In today’s world, the protection of the consumer is considered to be of utmost importance. All around the world, mechanisms have been pondered upon in order to uphold the satisfaction of the consumer. But what is the concept of consumer and the essence of consumer protection? Why does consumer protection have such a crucial role to play in modern society? This article will explain it all in detail.
Who is a Consumer?
The definition of the consumer has evolved, with various cases like Morgan Stanley Mutual Fund v. Kartick Pas and S.P. Goel vs. Collector of Stamps Delhi having defined the term. In simple words, a consumer is any person who purchases a product and uses the product. He or she is the individual that consumes the good or service being offered for sale by the seller. Section 2(1)(d) of the Consumer Protection Act, 1856 stresses on the nuances of the definition of a consumer of goods and services. It defines consumer as a person who:
buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who 12 [hires or avails of] the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose.
According to this clause, a consumer of a good, that is a tangible product, is one who buys the good from the seller for a considerable amount that he has:
- paid or
- promised or
- partially paid and partially promised.
Any system of deferred or future payment will also qualify the buyer to be a consumer. Any other person who, with the buyer’s permission, uses the good, is also a consumer. However, those who purchase goods in order to sell them again or for a commercial purpose, will be excluded from the definition of a consumer. Laxmi Engineering Works vs P.S.G. Industrial Institute defines the commercial purpose and separates it from self-employment activities.
Similar is the definition of the consumer of a service, that is intangible, where the buyer hires or avails of the service in the aforementioned methods of payment. Any other user of the service too, with the permission of the buyer, is a consumer. However, those who avail or hire such services for a commercial purpose are not consumers.Where the individual consumes for self-employment, he is still considered to be a consumer, as seen in Abhay Kumar Panda v. Bajaj Auto Limited.
Examples of Goods and Services:
A good refers to a tangible object that can be touched, seen and felt. They can be stored and transferred in physical form. Examples of goods are books, clothes, tables and so on.
Services are those that are intangible, that is, they cannot be touched or seen. They can only be felt. The quality of the service differs across different service providers and they cannot be separated from their providers. For example, banking, financing, insurance, transport and so on, as mentioned under Section 2(1)(o) of the Consumer Protection Act, 1986.
Examples of a Consumer:
Illustration 1: A buys an apple costing Rs. 5 from B, pays the money and eats the apple. Here, A is a consumer.
Illustration 2: A buys an apple costing Rs. 5 from B, promises to pay the money, and eats the apple. Here, A is a consumer.
Illustration 3: A buys an apple costing Rs. 5 from B, pays Rs. 2 and promises to pay Rs. 3, and eats it. Here, A is a consumer.
Illustration 4: A buys an apple costing Rs. 5 from B. C, on A’s permission, eats the apple. Here, C is a consumer.
Illustration 5: A buys an apple costing Rs. 5 from B in order to sell it to C. Here, A is not a consumer.
Illustration 6: A buys an apple costing Rs. 5 from B via the internet. Here, A is a consumer.
What is Consumer Protection?
US President John F. Kennedy first outlined a vision of consumer rights in a special message to Congress on 15 March 1962. This day is now celebrated as World Consumer Rights Day. Over time, the consumer movement developed this into a broader vision of our rights and needs as consumers that now guides much of our work and that of our members. Consumer Protection refers to the shielding of consumers against malpractices of sellers and traders. This is basically a way of ensuring that consumers are safe.
Each and every human being on earth mandatorily has to consume goods and services for existence and well-being. Goods may range from necessities to comforts to luxuries. All individuals purchase such products of varying categories for consumption and in turn, fall under the definition of consumer.In order to maintain peace and satisfaction amongst all the members of the society, each of them needs to be safeguarded. Consumers should be protected from those goods and services that are unsafe or hazardous to their health and hygiene. Such goods may cause an imbalance in the proper functioning of their bodies or may result in a disruption of those practices that maintain cleanliness.
For instance, goods that contain radioactive substances like uranium and thorium are harmful to human health and need to be protected against. Consumers also have to be protected against goods like foods that contain preservatives or food cooked in dirty water as they can be unhygienic.
After the successful campaigning by Consumers International, the UN Guidelines for Consumer Protection were adopted by the UN General Assembly in 1985. These were brought up to date in 2015 when the General Assembly adopted the revised UN Guidelines for Consumer Protection. These guidelines are an important tool, giving added legitimacy to the principles of consumer rights and practical support and guidance for the development of consumer protection around the world. The guidelines contain a number of consumer needs that broadly reflect the consumer rights.
Who are Consumer rights guidelines for?
The primary purport of these guidelines is to provide guidance to government departments and business organisations. It is an important tool for any organisation concerned with consumer protection. This includes:
- Civil society groups and consumer organisations – working to empower and protect consumers.
- Government departments – whose work relates to consumers in any way.
- Business Organisations – providing goods and services to consumers, both privately and publicly owned.
- Standards bodies – publishing voluntary guidance for businesses.
- Trade associations – developing industry codes of practice.
- Academics – working in the area of consumer affairs.
They are a valuable resource for any organisation in any country but may be particularly useful in areas where consumer protection needs to be strengthened. The Guidelines can be applied to all business-to-consumer transactions, carried out online or offline, in the home country or cross-border.
