CONSUMER PROTECTION (BUSINESS STUDIES - CLASS : XII)

 Class : XII (BUSINESS STUDIES) 

CHAPTER 12: Consumer Protection

 

Introduction

Under the modern concept of marketing, consumer is treated as the king of the market and all marketing activities aim at satisfying consumer’s needs and wants. But in reality a consumer is not treated like a king, instead he is being cheated and exploited. Due to growing competition and in an attempt to maximise profits by selling more, some businessmen are involved in unfair trade practices like adulteration, misleading advertisement, black-marketing, under-weight, over-charging etc. Thus, it becomes essential to protect the consumer against all these malpractices. In this regard, Government has made many efforts from time to time. The Consumer Protection Act, 1986 is available for the protection of the consumer.

 

Meaning of Consumer

A consumer is an individual or a group of people who use or consume goods or avail services. However, under the Consumer Protection Act, a consumer is defined separately for the purpose of goods and services.

(i)       Any person who buys any goods for a consideration, which has been paid or promised, or partly paid and partly promised, or under any scheme of deferred payment. It includes any user of such goods, when such use is made with the approval of the buyer, but does not include a person who obtains goods for re-sale or any commercial purpose.

 

(ii)      Any person who hires or avails of any service, for a consideration which has been paid or promised, or partly paid and partly promised, or under any system of deferred payment. It includes any beneficiary of services when such services are availed of with the approval of the person concerned, but does not include a person who avails of such services for any commercial purpose.

 

Who are not considered as consumers?

Under the Consumer Protection Act, 1986, the following persons are not considered as consumer:

 

(i)       The person who obtains goods for re-sale or for any commercial purpose.

 

(ii)      The person who obtains goods without any consideration.

 

(iii)    The person who uses the goods without the approval of the buyer.

 

(iv)    The person who hires or avails services without any consideration.

 

(v)     The person who avails, services without the approval of the hirer.

 

(vi)    The person who avails services for resale or for any commercial purpose.

 

Concept of Consumer Protection

Consumer protection means providing protection to consumers against malpractices of traders, manufacturers and service providers, providing them speedy and inexpensive redressal of their grievances and educating them about their rights and responsibilities.

  Importance of consumer protection

Consumer is at the centre stage of marketing activities. So, it is necessary to provide protection to the consumer. The importance of consumer protection can be discussed from consumers’ point of view and from business point of view.

 

(A)      From Consumers’ Point of View:The importance of consumers’ protection from their own point of view arises because of the following reasons:

 

1.     Consumer Ignorance:Because of illiteracy or lower level of education, many consumers are ignorant about their rights and remedies available to them. This ignorance may give opportunities to some suppliers to cheat the consumers by selling sub-standards goods and charging high prices. So, it becomes essential to create awareness among them regarding their rights and various redressal agencies in order to protect their interest.

 

2.     Unorganised Consumers:In developing countries like India, consumers are not organised. There are very few consumer organisations which are working to protect the interests of consumers. Consumer protection encourages establishment of more consumer organisations. Consumer protection provides certain rights and powers to these organisations as these organisations can file case on behalf of aggrieved consumers.

 

3.     Widespread Exploitation of Consumers:Although now-a-days consumer is the king of the market, but in fact he is not treated like a king, instead he is being cheated and exploited. Some dishonest and greedy businessmen use different unfair trade practices like black marketing, adulteration, etc. to cheat and exploit innocent consumers. Consumer protection provides safeguard to consumers from such exploitations.

 

(B)      From Business Point of View:

To ensure long term business success and continued growth, business enterprises put in extra efforts to protect their consumers’ interest. Consumer protection provides following benefits to businessmen:

 

1.     Long Term Interest of Business:Long-term interest of the business lies in the satisfaction of its consumers. Satisfied consumers not only bring repeat sales but also add new consumers by providing good feedback about the firm and thus, help in increasing the customer base of business. Thus, business firm should aim at long-term profit maximisation through customer satisfaction.

 

2.     Business Uses Society’s Resources:Business organisations use society’s resources. Thus, it is the responsibility of the business to provide better quality goods and services to the society. Businessmen are merely trustee of resources; they must use these resources for the benefits of consumers.

