Consumer Rights in India: A Walk in Time

I. Introduction

To create awareness about consumer’s right and safeguard the interests of consumers, World Consumer day is celebrated on the 15^th day of March every year, after it was established for the very first time by Consumers International in 1983 also known as the World Federation of Consumer Groups.

According to a survey of 2021, a total of 624 million Internet users are there in India. This enormous number has amplified by 47 million between 2020 and 2021.² In terms of Internet Penetration, China, Indian and the USA stands at 1^st, 2^nd and 3^rd place all over the world respectively. This number makes India a great pool of opportunity for e-commerce transactions. Post demonetisation, the Indian government has been consistently encouraging the Indian citizens to use digital platforms for the transaction to promote cashless transactions and turn India digital. But before we start the discussion on the pros and cons of consumer rights in the digital world, let dive into the emergence of consumer rights, and why was the need felt for it.

II. Consumer right- the rise

In ancient times, the Indian society used to follow Dharam-sastras that provided for the social rules and norms that served as guiding principles and governed human relations.³ It is of great significance that the emergence of Dharma-sastras took place from Vedas, which were considered the words of Gods. The said laws were known to have a divine origin that sages conveyed to the common people at large. Therefore, it can be said that the sole primary sources of law in India were the Vedas.⁴ The living conditions of the people were observed and recorded through divine texts that also provided for the principles that guided the Kings to rule their state and subjects.

Ancient India substantiates that consumer rights hail from a long time ago through rules of various periods and kingdoms in India. One of these Smiritis is Manusmiriti, who talked about fair trade practices. It conveyed the principles and guidelines that a merchant or trader should adhere to while dealing in the market. Manu in Manusmiriti also prescribed a code for conducting trade and also prescribed punishment for unfair trade practices against the buyers. Some instances reveal that Manu also mentioned the rules of competency for parties to enter into a contract. Another significant source that added prominence to consumer’s right was Kautilya’s Arthshashtra which was created during the period of Chandragupta. It discussed the theories of statecrafts and rights and duties of subjects and also talked about the duties of the director of trade, official standards of weights and measures, severe punishments for different types of cheating. ⁵

With the rise of Islam as a religion, when the medieval period in India saw a drift from the era of Kingdoms to Sultanate, the local conditions acted as the factor to determine the price of goods. The Holy Quran emphasised the protection of the consumer’s rights from unfair trade and practices. It was seen during the rule of Alauddin Khilji that the market was put under strict controls and a mechanism for price enforcement was established and those shopkeepers who underweighted their goods were punished.⁶

Before India fell under the rule of the British crown, all the laws that prevailed in the Indian subcontinent were uncodified. It was only after the British rule, the laws derived from customs and cultures were unified and moulded into a bunch of codes that formed a nationwide legal system. This legal system was following the modern elements of British Localism which marked the introduction of several acts like-

• The Indian Penal Code, 1860
• The Carriers Act 1865
• The Indian Contract Act, 1872
• The Agricultural Produce (Grading and Marking act) 1937
• The Drugs and Cosmetics Act. 1940

But these were not all the laws, numerous other laws were enacted for the betterment of consumers and safeguarding their interests after India attained independence from the colonial rule. Even after the independence and introduction of the Constitution in our country, the rules that prevailed and new laws that were introduced were highly based on the legislation that was established during the British rule in India. The introduction of the constitution made it apparent that the prime focus was on the social and economic welfare of the general public, who were the citizens of India on one hand and consumers on the other.⁷ The main acts are-

• The Drugs Control Act 1950
• The Industries (Development and Regulation) Act, 1951
• The Prevention of Food Adulteration Act, 1954
• The Essential Commodities Act, 1955
• The Trade and Merchandise Marks Act, 1958
• The Standards of Weights and Measures Act, 1976
• The Prevention of Black Marketing and Maintenance of Supplies of Essential

