Consumer Protection Chapter Notes | Business Studies (BST) Class 12 - Commerce PDF Download

If consumers are asked to make greater sacrifices than industry, the country is going to have the greatest shortage of all consumers. Betty Furness, an American Consumer Advocate.

Protecting consumers from unfair trade practices, adopted by the producers and sellers of goods and services is termed consumer protection. It not only includes educating consumers about their rights and responsibilities but also helps in getting their grievances redressed.  

Importance of Consumer Protection 

Consumer protection measures aim to safeguard consumers from unethical practices by businesses and ensure prompt resolution of their complaints in the following areas:

• Adulteration: Preventing the sale of products that have been tampered with by adding substandard substances.
• Counterfeit goods: Prohibiting the sale of fake products that are of lower quality than the genuine ones.
• Substandard goods: Regulating the sale of products that do not meet the required quality standards.
• Duplicate goods: Restricting the sale of identical products under different brand names.
• Underweight products: Preventing the use of faulty weights and measures that result in customers receiving less than the stated quantity.
• Black marketing and hoarding: Taking action against illegal practices that lead to product scarcity and price hikes.
• Overcharging: Prohibiting the sale of products above their Maximum Retail Price (MRP).
• Defective goods: Ensuring that consumers are not supplied with faulty or dysfunctional products.
• Misleading advertisements: Regulating advertisements that falsely claim superior quality, grade, or standards for a product or service.
• Inferior services: Ensuring that the quality of services provided meets the agreed-upon standards.

From Consumer’s point of view

1. Consumers Ignorance: Consumer protection is crucial as a considerable number of consumers lack awareness regarding their entitlements and available remedies, leading to their vulnerability and exploitation. To safeguard consumers from such mistreatment, it is imperative to establish measures that ensure their protection.
2. Unorganized Consumers: Consumer protection is essential in India due to the prevailing disorganization among consumers and the scarcity of consumer organizations. As a result, there is a pressing need to establish measures that safeguard the rights and interests of consumers.
3. Widespread Exploitation of Consumers: The exploitation of consumers through numerous unfair trade practices occurs on a significant scale, underscoring the necessity for consumer protection measures to safeguard them from such exploitation.

From the business point of view

1. Long-term Business Interest: Maintaining customer satisfaction is consistently advantageous for businesses, as it is a crucial factor in achieving success in global competition. Meeting customer needs and expectations is essential for winning their loyalty. Satisfied customers not only contribute to repeat sales but also play a vital role in expanding the customer base of a business.
2. Moral Justification: Businesses have a moral obligation to prioritize consumer welfare and refrain from engaging in any form of exploitation or unfair trade practices. These practices may include the sale of defective and unsafe products, adulteration, deceptive advertising, hoarding, or involvement in black marketing. It is the responsibility of businesses to ensure the protection of consumer interests and uphold ethical standards in their operations.
3. Business uses Resources of Society: Since every business utilizes societal resources, it is incumbent upon them to operate in a manner that serves the best interests of society.
4. Social Responsibility: A business holds social responsibilities towards multiple entities such as owners, employees, government, and customers. Therefore, it is imperative to offer customers high-quality products at affordable prices.
5. Government Intervention: When a business is involved in unfair trade practices, the government takes corrective measures, which can have a negative impact on its reputation and goodwill.

Consumer Protection Act, 2019

• The Consumer Protection Act 2019 aims to safeguard and advance the interests of consumers by ensuring quick and affordable resolution of their complaints. 
• It applies to all businesses, including manufacturers, traders, and e-commerce firms, operating in India. 
• The Act grants specific rights to consumers, empowering them and safeguarding their interests.

Who is a Consumer?

Under the Consumer Protection Act 2019, a consumer is defined as a person who purchases goods or uses services for a payment, either fully or partially, or under a deferred payment scheme. This definition applies to both offline and online transactions, including teleshopping, direct selling, and multilevel marketing. However, individuals who obtain goods or services for resale or commercial purposes are not considered consumers under this Act.

Consumer Rights

1. Right to Safety: Consumers have the entitlement to be safeguarded against products and services that pose risks to their health and safety. This includes the recommendation to utilize electronic devices that are ISI-marked, indicating compliance with safety standards.

2. Right to be Informed: The consumer has right to have complete information about the product before buying it.  

3. Right to choose: The consumer has a right to choose any product out of the available products as per his own decision-making.  

4. Right to be heard: The consumer has the right to file a complaint to be heard in case of dissatisfaction with goods or services (use of grievance cell)  

5. Right to Seek Redressal: The consumer has the right to get relief in case the product or service falls short of his expectations or is dangerous. He may be provided with replacement/removal of defect or compensation for any loss. Various redressal forums are set up by the Govt. at the National and State levels. 