Need for Consumer Protection:
The existing environment of business is chaotic, with the existence of cutthroat competition, where each seller is trying his best to survive and thrive by dominating the market. In order to maximise profits, sellers go to great extents, which can also end up being unethical and subsequently harmful. Consumers are in dire need of protection for the following reasons:
- Consumers are often uninformed. They lack the knowledge of their rights and duties. They do not have effective means to differentiate between original and duplicate or adulterated goods. Hence, these innocent consumers are oblivious since they are not informed of the possible hazards that can arise.
- Consumers are often exploited by manufacturers, retailers and traders. Goods are often duplicate, adulterated, spurious and defective. Defective goods have often been provided to the consumer, as seen in T.T. Private Ltd., v. Akhil Bhartiya Grahak Panchayat and Another. Weights and measures used by retailers tend to be manipulated. Also, traders may unnecessarily hike prices. Hoarding and black marketing are rampant. Consumer Protection is hence needed to eliminate such untoward practices that exploit the consumer.
- Consumers are also not grouped together to serve a common goal. They are unorganised and haphazardly placed with no association or party uniting them and integrating their purpose. Without consumer protection, there will be no platform for the consumers to voice their grievances and seek the path of justice through redressal.
The need for consumer protection does not simply exist for consumers. Consumer Protection is necessary for companies or sellers as well, for reasons mentioned below:
- Every seller seeks to survive in the market and dominate the economy for an indefinite period of time. If the seller has no regard for the consumer’s health and hygiene, there will be no trust developed between the buyer and the seller.The seller will soon be left with no customers since ample alternatives to each good and service is available in today’s market. Hence, in order to survive competition and have a prolonged run in the market, the seller is in need of consumer protection.
- Every seller benefits out of providing goods and services to the society. He himself is a part of society. He is under a moral obligation to rightfully give back to the society by providing quality goods and services at good enough prices that satisfy the consumer. Hence, the seller needs to implement consumer protection to serve the society.
- After various cases of consumer exploitation, various consumers flocked together in order to create consumer movements and associations all across the globe. This served as a warning sign to all the sellers as their exploitation will be called out. A social boycott is the most feared possibility for a consumer who needs consumer protection in order to eliminate such a risk.
- The Government too has begun to implement rules and regulations that are sellers are bound to follow in order to avoid penalties and disqualifications from the market. Hence, if not voluntarily, consumers are forced to follow these rules that glorify protection of the consumer.
Consumer Protection Act, 1986: Scenario before and after its Enactment
Before the enforcement of the Consumer Protection Act, 1986, there were certain legislative measures that governed the protection of consumers in the market. The Agricultural Produce (Grading and Marking) Act, 1937 and the Indian Standards (Certification Marks) Act, 1952, The Prevention of Food Adulteration Act (1954), Essential Commodities Act, 1955, Standards of Weights and Measures Act, 1976 and Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 are the main legislation.
However, this was not enough. The redressal agencies set up for the protection of consumers was dysfunctional. These agencies set up by Telephones, Railways, and Insurance companies were not able to dispose of the increasing mound of complaints. Hence, consumers were not being protected as they were not being compensated.With the enforcement of the Consumer Protection Act, 1986, a widespread change was noticed. This is mainly due to the establishment of the District Forum, the State Commission and the National Commission. Complaints are now being dealt with efficiently.
The Consumer Protection Act, 1986 has proved to be effective and inexpensive due to the elimination of court fee and charge of prolonged litigation. Unlike the previous redressal agencies namely the MRTP Commission and DARPG which were situated only in the capital city, it has provided an elaborate three-tier quasi-judicial machinery in all the districts. The Act covers all goods and services including banking, financing, insurance, etc. The Act provides compensation to the aggrieved consumers, and not punishment or imprisonment inefficiently conducted like before.
Measures under Consumer Protection Act, 1986
The Consumer Protection Act, 1986 ensures the protection of consumers by including all the aspects of goods and services. It has an efficient redressal machinery spread across all the districts of the country, delivering speedy justice and no fee.The District Forum, the State Commission and the National Commission function with autonomy to judge the complaints and are linked to one another through the system of appeal.
The Act ensures the grant of compensation of the aggrieved, for his physical or emotional loss. The Act checks unfair and restrictive trade practices. It also monitors defects and deficiencies in goods and services.All in all, the Consumer Protection Act, 1986 has been a success for the aforesaid reasons.
- Why is Consumer Protection important?
Consumer Protection is important as consumers’ interests need to be safeguarded. They are informed and ununited individuals who are often exploited by sellers. They need to be protected from the unjust and unethical practices of the producers and traders.
- What are the issues in Consumer Protection?
A major issue in Consumer Protection is that consumers are often uninformed of their rights and methods of redressal. Hence, they are unable to seek justice.
- Are Consumer Protection laws effective?
Consumer Protection is effective in providing speedy and inexpensive justice. The aggrieved need not travel far to seek justice as all districts have a consumer court.
- Do Consumer Protection measures affect business?
Consumer Protection does affect business. A business organisation aims to reap profits by building consumer loyalty. If the business ensures the protection of consumers through its means, it will thrive.
- What is the Consumer Financial Protection Bureau?
The Consumer Financial Protection Bureau (CFPB) educates and empowers consumers to make better informed financial decisions.
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(1991) 2 CPJ 644.
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