Consumer Protection Bill 2019

PIB press release dated 30th July, 2019

The Lok Sabha today passed the Consumer Protection Bill 2019 after due consideration and discussion. The Union Minister for Consumer Affairs, Food and Public Distribution Shri Ram Vilas Paswan said that the bill aims at protecting the interests of consumers by establishing authorities for timely and effective administration and settlement of consumers’ dispute. Moving the Bill, Minister of State for Consumer Affairs, Food and Public Distribution, Shri Raosaheb Patil Danve said the Bill aims to simplify a number of rules. Shri Danve said consumers do not get quick redressal of their complaints and with the passage of the Bill, consumers will be able to get speedy justice. He said the government aims to simplify the entire process of redressal of consumer grievances.

Under the Bill, there is provision for central government to set up a Central Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers and will be empowered to investigate, recall, refund and impose penalties. It will regulate matters related to violation of consumer rights, unfair trade practices, and misleading advertisements. There is also a provision for class action law suit for ensuring that rights of consumers are not infringed upon. The authority will have power to impose a penalty on a manufacturer or an endorser of up to 10 lakh rupees and imprisonment for up to two years for a false or misleading advertisement. 

Salient Features of the Bill

1.         Central Consumer Protection Authority (CCPA): Executive Agency to provide relief to a class of consumers. The CCPA will be empowered to-

1. Conduct  investigations into violations of consumer rights and institute Complaints /Prosecution
2. Order recall of unsafe goods and services
3. Order discontinuance of Unfair Trade Practices and Misleading  Advertisements
4. Impose penalties on Manufactures /Endorsers /Publishers of Misleading Advertisements

2.         Simplified Dispute Resolution process

i) Pecuniary Jurisdiction enhanced to-

• District Commission –Up to Rs1 crore
• State Commission- Between  Rs1 crore and Rs 10 crore
• National Commission –Above Rs.10 crore

ii) Deemed admissibility after 21days of filing

iii) Empowerment of Consumer Commission to enforce their orders

iv) Appeals only on question of law after second stage

v) Ease of approaching consumer commission

• Filing from place of residence
• E-filing
• Videoconferencing for hearing 

3.         Mediation

• An Alternate Dispute Resolution (ADR) mechanism
• Reference to Mediation by Consumer Forum wherever scope for early settlement exists and parties agree for it.
• Mediation cells to be attached to Consumer Forum
• No appeal against settlement through mediation

4.         Product Liability

A manufacturer or product service provider or product seller to be responsible to compensate for injury or damage caused by defective product or deficiency in services

The Basis for product liability action will be:

• Manufacturing  defect
• Design defect
• Deviation from manufacturing specifications
• Not conforming to express warranty
• Failing to contain adequate instruction for correct use
• Services provided arefaulty, imperfect or deficient

New Bill- Benefit to Consumers

Presently Consumer only have a single point of access to justice, which is time consuming. Additional swift executive remedies are proposed in the bill through Central Consumer Protection Authority (CCPA)

Deterrent punishment to check misleading advertisements and adulteration of products

Product liability provision to deter manufacturers and service providers from delivering defective products or deficient services

Ease of approaching Consumer Commission and Simplification of Adjudication process

Scope for early disposal of cases through mediation

Provision for rules for new age consumer issues: e-commerce & direct selling

FDI in e-commerce

Review of the FDI policy in e-commerce issued by the DIPP on 26th December, 2018

1.0       To provide clarity to FDI policy on e-commerce sector, Para 5.2.15.2 of the Consolidated FDI Policy Circular 2017 will now read as under:

5.2.15.2 E-commerce activities

Sector/Activity	% of Equity/FDI Cap	Entry Route
E-commerce activities	100%	Automatic

5.2.15.2.1 Subject to provisions of FDI Policy, e-commerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce.

5.2.15.2.2 Definitions:

i)    E-commerce- E-commerce means buying and selling of goods and services including digital products over digital & electronic network.

ii)   E-commerce entity-     E-commerce entity means a company incorporated under the Companies Act 1956 or the Companies Act 2013 or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in section 2 (v) (iii) of FEMA 1999, owned or controlled by a person resident outside India and conducting the e-commerce business.

iii)  Inventory based model of e-commerce- Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly. 

iv)  Marketplace based model of e-commerce- Marketplace based model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller.

5.2.15.2.3 Guidelines for Foreign Direct Investment on e-commerce sector

i)          100% FDI under automatic route is permitted in marketplace model of e-commerce.

ii)         FDI is not permitted in inventory based model of e-commerce.

5.2.15.2.4          Other Conditions

i)          Digital & electronic network will include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles etc.

ii)         Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis.

iii)        E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfillment, call centre, payment collection and other services.

iv)        E-commerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. Such an ownership or control over the inventory will render the business into inventory based model. Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies. 

 v)        An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.

vi)        In marketplace model goods/services made available for sale electronically on website should clearly provide name, address and other contact details of the seller. Post sales, delivery of goods to the customers and customer satisfaction will be responsibility of the seller.

vii)       In marketplace model, payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India.

viii)      In marketplace model, any warrantee/ guarantee of goods and services sold will be responsibility of the seller.

ix)        E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner. Such services will include but not limited to fulfilment, logistics, warehousing, advertisement/ marketing, payments, financing etc. Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory.

  x)       Guidelines on cash and carry wholesale trading as given in para 5.2.15.1.2 of Consolidated FDI Policy Circular 2017 will apply on B2B e-commerce.

xi)        e-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.

xii)       e-commerce marketplace entity will be required to furnish a certificate along with a report of statutory auditor to Reserve Bank of India, confirming compliance of above guidelines, by 30th of September of every year for the preceding financial year.

            Subject to the conditions of FDI policy on services sector and applicable laws/regulations, security and other conditionalities, sale of services through e-commerce will be under automatic route.

3.0       The above decision will take effect from 01 February, 2019.