ADEQUACY OF LEGISLATIVE PROVISIONS TO CRUMBLE UNFAIR TRADE PRACTICES
Author: Ashifa A Saheed, 3rd Year Student of Integrated Five Year LLB Course from Government Law College, Thiruvananthapuram
Consumerism exhibits a complex structure consisting of alternative views on consumer protection. Undoubtedly, the term “consumerism” has evolved over time and has acquired meanings which tend to be conflicting and contradictory. The main aim of all business is to maximize profit. Consumers have not only been called upon to pay higher prices but also have to settle at lower quality, spurious, duplicate and adulterated products that are being sold through misleading and powerful advertisement media. Hence, consumerism is required to protect consumer interest. The producer has the power to design the product, distribute, advertise and price it, but the consumer has only the power of not buying it. Consumer Movement thus represents an organized, collective and united effort to create a buyers’ market for all mass consumption of goods. Consumerism demands that companies should do what is best for the consumer; serve their interests, not their desires; even if this is not always what the consumer wants.
It is agreed on all hands that “consumer empowerment” in India has a long way to go. Every Year 24th December is observed as National Consumer Day with a specific theme in India. This day provides an opportunity for individuals to highlight the importance of the consumer movement and the need to make every consumer more aware of their rights and responsibilities. This day provides an opportunity for individuals to highlight the importance of the consumer movement and the need to make every consumer more aware of their rights and responsibilities.The consumer has to be aware of his rights and play a key role. Consumers should know that this is the right time to act.
Consumer Protection Act is an important milestone in the field of consumer protection, creating six basic consumer rights and establishing consumer dispute redressal agencies at district, state and central level. These quasi-judicial redressal agencies have the power to adjudicate complaints received from consumers against any defect in goods or services purchased by the consumer as well as against unfair trade practices. The Consumer Protection Act, scope is to provide for better protection of the interest of the consumers and for the purpose to make provisions for the establishment of Consumer Councils and other authorities for providing speedy solutions in the settlement of consumer disputes and for matters connected therewith.
The Consumer Protection Act, 1986 (COPRA) was anAct of the Parliament of India enacted in 1986 to protect the interests of consumers in India. This Act is regarded as the 'Magna Carta' in the field of consumer protection for checking unfair trade practices, ‘defects in goods’ and ‘deficiencies in services’ as far as India is concerned. It has led to the establishment of a widespread network of consumer forums and appellate courts all over India. It has significantly impacted how businesses approach consumer complaints and has empowered consumers to a greater extent. The Consumer Protection Act, 1986 had several challenges and faced many setbacks which needed immediate attention. But the government brought about a drastic change and introduced The Consumer Protection Act, 2019 which came into force on 20 July 2020. This earlier enactment had been revised every now and then to bring it in conformity with changes brought about by globalization, economic liberalization, digitalization of products and services etc. however, its implementation was a long way to achieve its desired objective of socio-economic legislation which sought to provide protection of the interests of the consumers. While on the other hand the new Consumer Protection Act, 2019 will strengthen and enhance the scope of protection provided to the consumers by revamping the advertising claims, endorsements, punishments, jail terms, administration of the disputes and various other factors.
CPA seeks to protect the following basic rights of consumers:
Right against the marketing of goods and services which are hazardous to life and property;
Right to be informed about the quality, quantity, potency, purity, standard and price of goods or services;
Right to choice, wherever possible through access, to a variety of goods and services at competitive price
Right to be heard and to be assured that consumers’ interests will receive due consideration at appropriate forums;
Right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers;
Right to consumer education;
Right to clean and healthy environment.
The Consumer Protection Act, 2019 has been enacted with a view to widen the scope of consumer rights and cover the field of e-commerce, direct selling, tele-shopping and other multi levels of marketing in the age of digitization. Through the Consumer Protection Act, 2019, the prevalent consumer laws have been overhauled. The codification of certain statutory rights applicable to all consumers in terms of the quality, quantity, prices, information about the product, etc., is a testament to the objectives sought from CPA 2019. The consumer protection policy and law are primarily concerned with the nature of consumer transactions, trying to improve market conditions for effective exercises of consumer choice.
Under the Act, consumers have six main rights, which are listed as follows:
the right to be protected against the marketing of goods, products or services which are hazardous to life and property;
the right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be, so as to protect the consumer against unfair trade practices;
the right to be assured, wherever possible, access to a variety of goods, products or services at competitive prices
the right to be heard and to be assured that consumer's interests will receive due consideration at appropriate form
the right to seek redressal against unfair trade practice or restrictive trade practices or unscrupulous exploitation of consumers
the right to consumer awareness
· Misleading and false advertisements is one of the many aspects that were introduced by the 2019 Act. The repealed Act did not deal with the concept of misleading and false advertisements. Misleading advertisement is defined under Section 2(28) of the Act and includes any advertisement, which gives false description of a product or service, gives false guarantee misleading the consumers, and conveys express representation constituting unfair trade practice and deliberately not revealing essential information about the product.
