Misleading Ads and CCPA jurisdiction
- March 23, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Misleading Ads and CCPA jurisdiction
Section: Statutory organization
Context: The Central Consumer Protection Authority (CCPA) has ordered discontinuation of certain misleading advertisements of Sensodyne toothpaste within seven days, and imposed a penalty of ₹10 lakh on the manufacturer
- The Consumer protection Act of 2019 Indian Parliament, in August 2019, passed the landmark Consumer Protection Bill, 2019. COPRA is regarded as the ‘Magna Carta’ in the field of consumer protection
- The Eight Basic Consumer Rights: The Right to Basic Needs, 2. The Right to Safety, 3. The Right to Information, 4. The Right to Choose, 5. The Right to Representation, 6. The Right to Redress, 7. The Right to Consumer Education, 8. The Right to a Healthy Environment.
Highlights of the New Act:
- E-Commerce Transactions: The New Act has widened the definition of ‘consumer’. The definition now includes any person who buys any goods, whether through offline or online transactions, electronic means, teleshopping, direct selling or multi-level marketing.
- E-Filing of complaints: The New Act contains enabling provisions for consumers to file complaints electronically and for hearing and/or examining parties through video-conferencing
- Unfair Trade Practices: The New Act introduces a specific broad definition of Unfair Trade Practices, which also includes sharing of personal information given by the consumer in confidence, unless such disclosure is made in accordance with the provisions of any other law.
The Act defines “misleading advertisement” in relation to any product or service, as “an advertisement, which—
(i) falsely describes such product or service; or
(ii) gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or
(iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or
(iv) deliberately conceals important information”.
Penalties for Misleading Advertisement:
- The CCPA may impose a penalty of up to INR 1,000,000 on a manufacturer or an endorser, for a false or misleading advertisement. The CCPA may also sentence them to imprisonment for up to two years for the same. In case of a subsequent offence, the fine may extend to INR 5,000,000 and imprisonment of up to five years.
- The CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to one year. For every subsequent offence, the period of prohibition may extend to three years.
Central Consumer Protection Authority (CCPA)
- The Consumer Protection Act, 2019 establishes the Central Consumer Protection Authority (CCPA) whose primary objective will be to promote, protect and enforce the rights of consumers.
- It will be empowered to conduct investigations into violation of consumer rightsand institute complaints / prosecution, order recall of unsafe goods and services, order discontinuation of unfair trade practices and misleading advertisements, impose penalties on manufacturers/endorsers/publishers of misleading advertisements.
- It will be headquartered in the National Capital Region of Delhi but the central government may set up regional offices in other parts of the country.
- It will have a Chief Commissioner as head, and only two other commissioners as members — one of whom will deal with matters relating to goods while the other will look into cases relating to services.
- The CCPA will have an Investigation Wing that will be headed by a Director General.
- District Collectors too, will have the power to investigate complaints of violations of consumer rights, unfair trade practices, and false or misleading advertisements.
- The CCPA will have an investigation wing, headed by a Director General, which may conduct inquiry or investigation into consumer law violations.
Powers and Functions:
- Inquire or investigate into matters relating to violations of consumer rights or unfair trade practices suomotu, or on a complaint received, or on a direction from the central government.
- Recall goods or withdrawal of services that are “dangerous, hazardous or unsafe.
- Pass an order for refund the prices of goods or services so recalled to purchasers of such goods or services; discontinuation of practices which are unfair and prejudicial to consumer’s interest”.
- Impose a penalty up to Rs 10 lakh, with imprisonment up to two years, on the manufacturer or endorser of false and misleading advertisements. The penalty may go up to Rs 50 lakh, with imprisonment up to five years, for every subsequent offence committed by the same manufacturer or endorser.
- Ban the endorser of a false or misleading advertisement from making endorsement of any products or services in the future, for a period that may extend to one year. The ban may extend up to three years in every subsequent violation of the Act.
- File complaints of violation of consumer rights or unfair trade practices before the District Consumer Disputes Redressal Commission, State Consumer Disputes Redressal Commission, and the National Consumer Disputes Redressal Commission.
Consumer Disputes Redressal Commissions (CDRCs)
- National Consumer Disputes Redressal Commission (NCDRC): A national level court works for the whole country and deals compensation claimed exceeds rupees one core. The National Commission is the Apex body of Consumer Courts; it is also the highest appellate court in the hierarchy.
- The National Consumer Disputes redressal Commission (NCDRC), is a quasi-judicial commission in India which was set up in 1988 under the Consumer Protection Act of 1986. Its head office is in New Delhi. The commission is headed by a sitting or retired judge of the Supreme Court of India.
- State Consumer Disputes Redressal Commission (SCDRC): A state level court works at the state level with cases where compensation claimed is above 20 lakhs but up to one core. The State Commission also has the appellate jurisdiction over the District Forum.
- District Consumer Disputes Redressal Forum (DCDRF): A district level court works at the district level with cases where the compensation claimed is up to 20 lakhs
Consumers can file complaints with the CDRCs regarding any of the following.
- Defective goods or services
- Overcharging or deceptive charging on goods and services
- Any unfair or restrictive trade practices
- Offering services or sale of goods which can be hazardous to life or not safe
- As per the new act, all the laws that apply for direct selling would also be applicable for E-Commerce.
- Consumers can file complaints from anywhere and they do not need to hire lawyer to represent their cases. For mediation, there will be strict timeline fixed in the rules.
- On misleading advertisements there is provision for jail term and fine for manufacturers.
- For the first time there will be an exclusive law dealing with Product Liability. A manufacturer or product service provider or product seller will now be responsible to compensate for injury or damage caused by defective product or deficiency in services.