CBSE Class 12 Business Studies - Consumer Protection
Consumer is a person who purchases goods and services for personal use.
Under the Consumer Protection Act – 1986, "consumer" means any person who—
1. 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
2. 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 '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 purposes.
The consumer is considered to be the king in a free market economy. The earlier approach of caveat emptor meaning ‘let the buyer beware’ has now been changed to Caveat venditor i.e. ‘let the seller beware’.
Due to the growing competition in the market and to increase sales the manufacturers and service providers may indulge in unscrupulous and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, black marketing, hoarding etc. so all this will lead a consumer to be exposed to risks due to unsafe products, cheated because of misleading advertisements, suffer from bad health, might have to pay higher price when seller engage in overpricing or black marketing.
Therefore there’s a need for protecting consumers against such practices.
IMPORTANCE OF CONSUMER PROTECTION
From consumers’ point of view:
- Consumer ignorance: Indian consumers are ignorant about their rights and reliefs available, therefore it becomes necessary to educate them about their rights so that they become more aware.
- Unorganised consumers: In India we do have various consumer organisations which are working in the field of educating consumers about their rights and promoting their interests. However these organisations are very few in numbers, therefore adequate protection is required to be given to the consumers till these organisations become powerful enough to protect and promote the interests of consumers.
- Widespread exploitation of consumers: consumers might be exploited by manufacturers and service providers which may indulge in unscrupulous and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, black marketing, hoarding etc. Consumers need protection against such malpractices of the sellers
From the point of view of business:
Long term interest of business: A good business firm will always be customer oriented because they know that they can capture big market share only when they are able to satisfy their customers by providing quality products at reasonable price. Satisfied customers not only lead to repeated sales but also provide referrals to potential customers and thus help in increasing the customer – base of business.
Social responsibility: a business organisation make money by selling goods and providing services to their customers, therefore customers form the most important group among other stakeholders and just like other stakeholders their interest should also be kept in mind.
Business use society’s resources: As business use the resources of the society therefore it’s the responsibility of business to provide such products and services which are in public interest.
Moral justification: a firm must take care of consumer’s interest and should never get involved in unfair and unethical trade practises like hoarding, black marketing, adulteration etc. which can cause any harm to its customers or potential customers.
Government intervention: it’s advisable for a business not to involve in any form of unfair and exploitative trade practices because such a thing would invite government intervention which in turn will tarnish the firm’s image.
CONSUMER PROTECTION ACT- 1986
To protect the rights of the consumer The Government of India has passed many laws, some of which are Consumer protection act -1986, The Indian contract act -1872, The competition act 2002, The prevention of food adulteration act – 1954 etc.
The consumer protection act seeks to protect & promote the consumer interest through speedy & inexpensive redressal of their grievances.
- The scope of consumer protection act is very wide.
- Applicable to all businesses, big or small, private or public, manufacturing or trading etc.
The act provides certain rights to the consumers which empower and protects the consumer.
Consumer protection Act provides six rights to consumer these rights are as follows:
1.Right to safety: the consumer has rights to be protected against goods and services which are hazardous to life and health.
FOR EXAMPLE - Electric goods that are not manufactured according to standards might give a shock to a user . Before purchasing an electronic appliance a consumer must look for an ISI mark.
2.Right to be informed: the consumer has a right to have complete information about the product, its features, ingredients, price, date of expiry and manufacturing etc. in India it is mandatory to provide such information on the label/ package of the product.
3.Right to choose: the consumer should have a right to choose from a variety of products at competitive price. Therefore, the marketers should offer a wide variety of products in terms of quality, brand, price, size etc. and allow the consumer to make a choice from these.
4.Right to be heard: the consumer has a right to file a complaint and to be heard in case of dissatisfaction with goods or service.
- Many companies have set up their own consumer services.
- Many NGOs and consumer organisations are also working towards this direction and helping consumers in redressal of their grievances.
5 .Right to seek redressal: a consumer has all rights to seek redressal if he isn’t satisfied with the product. The consumer protection act provides a number of relief to the consumer including replacement of the product, removal of defect, compensation to be paid for loss or injury etc.
6.Right to consumer education: the consumer has right to acquire knowledge and to be well – informed consumer throughout life, he should be made aware of his rights and reliefs available to him in case the product or service falls short of his expectations.
Many consumer organisations and some reputed businesses are taking an active part in educating consumers in this respect
REDRESSAL AGENCIES UNDER CONSUMER PROTECTION ACT
Who can file a complaint?
- Any registered consumers association
- The central or the state government
- A legal heir or representative of a deceased consumer; and
- One or more consumers on behalf of numerous consumers having the same interest.
Against whom can a complaint be filed?
- The seller, manufacturer or dealer of goods which are defective. Defects means any fault, shortcomings, imperfection in the quality, quantity or purity of goods.
- The service provider if they are deficient in any manner. Deficiency means any imperfection, shortcomings or inadequacy in the quality, nature and manner of performance of service.
