consumer protection Act part 1.pdf

BBA consumer protection

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Consumer protection Act
 MEANING
Consumer protection means protecting the rights of consumers. It also helps to
protect fair trade competition and truthful information in a market economy.
Various laws and organisations are designed to do this. The laws are designed to
stop companies using unfair practices to gain an advantage over their competitors.
 CONCEPT OF CONSUMER PROTECTION
 Consumer protection means safeguarding the interest and rights of
consumers.
 It refers to the measures adopted for the protection of consumers from
unscrupulous and unethical malpractices by the business and to provide
them speedy redressal of their grievances.

The most common business malpractices leading to consumer exploitation are
given below.

(a) Sale of adulterated goods
i.e., adding something inferior to the product being sold.
(b) Sale of spurious goods
i.e., selling something of little value instead of the real product.
(c) Sale of sub-standard goods
i.e., sale of goods which do not confirm to prescribed quality standards.
(d) Sale of duplicate goods.
(e) Use of false weights and measures leading to underweight.
(f) Hoarding and black-marketing leading to scarcity and rise in price.
(g) Charging more than the Maximum Retail Price (MRP) fixed for the product.
(h) Supply of defective goods.
(i) Misleading advertisements i.e., advertisements falsely claiming a product or
service to be of superior quality, grade or standard.
(j) Supply of inferior services i.e., quality of service lower than the quality agreed
upon
 NEED FOR CONSUMER PROTECTION
a) Protection of consumers from hazards to their health and safety;
b) Promotion and protection of the economic interests of consumers;

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c) Access of consumers to adequate information to enable them to make informed
choices according to individual wishes and needs;
d) Consumer education, including education on the environmental, social and
economic impacts of consumer choice;
e) Availability of effective consumer redress;
f) Freedom to form consumer and other relevant groups or organizations and the
opportunity of such organizations to present their views in decision-making
processes affecting them;
g) Promotion of sustainable consumption patterns.


 CONSUMER PROTECTION ACT 1986

The Consumer Protection Act, 1986 has been enacted to provide for the
establishment of consumer councils and other authorities for the settlement of
consumers‟ disputes and for matters connected therewith.
In fact, the basic motive of enacting this important Act is to provide
cheaper and speedy remedies to the consumers who are in disadvantageous
position in comparison with the traders who are well organised and rule the
market. The Consumer Protection Act, 1986’ extends to the whole of India
except the State of Jammu & Kashmir, and save as otherwise expressly provided
by the Central Government, this Act shall apply to all goods and services [Section
1]. This Act was amended in the year 1991,1993 and 2002.
This Act tries to help a consumer when the goods purchased are defective
or the services rendered to him are unsatisfactory. Prior to enactment of this Act,
consumer disputes had to be settled only through civil courts which are very
expensive

OBJECTS OF THE ACT

The Preamble to the Consumer Protection Act, 1986 reads as under: “An Act to
provide for the protection of the interests of consumers and for that purpose to
make provision for the establishment of Consumer Councils and other authorities
for the settlement of consumer‟s disputes and for matters connected therewith.”

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The rights given to the consumers under the Act are based on the basic rights as
defined by the International Organization of Consumers (IOCU) i.e., the Rights to
Safety, Information, Choice, Redressal Hearing, Education and Healthy
environment.
1. Promoting and protecting the rights of consumers
2. Providing for the establishment of consumer councils & other authorities
3. Providing speedy & simple Redressal machinery at District, state and
central level for settling consumer disputes and matters related to them.
 CONSUMERISM
Consumerism is defined as social force designed to protect consumer interests
in the market place by organising consumer pressures on business.
Consumerism challenges the very basis of the marketing concept. According to
P.F. Druckers, consumerism challenges four important premises of the marketing
concept.
(i) It is assumed that consumers know their needs.
(ii) It is assumed that business really cares about those needs and knows exactly
how to find about them.
(iii) It is assumed that business does provide useful information that precisely
matches product to needs.
(iv) It is presumed that product and services really fulfill customer expectations as
well as business promises.
Consumerism is a protest of consumers against unfair business practices
and business industries. It aims to eliminate those unfair marketing practices
e.g. misbranding, spurious products, unsafe products, adulteration, fictitious
pricing, planned obsolescence, deceptive packaging, false and misleading
advertisements, defective warranties, hoarding, profiteering, black-marketing, short
weights and measures etc.
Consumerism covers the following areas of consumer dissatisfaction and
remedial efforts:
(i) Removal or reduction of discontent and dissatisfaction generated in the
exchange relationships between buyers and sellers in the market.
(ii) Consumerism has interest in protecting consumers from any organization with
which there is an exchange relationship.