Commodities act, 1980

• The Bureau of Indian Standards Act, 1986

Post-independence, around 40 laws were enacted to preserve the rights and interests of the consumer, but unfortunately, having some or other shortcomings these laws were not able to attain the desired outcome. The consumer rights were not covered adequately and the exploitation of them was needed to be addressed dynamically. The need was felt for many stringent laws that could be relied upon so that justice could be delivered to the consumers. ⁸

After a profound study of the laws that aimed at protection of consumer’s rights operating in various countries and consulting to multiple national and international delegates of consumer, trade and industrial segments, the idea to introduce legislation for consumer rights protection was derived.⁹ The Consumer Protection Act was inspired by the International Framework as laid down by the United Nations. To provide effective protection to the consumer’s rights, the COPRA¹⁰ was enacted in the year 1986. This act was made to swathe all the loopholes that made all the previous acts and legislations since 1950 ineffective and thus, the enactment of this act was considered a milestone acquired towards the protection of the rights of the buyers. It was said that this act was enacted to provide “an additional layer of protection to the consumers and not the derogation of the laws in existence before this act”¹¹

III. Digital age – the pleasure and pain

With the rise of E-commerce in India, the face of the market has changed for both the buyers and the sellers. E-commerce came up with a completely different set of advantages and setbacks for both consumers and traders. The major trigger for the escalation in digitalisation was increasing penetration in the internet and Smartphone usage.¹² As seen from ancient times, India has been the favourite pick for the traders to establish a business due to the richness of opportunities and growth aspects. In a likewise manner, the digital market grew beautifully and picked up a pace not very long ago, that is continuously increasing every minute. With internet penetration expected to double by end of the year 2022, India is the country with arguably the world’s most promising internet economy.¹³¹⁴

Undoubtedly, consumers have been benefitted in numerous well-known ways due to the rise of e-commerce. The most known benefits can be considered as stated under-

• Cheaper costs- being a consumer and purchasing goods and services online are likely to cost less than going to a store physically to purchase the same good and services. The sole reason is that sellers do not need to establish a store and invest in its maintenance; the business operates completely through webs and the internet, thus, cutting the costs of management of a physical storefront.
• Saves precious time- the transactions that take place online does not require lining up as in stores and thus save the precious time of the consumers. Just a few clicks and the transaction are done with.
• Availability 24/7- the online shopping of any goods and service are not confined to the limits of store timings anymore. A consumer can avail of them at any time of the day or night.
• Wide range of products- the websites online offers way more range of products that a classic store physically can provide.
• Previews-One more reason to purchase goods online is that a customer can see the reviews of the previous customers that have bought the same product and satisfy themselves regarding various questions related to authenticity, reliability and quality of the product with their review.¹⁵
• Convenient and Safe- In the times when health threats are lurking outside as the world is facing the pandemic, online shopping provides a completely safe and more convenient way of getting goods that one want, than risking their health to go out and purchase the needed. ¹⁶

But being a consumer of e-commerce does not come with comforts only. The rise of e-commerce in India amplifies over the past decade and brought about a revolution in the shopping culture of the customers. Even big-shot merchants, designers, traders have shifted their businesses online on websites like Amazon, Flipkart, Myntra, Big Basket and many more. ¹⁷Many challenges are faced by consumers of e-commerce that can state as follows-

• Transparency- it is important to build the trust of a consumer if one thrives to stay in a business. But many e-merchants seems to have a lack of transparency, overly complex policies on consumer data collection, and inadequate disclosure on the collected data and its usage, which has become quite common issues across the digital market.
• Discrimination over preference- On one hand while the collection of consumer-related data helps in consumer profiling and helping in personalisation of goods and products, on the other hands the same leads to discrimination against customers in matters of cost, offers, brands preferred or presentation of data.
• Privacy – It is one of the major concerns now that the digital world has been so much in the limelight. All the e-commerce websites and portals are heavily dependent upon the personal information that is provided by the customers. With the benefit of product personalisation, it poses a great threat to the privacy and security of personal information.
• Accountability- If there are problems in transactions with consumers, the new ecosystem of products and business models may raise the following questions: who is ultimately responsible, is responsible. Further, with interconnected IoT devices and ecosystem, it is difficult for consumers to determine their responsibilities and responsibilities. In addition, as far as PMP is concerned, sellers can avoid liability in jurisdictions, and in jurisdictions, consumer protection regulations do not apply to transactions between consumers.¹⁸
• Scams- Fraud and scams due to mishandling of information or the inability to use information are seriously affecting consumer interest, thus, exploiting trust in the online marketplace. Consumer safety is an important part of consumer safety, and therefore, the lack of awareness of online portals and personal information is an important reason for consumers to enter the trap of fraudulent transactions.