6. Right to consumer education: Consumers possess the right to acquire knowledge and remain well-informed throughout their lives. It is crucial to make them aware of their rights and available remedies in cases where products or services do not meet their expectations. Recognizing the importance of consumer education, the Government of India has incorporated it into the school curriculum and utilizes various media platforms to disseminate information and empower consumers with knowledge about their rights.

Consumer 

Responsibilities

1. Consumer must exercise his rights: Consumers must be aware of their rights with regard to the products or services they buy from the market.  

2. Consumer must be a Cautious consumer: While buying a product or service, a consumer should read labels carefully.  

3. Consumer must file a complaint in an appropriate forum in case of any shortcoming in the product/service availed.  

4. Consumer must insist on a cash memo i.e. proof of purchase is required to file a complaint.  

5. Consumers must be quality conscious. He should ask/look for an ISI mark on electrical goods.  

FPO mark on food products, Hallmark on jewelry etc.  

6. Consumer must bring the discrepancy in the advertisement to the notice of the sponsor.

7. Consumer must exercise his legal right. If any of these rights are violated by the manufacturer or seller, the consumers must file a complaint with the legal machinery constituted under CPA, 1986.  

Ways and Means of Consumner Protection

• Self-regulation by Businesses: Ethical standards and practices encourage firms to serve customers in a rightful manner. Setting up customer service and grievance cells to address consumer problems.
• Business Associations: Trade associations like FICCI and CII have codes of conduct for their members in dealing with customers.
• Consumer Awareness: Informed consumers can raise their voices against unfair trade practices. Department of Consumer Affairs conducts awareness campaigns like JagoGrahakJago.
• Consumer Organizations: Educate consumers about their rights and protect them from malpractices and exploitation.
• Government: Enacting measures like the Consumer Protection Act. Establishing a central authority (CCPA) to regulate consumer rights violations and unfair trade practices. Redressal machinery at district, state, and national levels for consumer grievances.

Redressal Agencies Under the Consumer Protection Act

For the redressal of consumer grievances, the act provides a three-tier machinery:  

1. District Commission

District forums are set up in each district by the state concerned. The important features are:  

• It consists of a President and two members, one of whom should be a woman, duly appointed by the State Govt.  
• It can receive consumer complaints of not more than Rs. 20 lakhs value.  
• On receiving the complaint, the district forum shall refer the complaint to the opposite party concerned and send the sample of goods for testing in a laboratory.  
• The district forum after being satisfied that goods are defective or there is some unfair trade practice can issue an order to the opposite party directing him to either replace or return the price or pay compensation. In case the aggrieved party is not satisfied with the order of the district forum. He can appeal before the state forum within 30 days of passing an order.  

2. State Commission

It is set up in each state by the govt. concerned. The salient features are:  

• Each commission consists of a president and at least 2 members appointed by state Govt.  
• Complaints of at least Rs. 20 lakhs but not more than 1 crore can be filed with the state commission.  
• On receiving the complaint, the state commission can also refer the complaint to the opposite party and send the goods for testing in the laboratory.  
• The state commission after being satisfied can order to opposite party to either replace or repay or pay compensation. In case the aggrieved party is not satisfied, they can appeal before a national commission within 30 days of passing an order.  

3. National Commission 

It is set up by Central Govt. The provisions of the act are:  

• It consists of a President and at least 4 members appointed by Central Govt.  
• All complaints pertaining to goods and services of value more than Rs. 1 crore can be filed with the national commission.  
• On receiving the complaint, the national commission can also refer it to the opposite party and send goods for testing.  
• The National Commission has the power to issue orders for replacement mentor removal and to pay compensation for the loss.  

Remedies Available to Consumers  

1. To remove the defect in goods or services.  
2. To replace the defective product with a new one free from defects.  
3. To refund the price paid for the product/service.  
4. To pay compensation for the loss or injury suffered by the consumer due to the product/service.  
5. To discontinue the unfair trade practice and not repeat them.  
6. To withdraw the hazardous goods from sale.  
7. To pay any amount (not less than 5% of the value of defective goods) to any person, a consumer organization.  
8. To issue corrective advertisements to neutralize the effect of a misleading advertisement.  

Role of Consumer Organizations and NGOs  

1. Educate the general public about consumer rights by organizing training programs, seminars, and workshops.  
2. Publishing periodicals & other publications to educate consumers.  
3. Providing legal assistance to consumers by providing legal advice etc.  
4. Producing films or cassettes on food adulteration, misuse of drugs, etc.  
5. Filing complaints in appropriate consumer courts on behalf of consumers.  
6. Encouraging consumers to take on action against unfair trade practices.  
7. Taking the initiative in filing cases in consumer courts on behalf of consumers.