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(iii) Modern consumerism also takes keen interests in environmental matters
affecting the quality of life.

 SALIENT FEATURES OF CONSUMER PROTECTION ACT 1986

The salient features of Consumer Protection Act (CPA) 1986 are as follows:
It applies to all goods, services and unfair trade practices unless specifically
exempted
by the Central Government.
(b) It covers all sectors whether private, public or co-operative.
(c) It provides for establishment of consumer protection councils at the central,
state and district levels to promote and protect the rights of consumers and a three
tier quasi judicial machinery to deal with consumer grievances and disputes .
(d) It provides a statutory recognition to the six rights of consumers.

 RIGHTS AND REMEDIES OF CONSUMERS:

Consumer rights are those rights, which are or should be provided legally to
protect consumer interests. In other words, these are rights designed to ensure that
all consumers obtain goods and services of reasonable quality, at fair prices. Let us
briefly examine what the six rights under the Consumer Protection Act cover:

1. Right to Safety: This refers to the right to be protected against hazardous effect
that may be caused to the health/life of a consumer. This right specifies that the
consumer has the right to be protected against products, production processes and
services which are hazardous to health or life.
2.Right to be Informed: This means the right to be informed about the quality,
quantity, potency, purity, standard and price of goods and services, so as to protect
the consumers against unfair trade practices.
3. Right to Choose: This implies that every buyer has the right to have access to
products of varying quality and quantities, prices, size and design, at competitive
prices, and to choose according to his needs and wants.

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4. Right to be heard: The right to be heard means that consumers‟ interests will
receive due consideration at appropriate forums. It also includes the right to be
represented in various forums that are working to ensure consumer welfare. To
enable consumers to exercise this right, both the state and voluntary agencies are
expected to provide such forums.
5. Right to seek redressal: Every consumer has the right to seek redressal against
unfair trade practices or unscrupulous exploitation. It also includes the right to fair
settlement of genuine grievances. It involves the right to receive compensation for
faulty goods and services.
6. Right to Consumer Education: This refers to every person‟s right to acquire
knowledge and skill to be an informed consumer, so that s/he will be able to make
wise decisions while purchasing goods and hiring services. This right implies that
the consumer should be educated enough to be able to solve the problem himself.


 CONSUMERS’ RESPONSIBILITIES
Consumer protection is not only about consumer‟s rights but also about the
responsibilities of the consumers. Some of them are given hereunder –

1) To provide adequate information to the seller ( about his needs and
expectations to the seller)
2) To exercise caution in purchasing (must try to get full information on
Quality, Quantity, Utility, Price, Design etc of the product before
purchasing)
3) To insist on Cash memo or Receipt ( As a proof of purchase of goods from
the seller .this would help in making a complaint to the seller in the case of
any defect in the goods.
4) Beware of misleading advertisements
5) To be quality conscious ( ISI mark, Agmark, should never compromise on
the Quality of goods)
6) To file complaint against genuine grievance
7) Consumer must be aware of their rights and exercise them while buying
goods & services)
8) Proper use of Product/Services is expected from the consumers that they use
and handle the product/services properly.

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Important terms under the Consumer Protection Act

Consumer: According to Section 2(1)(d) of the Consumer Protection Act, 1986,
consumer means

(i) any person who buys any goods for a consideration which has been paid or
promised or partly paid and partly promised, or under any system of deferred
payment, and includes any person who uses such goods with the approval of the
buyer. It does not include a person who buys goods for resale or for any
commercial purpose; or

(ii) any person who hires or avails any services for a consideration which has been
paid or promised or partly paid and partly promised, or under any system of
deferred payment, and includes any person who is a beneficiary of such services
with the approval of the hirer. It does not include a person who avails of such
services for any commercial purpose.

It may be observed that the fore stated definition of consumer is in two parts
1) Consumer of goods
2) Consumer of services

Consumer of goods: The important features of the definition of „consumer of
goods‟ may be stated as follows:

1. Buying goods for consideration. There must be a contract of sale of goods
between a seller and a buyer. The seller should be a „business seller‟‟, i.e., a trader
or manufacture, and the buyer should be a „consumer buyer‟, i.e., one who buys
goods for consumption or private use. The buying of goods must be for
consideration, which may be paid immediately or promised to be paid later-even in
installments. Thus, it includes credit sale and hire purchase transactions also.
Consideration may be in terms of money or other goods and Services.

2. User of goods with the approval of the buyer. The term „consumer‟‟ also
includes any person who uses the goods with the permission of the buyer though

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he is himself not buyer. When a person buys goods, they may be used by his
family members, relatives and friends. The actual user of the goods may come
across the defects in goods. Thus, the law treats the rightful user of the goods as
the consumer.

