The Consumer Protection Act 2019 was passed by Parliament on 6 August 2019 (2019 Act) with the objective of overhauling the earlier regime and replacing the Consumer Protection Act 1986. The 2019 Act did not automatically come into force. The Central Government was authorised to notify the 2019 Act and/or select provisions of it.
On 15 July 2020, the Central Government notified several provisions of the 2019 Act which accordingly came into force from 20 July 2020 [please refer to https://www.mondaq.com/india/dodd-frank-consumer-protection-act/972500/the-consumer-protection-act-2019-key-highlights-of-the-notified-provisions-and-their-impact for our summary of the key changes]. On 23 July 2020, the Central Government has notified further provisions of the 2019 Act, particularly in relation to the Central Consumer Protection Authority (CCPA), which have come into force from 24 July 2020.
Some of the key highlights and impact of the notified provisions in relation to the CCPA are as follows:
- By §10, the CCPA has been set up to: (a) “protect, promote and enforce the rights of a consumer as a class, and prevent violation of consumer rights” under the 2019 Act; (b) “prevent unfair trade practices” and engaging in such practices; and (c) prevent false or misleading advertisements [§18(1)].
- The CCPA can investigate alleged contraventions, either on a complaint or suo motu. Wide powers have been granted which includes the power to enter premises, search and seize documents, articles and evidence and direct the production of any record or documents [§22(1)]. The provisions of the Criminal Procedure Code 1973 relating to search and seizure will apply, as far as may be applicable, to such action taken under the 2019 Act [§22(2)].
- Following an investigation, if the CCPA is satisfied that there is “sufficient evidence to show violation of consumer rights or unfair trade practice by a person”, it may, subject to giving the person an opportunity of being heard, pass such order as may be necessary, including:
- Recalling of goods or withdrawal of services which are dangerous, hazardous or unsafe;
- Reimbursement of the prices of goods or services so recalled to purchasers of such goods or services; and
- Discontinuation of services which are unfair and prejudicial to consumers' interest [§20].
- If the CCPA is satisfied that an investigation has revealed an advertisement to be false or misleading, and which is prejudicial to the interests of any consumer or is in contravention of consumer rights, then it may, subject to giving the person an opportunity to be heard:
- Direct the trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue or modify the advertisement [§21(1)];
- Additionally, impose a penalty of ₹10 Lakh to ₹50 Lakh on the manufacturer or endorser [§21(2)]; and
- Additionally, prohibit the concerned endorser from making endorsements of any product or service for 1 year, and 3 years for a subsequent contravention [§22(3)].
- By §89, “any manufacturer or service provider who causes a false or misleading advertisement to be made which is prejudicial to the interests of the consumers” shall be punished with imprisonment up to 2 years and a fine of up to ₹10 Lakhs, and with imprisonment of up to 5 years and a fine up to ₹50 Lakhs for every subsequent offence.
- A person failing to comply with directions issued by the CCPA under §20 and §21 shall be punished with imprisonment up to 6 months or with a fine of up to ₹20 Lakhs, or with both [§88].
The CCPA has been vested with wide powers to investigate and take action where there is violation of consumer rights or unfair trade practices. While the actual implementation of these powers are yet to be seen, going forward, care and caution would need to be taken particularly by manufacturers and sellers while finalising the contents of their advertisements as well as by all persons endorsing any product or service.
Originally published by Tuli & Co, September 2020
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