The Consumer Protection Act, 2019 (the Act) received the President’s assent on 9 August 2019 which has replaced the Consumer Protection Act, 1986. The Act aims at protecting and strengthening the rights of the consumers by establishing authorities, imposing strict liabilities and penalties on product manufacturers, electronic service providers, misleading advertisers, and by providing additional settlement of consumer disputes through mediation.


• Broadening the definition of “consumer

The definition of “consumer” has been expanded to include persons who engage in offline or online transactions through electronic means or by tele-shopping or direct selling or multi-level marketing. In our transactions concluded in all media in any case covered by CPA 1986.

The definition now provides consumers with a remedy in case of multi-level marketing. Thus, the seller at each level of multi-level marketing can be exposed to liability under CPA 2019 and not restricted to only the manufacturer of the product but all entities involved at various stages of production and marketing.

When services are provided for free, the person availing the service will not be considered as a consumer. Whether or not the service being provided is free is a question of fact and will have to be evaluated on case-to-case basis.

  • E-Commerce:

The Act has inserted the definition of “e-commerce” which means buying or selling of goods or services including digital products over digital or electronic network 4. Section 94 of the Act refers to the prevention of unfair trade practices in e-commerce and direct selling and also deals with protection of interest and rights of consumers. E-commerce has been defined as buying or selling of goods or services including digital products over digital or electronic network. The central government has been authorized to take measures and make rules to prevent unfair trade practices in e-commerce. In case of products being sold through online platforms, without charging any fees separately amounts to providing services needs to be ascertained. It is not clear whether off-shore e-commerce would also get covered and eventual enforcement of CPA 2019 qua such entities.

  • New Grounds to File Complaints:

While the provisions of CPA 1986 prescribed six (6) major grounds to file complaints, CPA 2019 has increased the count to seven (7), and also substantially modified one of the existing grounds to file complaints as provided under Section 2(c)(i) of CPA 1986. The two changes are:

Introduction of Unfair Contracts & expansion of Unfair Trade Practices

In the previous legislation, a complaint could be filed only if an unfair trade practice or a restrictive trade practice was adopted by any trader or service provider. Now “unfair contract” has also been added which further broadens the ground to file complaints and allows consumers to challenge contracts which are unfair, unilateral and unreasonable. Unfair contract has been defined to include contracts between a manufacturer or trader or service provider on one hand, and a consumer on the other, having such terms which cause significant change in the rights of such consumer, including the following, namely:—

  1. requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations; or
  2. imposing any penalty on the consumer, for the breach of contract thereof which is wholly disproportionate to the loss occurred due to such breach to the other party to the contract; or
  3. refusing to accept early repayment of debts on payment of applicable penalty; or entitling a party to the contract to terminate such contract unilaterally, without reasonable cause; or
  4. permitting or has the effect of permitting one party to assign the contract to the detriment of the other party who is a consumer, without his consent; or
  5. imposing on the consumer any unreasonable charge, obligation or condition which puts such consumer to disadvantage.

The above provisions would directly impact the financial institutions such as banks, as the apex court has already stated that the Banks also get covered under the Act. This would specifically take into account contracts entered with banks, e-commerce platforms where parties are not left with any option but to agree to the standard terms to avail the services. With such a broad subjective definition, it remains to be seen how courts would interpret in case of online contracts.

2. Expanding definition of “unfair trade practice

While CPA 1986 had listed six (6) types of unfair trade practices, three (3) types of additional unfair trade practices have now been added to the list which are as follows:

  1. failure or non-issuance of a bill or a cash memo;
  2. refusal to take back or withdraw defective goods or withdrawal or discontinuance of deficient services or refusal to refund the consideration amount paid within the period as stipulated in the bill or cash memo or receipt or in the absence of such stipulation, refusal to withdraw or refund goods or services within thirty (30) days; and

Before ascertaining whether it amounts to unfair trade practice, it become relevant to determine whether the goods or deficient services have been provided. The section as drafted in its current form pre-determines existence of defective product or deficient service. Separately, even if withdrawn or discontinued, companies could still be held liable under ‘product liability’ or for ‘deficiency of services.’

iii. disclosure of consumer’s personal information to any other person unless such disclosure is made in accordance with the provisions of any law for the time being in force or in public interest.