IV. Consumer protection act, 1986

Though the enactment of The Consumer Protection Act, 1986 was considered a great achievement in the sphere of Consumer Right’s protection in India, the law did not aid to the problems of customers in the digital era and did not hold any provisions for the protection of consumer’s rights in the web of the Internet. The act of 1986 regulated the laws and rules relating to unfair trade practice and related violations of the rights of customers.¹⁹

But the major drawback was proved in recent times when it was realised this act did not hold any active provisions for protecting the rights of consumers in case of online transactions. The consumer protection act 1986 completely exclude the liability of “a deficiency of services” or “defects of goods” or due to “occurrence of Unfair trade practices” in the case of e-consumers.²⁰ That implies that the consumer protection act will not be applicable in a case where a consumer faces a fraud or scam online. There was felt a need to introduce a mechanism that properly deals and attends to the needs and grievances of e-consumers. Hence, concerning the protection of e-consumers in e-commerce the Consumer Protection act 2019 was introduced repealing the decades of the law of 1986. The act of 2019 introduced major provisions dealing with issues of jurisdiction that prevailed in the COPRA 1986.²¹

V. Consumer protection act 2019

As the law of 1986 had failed to address the emerging issues faced by the consumers in the modern digital era, there was an urgent need to introduced updated laws. New methods of trade such as telemarketing, e-commerce and multi-level marketing and the issues relating to these areas were not covered by the old law, thus paving the path for the new law. The consumer protection act 2019 gave suo moto powers to the regulator along with expanding the scope of the framework of the law of 1986.²²

The CPA 2019²³ dealt with some very significant issues faced by the consumers –

• Product Liability – Under the statutory provision provided in this act, the consumers can claim compensation under the product liability action for a “harm” suffered by him due to deficiency in the product or services availed by him from a seller. The act of 1986²⁴ did not specify the same. Product liability action will be taken against a manufacturer if their product has a manufacturing or design defect or if it deviates from an express warranty or manufacturing specification
• Unfair Contracts- An unfair contract can be understood as a contract between a manufacturer and a consumer if that contract causes major changes in the rights of the consumer. Like the provision of Product liability, the act of 1986 did not provide consumers with a single forum against such contract. As per new rules, cases related to unfair contracts can be addressed in the State and National Commissions.²⁵
• False and Misleading Advertisements- With increasing e-commerce and online businesses, many cases were seen related to fake advertisements that led customers to believe in product or services that were completely misleading. The new laws enabled the consumer to file a complaint against such advertisements which conveys false impression and description of the product, and it can be filed with the Central Consumer Protection Authority. ²⁶

The CPA 2019 also led to change in the pecuniary jurisdiction of the commissions, which are-

• District Commission- Rs. 1 crore
• State Commission- Rs. 1 crore to Rs. 10 crores
• National Commission- More than 10 crores.

Another significant introduction that the CPA 2019 brought was the possibility of mediation, a mechanism of Alternate Dispute Resolution, which provides a way for the settlement of disputes among the seller and the buyer without having to approach the commissions. The mediation can be completed either in whole or in parts, and in the event where the mediation is successful, it is brought into writing, and put in front of the adjudicating commission. In case it is settled in parts, the commission shall continue hearing of the remaining part and record the part settled. But in case the mediation is not successful, within seven days of the receipt of the report the Commission shall pass a suitable order and shall proceed to dispose of the matter accordingly.²⁷

