January 6, 2018
“Consumer vulnerable to new forms of unfair trade & unethical business practices.”
The new Consumer Protection Bill, introduced by the Consumer Affairs Minister- Ram Vilas Paswan, aims to replace the existing 31 years old Consumer Protection Act, 1986.
The new Bill proposes to set up the Central Consumer Protection Authority (CCPA), which -if it’s satisfied that an ad is misleading or false- would issue directions to endorsers, advertisers, publishers, manufacturers & traders to modify or discontinue such an ad.
The objective of this bill is to “provide for protection of interest of consumers.” It added, “This (CCPA) fills an institutional void in regulatory regime extant. Presently, the task of prevention of or acting against unfair trade practices isn’t vested in any authority.”
CCPA’ll have the power to ban endorsers of misleading or false ads from endorsing any service or product for complete 1 year; and in case of any subsequent violation, the endorser will face a ban of up to 3 years.
The consumer protection body can also impose a penalty of up to ₹10 Lakhs on endorsers & manufacturers while subsequent violation’ll attract up to ₹50 Lakhs penalty.
The new Bill said, “No endorser shall be liable to penalty if he has exercised the due diligence to verify the veracity of the claims made in the advertisement regarding the product/service being endorsed by him.”
“The burden of proof of such defence shall lie on the person raising such defence.”
Misleading ads in various media touting ‘exaggerated claims’ are quite common because of a lack of clear legal provisions.
This bill seeks to specific what constitutes false & unfulfilled claims.
It provides for up to 2 years’ jail term and ₹10 lakh fine for manufacturers making false claims in their ads. This could go up to 5 years ₹50 lakh for repeat offenders.
Endorsers making such claims face a penalty of up to ₹10 lakh & a ban of a year (from endorsements) while repeat offenders will attract fines of up to ₹50 lakh.
The bill says that growth in e-commerce, international trade and newer services as well as innovative delivery chains have increased the choice before consumers but also made them vulnerable.
“The modern market place contains a plethora of products & services. The emergence of global supply chains, rise in international trade & rapid development of e-commerce have led to new delivery systems for goods & services & have provided new options & opportunities for consumers. Equally this has rendered consumer vulnerable to new forms of unfair trade & unethical business practices,” the new bill states.
Unfair trade practices often take advantage of limitations in the current law. “This new bill hopefully will address these shortcomings,” said Pradeep Mehta of CUTS International, a consumer rights activist group.
The new bill also provides for framing of rules – subsequent to passage of the bill – for product recalls & on responsibility of a firm for both safety & efficacy of its products.