Govt aims to protect consumer, plans regulator for direct selling cos

Among other things, new authority will be empowered to enforce refunds and product recall/return

In order to protect the interest of consumers, the Ministry of Consumer Affairs is planning to set up a regulator to monitor the online sale of goods, including direct selling of products.

The Consumer Protection Bill of 2015, which replaces the Consumer Protection Act of 1986, seeks widen the ambit and proposes to set up an executive agency to be known as the Central Consumer Protection Authority (CCPA). The CCPA seeks to promote, protect and enforce the rights of consumers, intervene when necessary to prevent consumer detriment arising from unfair trade practices and initiate class action including enforcing refunds, and the recall and return of products.

The CCPA seems to fill an institutional void in the current regulatory regime. This has been provided for in a manner that the role envisaged for the CCPA complements that of the sector regulators and duplication, overlap or potential conflict is avoided.

“The CCPA would simplify and expedite the redress of consumer complaints within a stipulated time, which is currently absent. Under the current system, consumers wait for years to get their complaints resolved,” said a senior official of a large direct selling company in India.

The major objectives of the Consumer Protection Bill include modernisation of legislation on consumer protection to keep pace with the changes in markets; ensuring fair, equitable and consistent outcomes for consumers; enabling swift executive intervention in the nature of class action both, to prevent consumer detriment and to provide redress to consumers.

“In my opinion, the Bill has attempted to make significant strides in improving the standards of consumer protection, and especially in filling the vacuum where institutional enforcement was somewhat thin. One of the defining features that characterises the Bill is the establishment of the CCPA, which is an executive agency through which enforcement actions may be taken and redressal of consumer grievances may be made, in addition to the empowerment of the government to supervise the functioning of State and District Commissions. In this respect, the Bill as more of seeking to provide mechanisms for enforcement actions (ie procedural improvements) while clarifying provisions on consumer protection (such as the attempts to cover aspects like product liability, types/instances of unfair contracts and such like),” said Zaheer Merchant, Director Corporate Affairs and Legal Affairs, QNet, the Hong Kong based direct selling company.

The bill also recognises the emergence of global supply chains, rise in international trade and the rapid development of e-commerce which have led to new delivery systems for goods and services and have provided new options and opportunities for consumers. 

This equally raises the need to mitigate for vulnerable consumers to new forms of unfair trade and unethical business practices (to use the language of the Bill in canvassing its objects and reasons). However this is a clear and positive sign that legislation is now catching up to emerging forms of businesses/industries and especially the direct selling industry in India, said the official.