 

3.     Social Responsibility:A business had social responsibility towards various interest groups such as owners, employees, government, consumers etc. Business earns profits by selling goods and providing services to consumers. Thus, consumers form an important group and like other stakeholders, their interest should be taken care of.

 

4.     Moral Justification:It is the moral duty of business to take care of the consumer’s interest and to avoid any form of their exploitation. Thus, a business must avoid exploitative and unfair trade practices such as adulteration, misleading advertisement, black-marketing etc.

 

5.     Government Intervention: If businessmen want to avoid intervention of government then they should not involve in unfair trade practices. Government intervention may spoil the image of business. Thus, businessmen should voluntarily involve in such practices, which protect the interests of consumers.

 

Consumer Protection Act, 1986: Meaning of consumer Rights

The Consumer Protection Act, 1986 seeks to protect and promote the interests of consumers. The main features of this Act are:

 

(i)         This Act has provided various rights and responsibilities to consumers

 

(ii)        It provides safeguards to consumers against defective goods, deficient services, unfair trade practices, and other forms of exploitation.

 

(iii)       It provides for the setting up of three-tier machinery, consisting of District Forums, State Commissions and the National Commission where consumer can file complains.

 

The Act empowers consumers and protects their interest by providing them certain rights. The various consumer rights may be stated as follows:

 

1.          Right to Safety:According to this right, the consumer has a right to be protected against goods and services which are hazardous to health, life and property. To protect consumers, the government has enacted regulations under which goods must acquire necessary certification to ensure that they conform to the prescribed quality. For example, consumers must prefer to purchase electrical goods with ISI mark, foods items with AGMARK etc.

 

2.          Right to be Informed:According to this right, the consumer has the right to be informed about the quality, quantity, purity, date of manufacture, expiry date, precaution of use etc. Therefore, the manufacturers must provide such information on the package and label of the product.  Such information would enable the consumer to intelligently exercise his decision to buy a product.

 

3.          Right to Choose:According to this right, the consumer has the right to choose from a variety of products at competitive prices. It implies that suppliers should offer a wide variety of products and allow the consumer to choose from alternative products. The producer or seller should not force the customer to buy a particular brand. Consumer must have complete freedom to compare the various products and select the most suitable one.

 

4.          Right to be Heard:According to this right, consumer is allowed to file a complaint and to be heard if he finds himself exploited or is not satisfied with the goods and services. Many reputed firms have set up their own consumer service and grievance cells to listen to the consumers’ complaints and take appropriate steps to redress their grievances.

 

5.          Right to Seek Redressal:According to this right, the consumer has the right to get relief in case of defective goods or deficient services. This right includes compensation in the form of money or replace of goods or repair of defect in the goods as per the satisfaction of consumer. Various redressal forums are set up by the government at state level and national level.

 

6.          Right to Consumer Education:This right states that a consumer has the right to acquire knowledge and skills to be a well-informed consumer. The consumer should be aware about his rights and the reliefs available to him in case of a product or service falling short of his expectations. To promote awareness, Indian Government has taken several measures like campaign of ‘JagoGrahakJago’ etc. The Government of India has included consumer education in the school curriculum and in various university courses. Many consumer organisations and reputed business firms are also taking an active part in educating consumers.

Responsibilities of consumers

Rights come with responsibilities. To exercise rights, a consumer must keep in mind the following responsibilities while purchasing and using the goods or services:

 

1.          Consumer must exercise his right:According to Consumer Protection Act, the consumer is granted various rights such as right to safety, right to choose, right to be heard etc. but these rights will be useful only when consumer exercises these rights. The consumer must select the product according to his preferences, he must file a complaint if he is not satisfied with the quality of product, he must be aware of his rights and exercise them whenever required.

 

2.          Cautious consumer:The consumer should not blindly believe on the words of supplier. He must insist on getting full information on the quality, quantity, utility, price etc. of the goods or services.

 

3.          Do not be carried away by advertisement: The advertisements often exaggerate the qualities or features of product or service. The consumer must compare the actual use of product with the use shown in the advertisement and whenever there is any discrepancy or difference it must be brought to the notice of sponsor of advertisement.