VI. Consumer protection (e-commerce) rules, 2020

The consumer protection (E-commerce) Rules 2020 can be said to provide a framework to dealing and marketing online goods and services under which all e-commerce entities, including B2B e-commerce and seller using e-commerce as their work to follow a specified set of rules with regards to consumers and users of an e-commerce platform. As previously discussed in this paper, the CPA 2019 introduced many significant modifications to the 1986 law, to cope up with the issues of the new digital and modern era. The E-commerce Rules of 2020 provide a framework to control the marketing, sale and purchase and trading of goods and services online²⁸. Some major introductions made by the most recent law can be outlined as follows-

• Definition of E-Commerce Entity- the new rules of 2020 defined the term “e-commerce entity” which refers to any person who owns, operates or manages digital or an electronic platform for e-commerce, but which does not include a merchant offering his goods or services for sale on a marketplace e-commerce entity. It was further categorised as Inventory e-commerce and Marketplace e-commerce
• Applicability of the Rules- the E-commerce rules 2020 shall apply to all the goods and services bought or sold over the digital means including digital products, but will not include any activity carried out in personal capacity not being part of any professional or commercial activity being conducted regularly. It is applicable both on national as well as international levels.
• Disclosure of Information- As per the E-commerce rules 2020, every e-commerce entity must provide information such as the legal name of the e-commerce entity, principal geographic address of its headquarters and all branches, names and all the details of its website, contact details, in a comprehendible and accessible manner on its platform or site of operation, and such information should be displayed prominently to its users. Also, the marketplace should specify the method of payment and product exchange/refund policies.
• Grievance Redressal System- all the e-commerce entity is required to establish an appropriate grievance redressal mechanism to address the number of complaints it normally receives from India and must appoint a grievance officer for grievance redressal of the consumer and will display the name, contact details and the designation of this officer on its platform.
• False Representation- no seller in the market may claim to be a consumer and publish an opinion about a good or service that falsely or otherwise misrepresents the quality or characteristics of any good or services. The same rule applies to the inventory e-commerce entity.
• Intellectual Property Rights- The Consumer Protection ( E-Commerce) Rules 2020 require every e-commerce enterprise in the market to make reasonable efforts to keep records of relevant information allowing the identification of all sellers who have repeatedly supplied goods or services that have been previously deleted or to which has already been deactivated under the Copyright Act, 1957, the Trademark Act, 1999 or the Information Technology Act, 2000. It further states that the entity of e-commerce may terminate this merchant's access to its platform voluntarily.²⁹

VII. Conclusion

The consumer protection laws were introduced to prevent the consumers from being exploited in the hands of the manufacturers and to avoid the concentration of powers in hands of the merchants and traders. In this prospect, the Consumer protection act was enacted in 1986 which expanded the purview of multiple laws aiming to achieve the welfare of consumers but which failed miserably. The introduction of Consumer Protection Act 1986 indubitably brought a great significance and acknowledgement to consumer’s rights and educated people about their rights as well as their duties as a customer. The act also provided a uniform system of complaint redressal at three various levels. But as the country underwent a technological advancement and saw a significant digital upgrade, the 1986 act started getting weaker every day as new challenges and issues aroused on the digital platforms. Neither the act had provisions to deal with the exploitations consumers started facing in e-commerce nor did it have proper grievance redressal systems.

The introduction of the Consumer Protection Act 2019 and Consumer Protection (E-commerce) 2020 Rules marked a new commencement of the Consumer’s era, the time when the last remaining shreds of inconsistency in the Consumer Protection Laws and fortified the power of consumers. These laws were rightly enacted as per the need of the hour. The consumer protection act 2019 addressed the major loopholes of the act of 1986 and provided the consumers with what they needed in the modern digital world. The E-commerce rules of 2020, simultaneously, went leaps and bounds to pave a path towards a poised marketplace where there is a strong system of checks and balance. In the wake of the Covid-19 pandemic, e-commerce has proved to be a blessing to all the consumers worldwide, and even if the recent laws are not completely devoid of flaws, the act of 2019 and rules of 2020 has proved to be a calibrated step in the direction of platform neutrality in the sphere of the e-commerce market.

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