CHAPTER 2 · BUSINESS STUDIES

Consumer Protection
Understanding the legal framework, rights, responsibilities, and redressal mechanisms that safeguard every consumer in India
under the Consumer Protection Act, 2019.

Landmark Case — Banks Responsible for Failed ATM Transactions: On May 4, 2017, the Consumer Forum in Raipur
ruled that non-availability of cash in ATMs constitutes deficiency of service on the part of the bank. The bank was
fined Rs. 2,500 (Rs. 1,500 as compensation for mental harassment + Rs. 1,000 for legal expenses). This case
established that consumers are entitled to functional ATM services and banks cannot escape liability by citing
internet connectivity issues. Source: [Link], 2017
 LEARNING OBJECTIVES

What You Will Learn

After studying this chapter, you should be able to:

01 02

State the Importance of Consumer Protection Explain the Legal Framework

Understand why consumer protection matters for both Briefly explain the legal framework for consumer protection
consumers and businesses in a free market economy. in India, including the Consumer Protection Act, 2019.

03 04

Describe Consumer Rights Ways and Means of Consumer Protection

Describe the six consumer rights enshrined under the Briefly describe the various ways and means through which
Consumer Protection Act, 2019 in India. consumer protection can be achieved.
 INTRODUCTION

Introduction to Consumer Protection

Each one of us is a consumer in one way or another. It is important to be an aware and informed consumer of goods and
services available in the market. The Consumer Protection Act 2019 has replaced the Act 1986 and seeks to widen its scope in
addressing consumer concerns.

From Caveat Emptor to Caveat Venditor Why Protection is Needed

Market forces have changed from a seller's market (caveat With growing competition, manufacturers and sellers may
emptor — "Let the buyer beware") to a consumer's market engage in unscrupulous practices like:
(caveat venditor — "Let the seller beware"). A consumer is
Defective and unsafe products
said to be a KING in the free market economy.
Adulteration of food products
False and misleading advertising
Hoarding and black-marketing
Overpricing above MRP
 IMPORTANCE

Importance of Consumer Protection

Consumer protection safeguards consumers from unethical malpractices and provides swift redressal of grievances.

From Consumers' Point of View From Business Point of View

Consumer Ignorance: Widespread ignorance of rights Long-term Interest: Satisfied customers lead to repeat
makes education necessary to achieve consumer sales and help increase the customer base.
awareness. Business Uses Society's Resources: Businesses have a
Unorganised Consumers: Consumers need to be responsibility to supply products in public interest.
organised into consumer organisations to protect and Social Responsibility: Consumers are important
promote their interests. stakeholders whose interests must be well taken care
Widespread Exploitation: Consumers face defective of.
products, adulteration, false advertising, hoarding, and Moral Justification: It is the moral duty of any business
black-marketing. to avoid exploitation of consumers.
Government Intervention: Exploitative practices invite
government action, impairing the company's image.
 LEGAL FRAMEWORK

The Consumer Protection Act, 2019 & Who is a

Consumer?
The Consumer Protection Act 2019 seeks to protect and promote consumers' interests through speedy and inexpensive
redressal of grievances. It extends to the whole of India and applies to all types of businesses — manufacturers, traders,
service providers, and e-commerce firms — covering both offline and online transactions.

Who is a Consumer? Key Definitions under CPA 2019

A person who buys any goods or avails services for a Complaint: Written allegation regarding restrictive trade
consideration (paid, promised, or partly paid) under any practice, defect in goods, deficiency in services,
scheme of deferred payment. It includes any user of such overcharging, or goods/services injurious to life and
goods or beneficiary of services with the approval of the safety.
buyer. Complainant: One or more consumers, any voluntary
consumer association, central/state government, the
Applies to: offline, online, teleshopping, direct selling, and
Central Authority, or a legal heir/representative.
multilevel marketing.
Spurious Goods: Goods falsely claimed to be genuine.
Unfair Trade Practice: Falsely represents quality,
Excluded: Any person who obtains goods or
standard, quantity, composition, style, or model of
services for resale or commercial purpose is NOT
goods/services.
a consumer under CPA 2019.
Restrictive Trade Practice: Manipulates price or affects
flow of supplies, imposing unjustified cost on
consumers.
Defect: Fault, imperfection, or inadequacy in quality or
performance of goods.
Deficiency: Fault or inadequacy in quality or
performance of services, including negligence or
withholding relevant information.
Injury: Any harm illegally caused to any person in body,
mind, or property.
Product: Any article, goods, substance, or raw material in
gaseous, liquid, or solid state. Excludes human tissues,
blood, blood products, and organs.
Product Seller: Any person who imports, sells,
distributes, leases, markets, or places a product for
commercial use.
Product Liability: Responsibility of a manufacturer or
seller to compensate for harm caused by a defective
product or deficiency in services.
 CONSUMER RIGHTS

Six Consumer Rights under CPA 2019

The Consumer Protection Act 2019 provides for six fundamental rights of consumers to empower them and protect their
interests.

Right to Safety
1 Protection against goods and services hazardous to life, health, and property. E.g., use ISI-marked electrical
appliances that conform to safety norms.

Right to be Informed
2 Complete information about the product — ingredients, date of manufacture, price, quantity, directions for use.
Manufacturers must provide this on package labels.

Right to be Assured (Right to Choose)

3 Freedom to access a variety of products at competitive prices. Marketers should offer wide variety in quality,
brand, prices, and size for consumers to choose from.