 

4.          Consumer must be quality conscious:The problems of supply of substandard goods, adulterated products and duplicate products can be solved only when consumer himself stops compromising the quality of product. While purchasing the goods or services consumer must look for quality marks such as ISI mark (for electrical products), AGMARK (for agricultural commodities and livestock products), WOOL MARK (for woollen product), FPO Mark (for food products), HALLMARK (for jewellery items) etc.

 

5.          Filling complaints for the redressal of genuine grievances:Most of the time consumer ignores the loss he suffers on purchase of defective goods but this attitude of not filing complaint encourages the corrupt businessmen to supply low standard or defective goods and services. The consumer must file a complaint even for a small loss and whenever consumer is filing a complaint it must be genuine.

 

6.          Proof of transaction:Consumer must collect a cash memo or purchase bill for every transaction related to purchase of goods or services. The purchase bill or cash memo acts as a proof of purchase and can be used to file a case if the product fails to meet the expectations.

 

7.          Respect the environment:Consumer should respect the environment by avoiding waste, littering and thus, contributing to pollution free environment.

 

Who can file a complaint under the Consumer Protection Act, 1986?

A complaint before the appropriate consumer forum can be made by:

(i)          Any consumer.

(ii)        Any registered consumers’ association.

(iii)       The State or Central Government.

(iv)      One or more consumers, on behalf of numerous consumers having the same interest.

(v)       A legal heir or representative of a deceased consumer.

 

Against whom the complaint can be filed?

A consumer can file a complaint against the following:

(i)         The seller, manufacturer or a trader who has sold defective goods.

(ii)        The service provider in case the services are deficient in any manner.

 

Redressal machinery

The Consumer Protection Act, 1986 provides for setting up of three-tier enforcement machinery at the district, state and the national levels for speeding and inexpensive redressal of consumer grievances. The three redressal agencies are:

 

(i)         District Consumer Dispute Redressal Forum (briefly referred to as District Forum).

(ii)        State Consumer Disputes Redressal Commission (State Commission).

(iii)       The National Consumer Disputes Redressal Commission (National Commission).

 

The Consumer Protection Act requires all the complaints to be disposed off as speedily as possible. It provides that all complaints must be settled within 3 months and if any complaint requires analysis or testing of goods then it must be settled within a maximum period of 5 months.

 

District Forum

District forum is set up for redressal of consumers’ grievances at district level. The forums are set up by the respective State Government. The salient features of District Forum are as under:

(i)         The District Forum consists of a President and two other members appointed by the concerned State Government. One of the members must be a woman.

(ii)        Only those complaints can be filed in the District Forum where the value of goods or services and the compensation claimed is not more than `20 lakh.

(iii)       Once complaint is received, notice of it is sent to the opposite party. If required, the District Forum sends the sample of goods for testing in a laboratory. The opposite party is the seller, manufacturer or any organisation against whom the complaint has been filed. After considering the laboratory report and hearing to the opposite party, the District Forum passes an order.

(iv)      If the aggrieved party is not satisfied with the order the District Forum, he/she can appeal against the order in the State Commission within 30 days of passing of the order.

 

State Commission

State Commission is set up at the State level by the respective State Government. Its main features are as follows:

(i)         The State Commission consists of one President and two other members, one of whom should be a woman. They all are appointed by the concerned State Government.

(ii)        A complaint is made to the State Commission if the value of goods or services along with the compensation claimed exceeds `20 lakh but is less than `1 crore or as an appeal against the orders of a District Forum.

(iii)       Once complaint is received, notice of it is sent to the opposite party. If necessary, the State Commission send the sample of goods for testing in a laboratory. After considering the laboratory report and hearing to the opposite party, the State Commission passes an order.

(iv)      If the complaining consumer is not satisfied with the order of the State Commission, he/she can appeal against the order to the National Commission within 30 days of passing of the order.

 

National Commission

The National Commission is set up by the Central Government. Its main characteristics are as follows:

(i)         The National Commission consists of a President and at least four other members appointed by the Central Government. One of the members must be a woman.

(ii)        A complaint is made to the National Commission if the value of goods or services along with the compensation claimed exceeds `1 crore or as an appeal against the orders of the State Commission.