3. Goods should not be purchased for resale or for any commercial purpose. The
term „consumer‟ does not include a person who buys goods for „resale‟ or for any
“commercial _ purpose‟. The expression „commercial purpose‟ implies that the
goods are bought to commercially exploit them with the object to earn profits.
Thus, where a company purchases a computer system to facilitate its work, the said
purchase is a purchase for „commercial purpose‟ and the company is not a
„‟consumer under the act.

4. Person buying goods for self-employment is a consumer. When the goods are
bought and used by the buyer himself, exclusively for the purpose of earning his
livelihood, by means of self-employment, then such buyer/user is also recognized
as a consumer under the Act. Thus, a person who purchases a taxi, or a sewing
machine or a Photostat machine exclusively for the purpose of earning his
livelihood by means of self-employment, will be a consumer.

Consumer of Services : The second category of „consumer‟ is that of
„consumer of services‟. A person is a „consumer of service‟ if he satisfies the
following criteria:

1. Hiring of services for consideration. There must be a transaction of hiring or
availing of service for consideration. However, the payment of consideration need
not necessarily be immediate. It may be paid later. If the service is provided
without charging anything in return, the person availing the service is not a
„consumer‟.

2. Beneficiary of service is also a ‘consumer’. A beneficiary of service, though
not the hirer himself, is also regarded as a „consumer‟ provided the beneficial use
is made with the approval of the person who hired the service. Thus, nominees

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under an insurance policy and an actual user of the subscriber‟s telephone have
been held to be „consumers‟.

3. Service should not be availed for any commercial purpose. The term
„consumer of service‟ does not include a person who avails service for any
„commercial purpose‟. Thus were a person hires the services of goods carrier and
starts plying it on hire as public carrier with the object to earn profits, the said
hiring of services of a good carrier is for „commercial purpose‟ and the person is
not a „consumer‟ under the Act.

SERVICE‟ defined. Section 2 (1) (O) defines the term ‘service’ as follows:
„Service‟ means service of any description which is made available to potential
users and includes, but not limited, the provision of facilities in connection with
banking, financing, insurance, transport, processing, supply of electrical or other
energy, boarding or lodging or both, housing construction, entertainment,
amusement or the purveying of news or other information. However, it does not
include the rendering of any service free of charge or under a contract of personal
service.

COMPLAINANT Sec. 2(1) (13) “Complainant” means-
(i) a consumer; or
(ii) any voluntary consumer association registered under the Companies Act, 1956
(1 of 1956). Or under any other law for the time being in force; or
(iii) the Central Government or any State Government, who or which makes a
complaint;
(iv) one or more consumers, where there are numerous consumers having the same
interest
(v) in case of death of a consumer, his legal heir or representative”

COMPLAINT Sec. 2(1) (C) “Complaint” means any allegation in writing made
by a complaint that-
(i) an unfair trade practice or a restrictive trade practice has been adopted by any
trader; or service provider

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(ii) the goods bought by him or agreed to be bought by him; suffer from one or
more defect the services hired or availed of or agreed to be hired or availed by him
suffer from deficiency in any respect;
(iv) a trader or the service provider has charged for the goods or for the service
mentioned in the complaint a price in excess of the price (a) fixed by or under any
law for the time being in force, (b) displayed on the goods or any package
containing such goods, (c) displayed on the price list exhibited by him, (d) agreed
between the parties.
(v) Goods which will be hazardous to life and safety when used, are being offered
for sale to the public in contravention of any law for the time being in force.
(vi) service which are hazardous or likely to be hazardous to life and safety of the
public when used.

CONSUMER DISPUTE “Consumer dispute” means a dispute where the person
against whom a complaint has been made, denies or disputes the allegations
contained in the complaint.

DEFECT:- Defect means any fault, imperfection or short coming in the quality,
quantity, potency or standard which is required to be maintained by or under any
law for the time being in force or under any contract, express or implied or as is
claimed by the trader in any manner whatsoever in relation to any goods.

DEFICIENCY:- It means any fault , imperfection, shortcoming or inadequacy in
the quality, nature and manner of performance which is required to be maintained
by or under any law for the time being in force or has been undertaken to be
performed by a person in pursuance of a contract or otherwise in relation to any
service.
RESTRICTIVE TRADE PRACTICES :- As per sec.2(1)(n) „Restrictive trade
practices‟ means any trade practice which requires a consumer to buy, hire or avail
of any goods or as the case may be, services, as a condition precedent for buying,
hiring or availing of other goods or services.