Right to be Heard
4 Right to file a complaint and be heard in case of dissatisfaction. Many firms have set up consumer grievance
cells for this purpose.

Right to Seek Redressal

5 Right to get relief against unfair or restrictive trade practices — including replacement of product, removal of
defect, or compensation for loss or injury.

Right to Consumer Education

6 Right to acquire knowledge and be a well-informed consumer throughout life. Consumer organisations and
enlightened businesses actively educate consumers about their rights and reliefs.
 CONSUMER RESPONSIBILITIES

Consumer Responsibilities
Consumer rights alone cannot achieve the objective of consumer protection. Consumers must also understand and fulfill their
responsibilities while purchasing, using, and consuming goods and services.

Be Aware
Be aware about various goods and services available in the market so that an intelligent and wise choice can be
made.

Buy Standardised Goods

Buy only standardised goods as they provide quality assurance. Look for ISI mark on electrical goods, FPO mark on
food products, Hallmark on jewelry, Agmark on agricultural products, and Eco-mark for environment-friendly products.

Learn About Risks & Read Labels

Learn about risks associated with products and services, follow manufacturer's instructions, and read labels carefully
for prices, net weight, manufacturing and expiry dates.

Assert Yourself & Be Honest

Assert yourself to ensure you get a fair deal. Be honest in your dealings, choose only legal goods and services, and
discourage unscrupulous practices like black-marketing and hoarding.

Ask for Cash Memo & File Complaints

Ask for a cash memo on purchase — it serves as proof of purchase. File a complaint in an appropriate consumer forum
in case of any shortcoming, even when the amount involved is small.

Form Consumer Societies & Respect Environment

Form consumer societies that play an active part in educating consumers and safeguarding their interests. Respect the
environment — avoid waste, littering, and contributing to pollution.
 WAYS & MEANS

Ways and Means of Consumer Protection

Consumer awareness about rights and responsibilities is one way to achieve consumer protection. There are several other
mechanisms:

1. Self-Regulation by 2. Business Associations 3. Consumer Awareness

Business
Associations like FICCI (Federation A well-informed consumer can
Socially responsible firms follow of Indian Chambers of Commerce raise their voice against unfair
ethical standards. Many firms have and Industry) and CII trade practices. The Department
set up customer service and (Confederation of Indian of Consumer Affairs, GOI, has been
grievance cells to redress Industries) have laid down codes undertaking the Jago Grahak Jago
problems and grievances of of conduct providing guidelines campaign for generating
consumers. It is in their long-term for their members in dealings awareness among consumers.
interest to serve customers with customers.
rightfully.

4. Consumer Organisations 5. Government

Consumer organisations play an The Government of India has set
important role in educating up a toll-free National Consumer
consumers about their rights and Helpline: 1800-11-4000. The
providing protection. They can legal framework includes various
force business firms to avoid legislations, with the Consumer
malpractices and exploitation of Protection Act, 2019 being the
consumers. most important. The Act provides
for a Central Consumer Protection
Authority (CCPA) to regulate
matters relating to violation of
consumer rights, unfair trade
practices, and false or misleading
advertisements.
 REDRESSAL MACHINERY

Three-Tier Redressal Agencies under CPA 2019

For redressal of consumer grievances, the Consumer Protection Act 2019 provides for a three-tier enforcement machinery at
the District, State, and National levels.

Feature District Commission State Commission National Commission

Jurisdiction (Value Up to ₹50 Lakh ₹50 Lakh to ₹2 Crore Above ₹2 Crore

of Goods/Services)

Established By District Level Respective State National Level (whole

Government (at State country)
Capital)

Mediation May direct parties to — —

mediation within 5 days if
elements of settlement exist

Appeal Lies To State Commission (within 45 National Commission (within Supreme Court of India
days) 30 days) (within 30 days)

Finality of Order Final if no appeal is made by Final if no appeal is made by Final if no appeal is made
any party any party by any party

Who Can File a Complaint? One or more consumers, any voluntary consumer association, Central or State
Government, the Central Authority, or a legal heir/representative (including parent/guardian in case of a minor).
REMEDIES & NGOS

Reliefs Available & Role of Consumer

Organisations
Reliefs Available under CPA 2019 Role of Consumer Organisations & NGOs

Where District, State, or National Commission is satisfied Several consumer organisations and NGOs in India protect
about defect in goods or deficiency in services, it may and promote consumers' interests:
order:
Educating the public about consumer rights through
Remove the defect in goods or deficiency in service training programmes, seminars, and workshops
Replace the defective product with a new one, free Publishing periodicals on consumer problems, legal
from any defect reporting, and reliefs available
Refund the price paid for the product or charges paid Carrying out comparative testing of consumer products
for the service in accredited laboratories
Pay reasonable compensation for any loss or injury Encouraging consumers to protest against unscrupulous
suffered due to negligence trade practices
Pay punitive damages in appropriate circumstances Providing legal assistance and advice to consumers
Discontinue unfair/restrictive trade practice and not Filing complaints in consumer courts on behalf of
repeat it consumers
Not to offer hazardous goods for sale / Withdraw Taking initiative in filing cases in public interest (not for
hazardous goods from sale any individual)
Cease manufacture of hazardous goods and desist E.g., Consumer Unity and Trust Society (CUTS), Jaipur
from offering hazardous services
Compensate under product liability action and
withdraw hazardous products

Key Terms

Consumer Consumer Rights Consumer Redressal

Protection Responsibilities Mechanism

Mediation