(iii)       Once complaint is received, notice of it is sent to the opposite party. If required, the National Commission sends the sample of goods for testing in a laboratory. After considering the laboratory report and hearing to the opposite party, the National Commission passes an order.

(iv)      If the aggrieved party is not satisfied with the National Commission’s order he/she may appeal to the Supreme Court of India.

 

Remedies available

When the consumer court is satisfied about the genuineness of the complaint, it can issue one or more of the following directives to the accused party:

(i)         To remove the defect in goods or deficiency in service.

(ii)        To replace the defective product with a new non-defective product.

(iii)       To refund the amount paid by the complainant.

(iv)      To pay compensation if the consumer has suffered any loss or injury.

(v)       To pay punitive damages in appropriate circumstances.

(vi)      To discontinue the unfair/restrictive trade practices, and not to repeat them in future.

(vii)     To stop the sale of hazardous goods from sale.

(viii)   To withdraw the hazardous goods from sale.

(ix)      To stop manufacturing of hazardous goods and not to offer hazardous services.

(x)       To pay any amount (not less than 5 percent of the value of the defective goods or deficient services provided), to be credited to the Consumer Welfare Fund or any other organisation/person to be utilised in the prescribed manner.

 Consumer awareness

In developing countries like India, it is a common fact that generally poor people, without considering its quality and harmful effects, accept any product which is offered to them at low price. Illiteracy among consumers is yet another important factor which is responsible for consumer exploitation. The basic reason is that people are illiterate and they are unaware of their rights, so it is necessary to provide protection to the consumer.

A consumer would be in a position to raise his voice against any kind of exploitation, if he is well aware of his rights and reliefs available. Moreover, this awareness helps him to safeguard his interest. 

Sometimes back the principle of ‘Caveat emptor’, which means ‘let the buyer beware’ governed the relationship between seller and the buyer. This principle relieved the seller of the obligation to disclose the defects, if any, in the products.

However, with the growth of trade and its globalization now this principle has been changed to ‘Caveat venditor’, which means ‘let the seller beware’. Because of emergence of different modes of communication, it is next to impossible for a buyer to examine the goods before-hand. Sometimes, nature of goods is so complex that, it is only the producer/seller who can assure the quality of goods.

 

Role of consumer organizations and Non-Governmental Organizations (NGOs)

Many consumer organisations and non-government organisations have been set up in India for protecting and promoting consumers’ interest. Non-Government Organisations (NGOs) are non-profit organisations whose main aim is to promote consumer welfare. They have a constitution of their own and are free from government interference.

Following are the main functions performed by them:

 

1.          Educating the consumers:They educate the consumers about exploitative and unfair trade practices of the sellers.

 

2.          Publishing periodical and other publications: They publish periodicals, brochures, journals etc. for creating consumer awareness.

 

3.          Carrying and comparative testing of consumer products:They conduct comparative testing of consumer products in accredited laboratories to test relative qualities of competing brands and also publish the results for the benefit of general public.

 

4.          Encouraging consumers to protest:They encourage the consumers to protest and take legal action against unscrupulous, exploitative and unfair trade practices of sellers, traders, manufacturers etc.

 

5.          Provide legal assistance:They provide legal assistance for getting legal remedy against the damages caused to consumers.

 

6.          Filing complaints:They file suits, complaints and writ petitions on behalf of the consumers.

 

7.          Arrangement of seminars, workshops: They arrange seminars, conferences and workshops for the purpose of focusing on the problems of consumers and finding their solutions.

8.          Taking an initiative in filing of case:In the interest of general public and not for any individual, they also take an initiative in filling cases in consumer courts.

 

Important Consumer Organisations and NGOs Engaged in Consumer Protection

Some of the important consumer organisations and NGOs engaged in protecting and promoting consumers’ interests include the following:

1.          Voluntary Organisation in Interest of Consumer Education (VOICE), Delhi.

2.          Consumer Coordination Council, Delhi.

3.          Common Cause, Delhi.

4.          Consumers’ Association, Kolkata.

5.          Consumer Protection Council (CPC), Ahmedabad.

6.          Consumer Education and Research Centre (CERC), Ahmedabad.

7.          Consumer Guidance Society of India (CGSI), Mumbai.

8.          Karnataka Consumer Service Society, Bengaluru.