The provision fails to give any clarity whether information can be shared if consent is taken from the consumers. The reliance will have to be placed on prevalent data protection law. The current data protection law in India does not require any specific compliance for data sharing in case the information is not in the nature of sensitive information i.e. relating to (i) passwords; (ii) financial information; (iii) physical, physiological and mental health conditions; (iv) sexual orientation; (v) medical records and history; (vi) biometric information; (vii) any detail relating to the above, as provided to a body corporate for providing services; and (viii) any of the information received under the above by a body corporate, for processing or storing data under lawful contract, or otherwise.

  • Product Liability:

There was no separate legislation governing ‘product liability’ in India, though it was addressed under CPA 1986, if parties were included within the ambit of ‘consumer’. Insertion of “Product Liability” as a separate chapter in CPA 2019 and a new ground for filing a complaint has been one of the most significant additions to the act.

Section 2(35) of CPA 2019 allows a person to make a claim of product liability against such manufacturer, seller or service provider for such defective products. Product liability means the responsibility of a product manufacturer or product seller, of any product or service, related to the product to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating to the product.

Central Consumer Protection Authority:

The Act introduces the establishment of a Central Consumer Protection Authority (CCPA) by the central government. The CCPA is a regulatory authority and shall be empowered to impose penalties, recall goods, cause withdrawal of services, provide refunds and investigate into matters. It shall also be responsible for protecting the rights of consumers as a class and shall further ensure that no person engages in unfair trade practices and that no misleading advertisements are made. The Act provides for establishing an investigation wing which shall be headed by the director general who shall be appointed by the central government for conducting investigations as per the order of the CCPA. Further, the Act also introduces electronic mode for filing complaint for unfair trade practices or false or misleading advertisements to the district collector, the commissioner of the regional office or the CCPA.

• False or misleading advertisements

CCPA has also been empowered to take actions against false or misleading advertisements. CCPA can impose a penalty of up to INR1 million, and up to INR 5 million for every subsequent violation. It is important to note that such penalty can be imposed on endorsers too, thereby bringing actors/actresses in the scope of penalty. However, the endorser would be exempted from any liability if she/he establishes that they undertook due diligence to verify the veracity of the claims before endorsing the same. Therefore, endorsers/actors/celebrities will also have to conduct a thorough due diligence/ research before signing up for any advertisements.

  • Mediation

The Act has introduced a new chapter on mediation as an alternate dispute resolution mechanism, in order to resolve the consumer dispute faster without having to approach the Commissions. The dispute can be resolved either in whole or in parts.

Thus, in the event, the mediation is successful, the terms of such agreement shall be reduced into writing accordingly. Where the consumer dispute is settled only in part, the Commission, shall record the settlement of the issues which have been settled, and shall continue to hear the remaining issues involved in the dispute. In the event the mediation is not successful, the respective commission shall within seven days of the receipt of the settlement report, pass a suitable order and dispose the matter accordingly.

  • Product liability

A key concept on “product liability” has been introduced by the Act wherein a product liability action may be brought by a complainant against a product manufacturer, product service provider or product seller, for any harm caused to the complainant on account of a defective product. The Act provides a breakup of the liabilities of the product manufacturer, product service provider and product seller and also circumstances under which they are not liable.

  • Offences and penalties

The Act has introduced a separate set of penalties with respect to misleading advertisements, ranging from INR10 lakhs with an imprisonment for up to two years to INR50 lakhs) with an imprisonment for up to five years. Any failure to comply with the directions of the CCPA for recall of goods, withdrawal of services shall attract an imprisonment for a term which may extend to six months or with a fine which may extend to INR20 lakhs.


The Act is a welcome change in favour of the consumers. It provides them with clearly defined rights and dispute resolution process which may enable them to resolve their grievances on a fast-track basis. Online marketplaces and online auction sites, which have all throughout been included under the purview of an “aggregator”, have also been included under the purview of this Act which will place more responsibility on them with respect to the goods and services being sold and provided by them. Apart from establishing authorities at district, state and national level for consumer disputes redressal, the Act also seeks to hold the product manufacturers liable along with the product service providers and product sellers where the rights of the consumer have been infringed due to defects or deficiency in the goods and services provided.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

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