Consumer Couture: Assessing the Style and Substance of Modern Legal Safeguards

With the rise of digital marketplaces, cross-border e-commerce, and fast fashion, the risk of exploitation, deceptive practices, and substandard products has increased. Safeguarding consumer interests is crucial to maintaining trust in the marketplace.

Introduction

The aspect of Consumer protection can be traced back to 3200 B.C. in the Indian civilization. If we analyse the development and certain aspects of consumer awareness and protection in countries, it may be deduced that in the early times, the emphasis was primarily on cautioning consumers. Customers were advised to be careful about the inherently risky and unpredictable nature of commerce.

But it is pertinent to assert the fact that now, the era of "Caveat Emptor" is over, and today, the world acknowledges the idea that the “Consumer is King” Consumer complaints, courts, forums, and other resources are available to consumers in the 21st Century. Taking the tracing to post-independent India, it can be asserted that Indian Legislators have always been proactive in interpreting consumer laws in their best prospects. However, the dynamic and ever-changing nature of commerce continues to pose new challenges. One of the major issues is the rising prevalence of e-commerce fraud, which has become a significant threat to consumer rights in the digital age.

Recent Occurrences and Clamour for Consumer Rights

There have been instances of unfair trade practices and after that, the government took steps for the protection of consumers rights and ensuring compliance in online transactions. The Ministry of Consumer Affairs, Food and Public Distribution notified the Consumer Protection (E-Commerce) Rules, 2020, under the Consumer Protection Act, 2019. The main aim of these rules is to prevent the prevalent malpractices in e-commerce, protect consumer interests, and ensure transparency in e-commerce platforms. They also include requirements from the Legal Metrology Rules and other legislations. So, without confusion, the sanctions from Legal Metrology (Packaged Commodities) Rules, 2011 apply to e-commerce businesses.

Modifications brought by the Consumer Protection Act, 2019

The Consumer Protection Act, 2019, which replaced the 1986 Act, introduced several transformative reforms to address the changing dynamics of consumer rights including the increase in the scope of the definition of "customer" to include people who make purchases online and offline. It is seen as a game-changing step in narrowing the e-commerce sector into compliance with the Act and safeguarding the consumers against unfair commercial practices.

In this regard, Food is included in the definition of "Goods" in Section 2(21) of the Consumer Protection Act, 2019, which defines "Goods" as "any kind of movable property," including "food" as defined in clause (j) of sub-section (1) of section 3 of the Food Safety and Standards Act, 2006.

In addition to this, "Telecom" has been added to the definition of "Services" aiming to bring the telecom service providers under the Act's ambit.

Section 2(47), of the Consumer Protection Act of 2019 establishes a comprehensive definition of unfair trade practices, that describes them as any unfair or deceptive method or practice that is used to promote the sale, use, or supply of any products or services, along with an extensive list of such practices.

The National Consumer Disputes Redressal Commission handles disputes over Rs. 10 crores, while State and District Commissions manage less serious issues. In this regard, the complaints can be filed regardless of location, enhancing access.

The Act allows the Central Consumer Protection Authority to fine or imprison for deceptive advertising, with penalties up to Rs. 50 lakh and five years' imprisonment. Also, the compensation covers the property loss if any, injury, disease, death and even emotional suffering or injury. The Act of 2019 also includes the option of mediation as an Alternative Dispute Resolution method.

In the cases that if the disputes are not settled or are unable to be settled at any stage through mediation, then, the investigation will be done by the District Commission as per the Act. Also, the new law emphasizes regulating the problems that are connected to consumer rights breaches, unfair commercial practices, and false or misleading ads that are causing wrongful loss and damaging the rights and interests of the public and the consumers. The Director-General leads the Authority of the investigative committee.

It is important to note the fact that the overlap in investigative functions between District Collectors and the Authority creates potential conflicts of interest. So, it is unclear if the ongoing matters before the Consumer Commissions will continue or whether they will be remanded, increasing the possibility of delays and uncertainty.

Overview of the Consumer Protection (E-Commerce) Rules, 2020

The contemporary rules apply to all online goods and services which includes taxi-hailing and edtech providers. Platforms and sellers are required to protect consumer interests. There should be an appointment of a Nodal Officer, and a grievance officer, and ensure clear shipping, payment, and refund terms. It is required by the platforms that they must monitor for trademark and IT Act violations, though rules are silent on cross-licensed products. This helps in reducing consumer burdens and also holds manufacturers accountable for any discrepancies or misleading ads.

Overall, while the Rules encourage the consumers’ interest protection, their full impact and scope are yet to be determined. So, although these Rules are a positive initiation towards protecting consumers' interests, they also have certain uncertainties about the various circumstances.

It can be asserted that these Rules are beneficial for consumers but at the same time, challenging for platforms to comply with. To address the concerns, the Ministry issued a Notification on May 17, 2021, introducing the Consumer Protection (E-Commerce) (Amendment) Rules, 2021. These amendments require the appointment of an Indian Nodal Officer or a senior functionary for companies outside India or those controlled by Indian residents.

E-Commerce Frauds: A Persistent Challenge for Indian Consumers

The efforts of Indian legislators' efforts regarding the protection of consumer rights have gaps that benefit the e-commerce sector. Despite the broad interpretations, the new laws are still on the back foot as they are still missing the key loopholes, leading to over 22% of customer complaints being related to e-commerce transactions. Over the previous years, an increasing number of product-related rights, such as ‘country of origin’ information have been introduced on e-commerce platforms, resulting in a spike in complaints in the consequent years. Indian consumer laws are still developing and lag behind advanced cybercriminal tactics and technology-oriented frauds.

E-commerce has transformed buying and selling, providing benefits like global access, increased choices, competitive prices, customized products, and reduced costs. However, it raises concerns about consumer rights violations. Despite the advantages, the risk of breaches of fundamental consumer rights is significant. Globally recognized standards, supported by effective regulatory systems and legal principles, are essential for addressing these concerns in digital transactions.

Applying the same balancing theory to the problem of consumer protection in e-commerce transactions, it is emphasized that the role of the consumer protection law should be to regulate the market and the social practices for controlling bitter consequences of violations of consumer protection, to ensure proper consumer protection with the growth of the e-commerce market.

It is not to be asserted only that consumer protection laws and other regulatory systems should only secure consumer interests, but also strive to promote customers' free will in the process of carrying out e-commerce transactions without any fear of losing essential consumer rights.

Conclusion

Keeping in mind and considering today’s technological advancement and landscape, the 2019 Act is essential for consumer protection that provides clearer rights and quick resolution of problems. There are significant judgments under the now-repealed 1986 CPA that have influenced this new law. Article 19(1)(g) of the Indian Constitution protects the right to practice any profession or to carry on any occupation, trade, or business. This provision encompasses commercial speech, but such protection does not extend to speech that is untrue, offensive, or deceptive, as these can be regulated under reasonable restrictions.

References

[1] Abhishek Bagga & Smita Paliwal, Mediation: A Resolution To Complaints Under The Consumer Protection Act, 2019, Available Here

[2] Samyak Pandey, Over 22% of consumer complaints in India in last 4 years are linked to e-commerce sector, Available Here

[3] Indian consumers have the highest exposure to online fraud within Asia Pacific: Experian Fraud Insights 2017, Available Here

[4] The Consumer Protection Act, 2019

[5] Consumer Protection (E-Commerce) Rules, 2020

[6] Legal Metrology (Packaged Commodities) Rules, 2011