• Jurisdiction of CDRCs: The District CDRC will entertain complaints where value of goods and services does not exceed Rs one crore. The State CDRC will entertain complaints when the value is more than Rs one crore but does not exceed Rs 10 crore. Complaints with value of goods and services over Rs 10 crore will be entertained by the National CDRC.

• The New Act also introduces the concept of product liability and brings within its scope, the product manufacturer, product service provider and product seller, for any claim for compensation. The Act provides for punishment by a competent court for manufacture or sale of adulterant/spurious goods. The court may, in case of first conviction, suspend any licence issued to the person for a period of up to two years, and in case of second or subsequent conviction, cancel the licence

Increased compensation:

• The CCPA may impose a penalty on a manufacturer or an endorser of up to Rs 10 lakh and imprisonment for up to two years for a false or misleading advertisement.
• In case of a subsequent offence, the fine may extend to Rs 50 lakh and imprisonment of up to five years.

Mediation:

• The act provides for reference to mediation by Consumer Commissions wherever scope for early settlement exists and parties agree for it.
• Mediation Cells to be attached to Consumer Commissions. Mediation to be held in consumer mediation cells.
• Panel of mediators to be selected by a selection committee consisting of the President and a member of Consumer Commission.

The e-commerce portals will have to set up a robust consumer redressal mechanism as part of the rules under the Consumer Protection Act, 2019.

• They will also have to mention the country of origin which are necessary for enabling the consumer to make an informed decision at the pre-purchase stage on its platform.
• The e-commerce platforms also have to acknowledge the receipt of any consumer complaint within forty-eight hours and redress the complaint within one month from the date of receipt under this Act.

Sources

• The Indian Express
• The Hindu
• PIB
• PRS