Consumer protection gets another boost with online players under its ambit

The Act brings all types of e-commerce entities under its purview by putting in place regulations related to the sale of goods and services, their returns and refunds, etc
Consumers have reason to cheer with the newly-enacted Consumer Protection Act, 2019 coming into force recently. The new Act replaces the Consumer Protection Act, 1986. As Ganesh Prasad, partner, Khaitan & Co puts it: “With the introduction of the New Act, the government has sought to update the law on consumer protection and thereby empower consumers.”  The E-commerce rules— Consumer Protection (E-Commerce) Rules, 2020—will be a part of the Consumer Protection Act, 2019, for all goods sold through a digital platform

Another major feature of the new Act is a provision for the establishment of a Central Consumer Protection Authority. Says Siddharth Jain, co-founder and partner, PSL Advocates & Solicitors: “The Authority’s job will be to regulate matters in relation to the violation of consumer rights, unfair trade practices and false or misleading advertisements that are prejudicial to the interests of the public and consumers. It will also seek to promote, protect and enforce the rights of consumers as a class.”  

E-Commerce rules and their impact: The Act brings all types of e-commerce entities under its purview by putting in place regulations related to the sale of goods and services, their returns and refunds, etc. This will create greater transparency for buyers. eCommerce platforms will have to start giving more details about products, their manufacturing, and about their sellers. 

The new Consumer Protection Act of 2019 specifies that e-commerce firms must provide all information relating to a product. Says Jain: “The Consumer Protection (E-Commerce) Rules, 2020 saddles all the major players in the e-commerce space, including the seller, with specific duties. They are now required to furnish pertinent information to the consumer on the platforms along with putting in place effective grievance redressal mechanisms.”  


Other details that need to be mentioned include information about the grievance redressal officer, the importer, the price breakup, the expiry date of products, accurate description and specifications of products, country of origin, seller information, verified images, and other relevant content, etc. The Act also prohibits sellers from posting fake customer reviews about their own goods or services, or misrepresenting their qualities or features. Sellers have also been warned against manipulating the prices of the goods and services offered on their platforms to earn an unreasonable profit.

 Other rules include educating customers about safe online payment methods, details of the total price of the item along with the breakup of taxes, generating a ticket number for complaints handling, etc. In case of an offence, penalties, as decided by the consumer protection authority and consumer courts, will be levied. 

Any consumer complaint must be acknowledged within forty-eight hours of receipt. Once the e-commerce entity has confirmed the purchase, it should not levy cancellation charges from the consumer. If it does, then the e-commerce entity must also bear similar charges if it cancels the purchase order unilaterally for any reason.

Product liability: Until now, there was no dedicated legislation on product liability in India, barring product and sector-specific laws (such as food safety laws, Bureau of Indian Standards, etc.) and principles established by the Indian courts. Says Rishi Anand, partner, DSK Legal: “In a major policy shift, the 2019 Act has introduced the concept of product liability in India, under which a compensation claim may be initiated for any harm caused by a defective product manufactured by a product manufacturer, serviced by a product service provider, or sold by a product seller.” 

Besides splitting the liabilities of the product manufacturer, service provider and product seller, it also provides specific safe-harbour provisions to help them avoid frivolous claims. For manufacturers, it applies in case of a manufacturing or design defect, or deviation from manufacturing specifications. It also applies for products not conforming to the express warranty.   
In the case of service providers, it applies when the service provided is faulty, imperfect, deficient, inadequate in quality, or does not conform to express warranty or the terms and conditions of the contract. 

A product seller who is not a product manufacturer shall be liable in a product-liability action. Says Jain: “A complainant can bring a product liability action for compensation against a product manufacturer or product service provider or product seller, as the case may be, for any harm caused owing to a defect in the product.” 

However, it does not mean that the Act accords blanket powers for product-liability action. Says Jain: “Section 87 is the exception clause which clearly defines the circumstances wherein this claim would not sustain.” 

Provision for mediation: The Act has a provision to use mediation to resolve disputes in whole or in parts. Says Prasad: “Mediation makes the process of dispute resolution more accessible, simpler, and quicker. It is also generally better suited for redressing consumer disputes. If implemented effectively, it will help reduce the burden of pending cases before the consumer dispute commissions.” In case mediation fails, the complainant can proceed further.

Timeline for case disposal: The new Act also calls for timely disposal of cases. Says Gaurav Dani, founder partner, IndusLaw: “The CPA and the rules framed thereunder provide indicative timelines for disposal of cases by the commissions. It provides that an endeavour should be made to decide the complaint within three months from the date of receipt of notice by an opposite party where the complaint does not require analysis or testing of commodities, and within five months if it requires analysis or testing of commodities.” 

In case of an appeal filed before the State Commission or the National Commission, the CPA says that an endeavour should be made to dispose of the appeal within 90 days from the date of its admission.

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