Explainer - offences and penalties under the Consumer Protection Act, 2019

MEMBER FIRM OF

This is in continuation to our article on the highlights and salient features of the Consumer Protection Act, 2019, (‘Act’), and we now delve into the offences and penalty provisions of the Act.

The basic and primary mechanism under the Act is to restore justice to the complainant in the form of liquidated damages or replacement of goods/services and for certain offences, punitive damages may also be awarded to the consumer. However, the Consumer Protection Act, 2019 is not in its entirety a civil legislation as it provides for retributive justice in the form of imprisonment, and also constitutes a central regulatory authority for protection of consumer rights.

Central Consumer Protection Authority

The Act establishes a Central Consumer Protection Authority (CCPA) for the purpose of regulating matters relating to the violation of rights of consumers, unfair trade practices and false or misleading advertisements that are prejudicial to the interests of public and consumers.

Power to investigate

CCPA is empowered to investigate complaints relating to the violation of consumer rights, unfair trade practices or false or misleading advertisements, which can be initiated in 3 ways:

1. Suo-motu investigation by CCPA;
2. On complaint received by CCPA or to the District Collector;
3. On directions from the Central Government.

Orders post investigation

The CCPA is empowered to order recall of unsafe goods and services (Section 20), order discontinuance of unfair trade practices and misleading advertisements, prohibit the endorser from making any endorsement of a product or service for a certain time period, impose civil penalties on manufacturers/endorsers/publishers of misleading advertisements (Section 21). The penalty that can be imposed on a manufacturer or endorser or publisher for false and misleading advertisements can extend to Rs.10,00,000 and for subsequent contraventions, the penalty can extend to Rs.50,00,000.

While determining the quantum of the civil penalty that is to be imposed against offenders the CCPA has to take into consideration:

1. the population and the area impacted or affected by such offence;
2. the frequency and duration of such offence;
3. the vulnerability of the class of persons likely to be adversely affected by such offence; and
4. the gross revenue from the sales effected by virtue of such offence.

Safe harbour for brand endorsers and advertisement publishers

The defence that a brand endorser in a misleading advertisement, and that a publisher of a misleading advertisement can take to avoid monetary penalty is specified in Act.

• For an endorser - if due diligence had been exercised by him to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by him;
• For a publisher - if he had published the false or misleading advertisement in the ordinary course of his business. However, this defence would not be available to the publisher, if he had previous knowledge about the order passed by the CCPA regarding the withdrawal or modification of such advertisement.

Other offences and penalties:

Compounding of offences:

An offence punishable under Section 88 and 89 of the Act is compoundable on payment of such amount as may be prescribed (such amounts cannot exceed the maximum amount of fine imposed under the Act). However, the option to compound the offence is not available to a repeat offender committing the same or similar offence within 3 years from the date the first offence was compounded.