THREE-TIER REDRESSAL MACHINERY
1. District Forum: The District Forum consists of a President and two other members, one of whom should be a woman. They all are appointed by the State Government concerned. A complaint can to be made to the appropriate District Forum when the value of the goods or services in question, along with the compensation claimed, does not exceed Rs. 20 lakhs. On receiving the complaint, the District Forum shall refer the complaint to the party against whom the complaint is filed. If required, the goods or a sample thereof, shall be sent for testing in a laboratory. The District Forum shall pass an order after considering the test report from the laboratory and hearing to the party against whom the complaint is filed. In case the aggrieved party is not satisfied with the order of the District Forum, he can appeal before the State Commission within 30 days of the passing of the order.
2. State Commission: Each State Commission consists of a President and not less than two other members, one of whom should be a woman. They are appointed by the State Government concerned. A complaint can to be made to the appropriate State Commission when the value of the goods or services in question, along with the compensation claimed, exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore. The appeals against the orders of a District Forum can also be filed before the State Commission. On receiving the complaint, the State Commission shall refer the complaint to the party against whom the complaint is filed. If required, the goods or a sample thereof, shall be sent for testing in a laboratory. The State Commission shall pass an order after considering the test report from the laboratory and hearing to the party against whom the complaint is filed. In case the aggrieved party is not satisfied with the order of the State Commission, he can appeal before the National Commission within 30 days of the passing of the order.
3. National Commission: The National Commission consists of a President and at least four other members, one of whom should be a woman. They are appointed by the Central Government. A complaint can to be made to the National Commission when the value of the goods or services in question, along with the compensation claimed, exceeds Rs. 1 crore. The appeals against the orders of a State Commission can also be filed before the National Commission. On receiving the complaint, the National Commission shall refer the complaint to the party against whom the complaint is filed. If required, the goods or a sample thereof, shall be sent for testing in a laboratory. The National Commission shall pass an order after considering the test report from the laboratory and hearing to the party against whom the complaint is filed.
An order passed by the National Commission in a matter of its original jurisdiction is appealable before the Supreme Court. This means that only those appeals where the value of goods and services in question, along with the compensation claimed, exceeded Rs. 1 crore and where the aggrieved party was not satisfied with the order of the National Commission, can be taken to the Supreme Court of India. Moreover, in a case decided by the District Forum, the appeal can be filed before the State Commission and, thereafter, the order of the State Commission can be challenged before the National Commission and no further.
- To remove the defect in goods or deficiency in service
- To replace the defective product with a new one, free from any defect
- To refund the price paid for the product or service
- To pay punitive damages in appropriate circumstances
- To stop manufacture of hazardous goods and to desist from offering hazardous services.
- To pay reasonable amount of compensation for any loss or injury suffered by the consumer due to the negligence of the opposite party.
- To withdraw the hazardous goods for sale.
- A consumer must be aware about various goods and services that are available in the market so that he can make a wise choice.
- While buying the product a consumer must read the label carefully in order to find important information such as price, date of manufacturing, net weight, expiry dates etc.
- A consumer should purchase standardized goods as they provide quality assurance. He should look for ISIS mark on electrical goods, Hallmark on jewellery etc.
- The consumer must ask for a cash memo on purchase of goods and services. This would serve as a proof of purchase. If there is any defect in goods purchased or deficiency in service hired, he must have the cash memo to file a complaint in the appropriate consumer court.
- A consumer must be honest in his dealings, he should discourage any unethical practices like hoarding, black marketing etc.
- A consumer must file a complaint in an appropriate consumer court in case the good purchased are defective or there is a deficiency in the service hired. He should take action even if the amount is small.
- The consumer must learn the risk associated with products and services, follow manufacturer’s instructions and use the products safely.
ROLE OF CONSUMER ORGANISATIONS AND NGO’s
Non-governmental organisations (NGO) are non-profit organisation which aim at promoting the welfare of people. They have a constitution of their own and are free from government interference. In India we have several consumer organisations and NGOs that are working for protection and promotion of consumers interest.
Some of the functions of NGOs are as follows:
- Educating the general public about consumer rights by organising training programmes, seminars and workshops.
- Carrying out comparative testing of consumer products in accredited laboratories and publishing its results.
- Publishing periodicals and other publications to impart knowledge about consumer problems, reliefs & remedies available etc.
- Providing legal assistance to consumer by way of providing aid, legal advice etc. in seeking legal remedy.
- Taking an initiative in filling cases in consumer courts in the interest of the general public, not for any individual.
- Filling complaints in appropriate consumer courts on behalf of the consumers.
Following are some of the NGOs working for consumers:
- Voluntary organisation in interest of consumer education (VOICE), Delhi
- Consumer coordination council, Delhi
- Consumer guidance society of India, Mumbai
- Consumers’’ association, Kolkata
- Consumer protection council, Ahmedabad