· Under Section 21(4) of the Act, any person who publishes false and misleading advertisements may be punished with imprisonment or a penalty that may extend up to ten lakh rupees.
The most significant amendment made to the consumer law is the expansion of the term ‘unfair trade practice’. With the increase in transaction on digital marketplace / platforms, one of the major setbacks is protection of personal data provided for such transactions. It has been seen that many organizations, including hospitals, travel companies, banks and supermarkets hold consumers personal data and at times same is misused or shared with third parties. The term Unfair Trade Practice (UTPs) broadly refers to a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice which is prohibited by a statute or has been recognized as actionable under law or by a judgment of the court. An unfair trade practice is sometimes referred to as “deceptive trade practices” or “unfair business practices.”
UTPs (Unfair trade practices) not only harm the consumers, but also victimize other market players in the process, especially the smaller enterprises, and more importantly, they may cause damage to the market as a whole as well. For this reason, there has been a fair amount of uncertainty across countries regarding how to deal with them, in theory as well as in practice. In some countries, UTPs fall within the purview of the competition statutes, in some others, that of the consumer protection one, and in some other cases, they are dealt with by a separate law/act. UTPs also remain an issue of low significance when compared to the high profile of other antitrust/competition issues, unfortunately.
The MRTP Act, 1969, was enacted to prevent monopolies and restrictive trade practices in the economy. MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT (MRTP), 1969 to prevent the concentration of economic power to common detriment, control of monopolies, and prohibition of monopolistic and restrictive trade practices (MRTP) and matters connected therewith.The MRTP created a judicial body called the MRTP Commission and the DGIR was to take cases before the benches of the Commission. The Commission, on judging a practice to be an unfair trade practice, could order the offending party to cease and desist the practice. . Section 36 A of the Act lists unfair trade practices. The Commission could discontinue an unfair trade practice, under Section 36 D, if the practice is ‘prejudicial to the public interest or to the interest of any consumer or consumers generally.The Government of India constituted a Competition Commission of India to recommend legislative measures for protecting and enhancing competition in the economy. Following its recommendations, the government repealed the MRTP Act. The Competition Commission was of the view that the Competition Act should not be burdened with unfair trade practices.This was, instead, given effect under the Consumer Protection Act, 1986 (CPA). After coming into effect of the Competition Act, 2002, as recommended by the Raghavan committee, a separate chapter relating to UTPs was introduced under the Consumer Protection Act, 1986 as the committee was of the opinion that the that the Competition Act should not be burdened with UTPs and thus this was, instead, given effect under Consumer Protection Act which was already dealing with unfair trade practices. Since a consumer needed protection not only from being supplied with defective goods and deficient service but also unfair trade practices, the provisions on unfair trade practices were transferred from the MRTP Act into the Consumer Protection Act
Unfair trade practices encompass a broad array of torts, all of which involve economic injury brought on by deceptive or wrongful conduct. The legal theories that can be asserted include claims such as trade secret misappropriation, unfair competition, false advertising, palming off, dilution and disparagement.It also includes the deceitful and misleading representation of goods and services which portrays a false image of the product. Information regarding utility, quality and standard, style etc. of goods and services may be twisted under this practice. A practice or act that is deceptive, fraudulent, or causes injury to a consumer simply. These practices can include acts that are deemed unlawful like false representation of a good or service; false free gift or prize offers; non-compliance with manufacturing standards; false advertising; or deceptive pricing.
Section 2(47) of the Consumer Protection Act, 2019 defines ‘unfair trade practice’
"Unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:— (i) making any statement, whether orally or in writing or by visible representation including by means of electronic record, which— (a) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;
(b) falsely represents that the services are of a particular standard, quality or grade;
(c) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;
(d) represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;
(e) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;
(f) makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;
(g) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof:
The definition of ‘unfair trade practice’ has been broadened to include practices such as:
manufacturing or offering spurious goods for sale or adopting deceptive practices for providing service,
not issuing proper cash memo or bill for the services rendered and the good sold,
refusing to withdraw, take back or discontinue defective goods and services and refund the consideration taken thereof within the time period stipulated in the bill or within 30 days if there is no such provision in the bill,
Disclosing personal information of the consumer to any other person not in accordance with the prevailing laws.
Unfair trade practice can be categorized as under-
False offer of bargain price
Free gifts offers and prize schemes
Non-compliance of prescribed standards
Hoarding, destruction etc.
With an increase in sellers in the market, each seller tries to enhance his goods and services in order to surpass competitors and maximize profits. This cut-throat competition may result in the focus of satisfaction of consumers being forgotten. The exploitation of consumers is curbed through these regulations. The repealed Act of 1986 did not include online misleading advertisements in the definition of unfair trade practice that were added in the 2019 Act. CPA 2019 also provides for penal action against selling, storing, and distributing adulterous and spurious goods. The same has been given below.