Class 12 Business Studies Notes Chapter 4 (Consumer Protection) – Business Studies-II Book

Alright, let's get straight into Chapter 4: Consumer Protection. This is a vital chapter, not just for your exams but also for being an aware citizen. We'll cover the key concepts as per your NCERT syllabus, keeping in mind the perspective needed for government exam preparation.

Chapter 4: Consumer Protection - Detailed Notes

1. Introduction & Concept:

• Meaning: Consumer protection refers to the measures adopted to safeguard consumers against unfair trade practices, exploitation, and unethical conduct by producers and sellers in the marketplace.
• Need: Arises due to consumer ignorance, unorganised consumers, widespread exploitation (e.g., adulteration, false advertising, hoarding, black marketing, underweight supply, defective goods, deficient services).

2. Importance of Consumer Protection:

• (a) From Consumer's Point of View:

  • Consumer Ignorance: Protects consumers who lack information about their rights, reliefs available, and product details.
  • Unorganised Consumers: Provides power and a platform for individual consumers who cannot fight powerful businesses alone.
  • Widespread Exploitation: Offers remedies against various malpractices like defective goods, deficient services, unfair pricing, misleading advertisements, etc.

• (b) From Business's Point of View:

  • Long-term Interest of Business: Satisfied consumers lead to repeat sales, brand loyalty, and positive word-of-mouth, ensuring business growth and survival.
  • Business Uses Society's Resources: Businesses have a responsibility towards society (including consumers) as they utilize its resources.
  • Social Responsibility: It's part of a business's duty towards various stakeholder groups, including consumers.
  • Moral Justification: Ethical businesses avoid exploitative practices as a matter of principle.
  • Government Intervention: Proactive consumer protection by businesses can prevent stringent government regulations and interventions, which can tarnish the company's image.

3. Legal Protection to Consumers - The Consumer Protection Act, 2019 (CPA, 2019)

• Key Point: The Consumer Protection Act, 2019 replaced the Consumer Protection Act, 1986. It aims to provide timely and effective administration and settlement of consumer disputes.
• Scope: Applies to all goods and services unless specifically exempted by the Central Government. Covers all sectors (private, public, cooperative).
• Definition of 'Consumer' under CPA, 2019:
  • Buys any goods for a consideration (paid or promised, partly paid/promised, or under deferred payment). Includes user of such goods with buyer's approval. Does not include a person who obtains goods for resale or commercial purpose.
  • Hires or avails any services for a consideration (paid or promised, etc.). Includes beneficiary of such services with the hirer's approval. Does not include a person who avails services for commercial purpose.
  • Note: "Commercial purpose" does not include using goods/services exclusively for earning livelihood by means of self-employment.
• Definition of 'Goods': As defined in the Sale of Goods Act, 1930.
• Definition of 'Service': Includes banking, financing, insurance, transport, processing, supply of electrical or other energy, boarding or lodging, housing construction, entertainment, amusement, etc. Does not include services rendered free of charge or under a contract of personal service.
• Definition of 'Unfair Trade Practice': Practices like misleading ads, false representation, non-issuance of bills, non-withdrawal of defective goods, etc.
• Definition of 'Defect': Any fault, imperfection, or shortcoming in quality, quantity, potency, purity, or standard required.
• Definition of 'Deficiency': Any imperfection, shortcoming, or inadequacy in the quality, nature, and manner of performance of a service.

4. Consumer Rights (Under CPA, 2019):

1. Right to Safety: To be protected against goods and services hazardous to life and property (e.g., electrical appliances, pressure cookers). Consumers should insist on quality marks like ISI, AGMARK.
2. Right to be Informed: To be informed about the quality, quantity, potency, purity, standard, and price of goods or services to protect against unfair trade practices. Consumers should check all details on packaging.
3. Right to Choose: To be assured access to a variety of goods and services at competitive prices. In case of monopolies, it means right to be assured of satisfactory quality and service at a fair price.
4. Right to be Heard / Right to Representation: To ensure that consumer's interests will receive due consideration at appropriate forums. Includes the right to be represented in various forums formed to consider consumer welfare.
5. Right to Seek Redressal: To seek relief against unfair trade practices or restrictive trade practices or unscrupulous exploitation. Includes compensation for loss or injury suffered. The CPA provides a three-tier redressal machinery.
6. Right to Consumer Education: To acquire the knowledge and skill to be an informed consumer throughout life. Awareness of rights and reliefs available is crucial.

5. Consumer Responsibilities:

While the Act grants rights, consumers also have responsibilities:

1. Be Aware: Be alert about various goods and services available.
2. Buy Standardised Goods: Look for quality certification marks like ISI (electricals, etc.), FPO (processed fruit products), AGMARK (agricultural products), Hallmark (jewellery).
3. Learn about Risks: Follow manufacturer's instructions and learn about risks associated with products/services.
4. Read Labels Carefully: Check price, net weight, manufacturing/expiry dates, ingredients, etc.
5. Assert Yourself: Ensure you get a fair deal.
6. Be Honest: Do not engage in black marketing or hoarding; be fair in dealings.
7. Ask for a Cash Memo: Proof of purchase is essential for filing complaints.
8. File Complaint: File a complaint for genuine grievances, even small losses. Do not hesitate.
9. Form Consumer Societies: Participate actively in consumer societies/organizations.
10. Respect the Environment: Avoid waste, littering, and pollution.

6. Ways and Means of Consumer Protection:

1. Self-Regulation by Business: Socially responsible firms follow ethical standards and practices. Many have customer care cells/grievance cells.
2. Business Associations: Associations like FICCI (Federation of Indian Chambers of Commerce & Industry) and CII (Confederation of Indian Industry) lay down codes of conduct for members to protect consumer interests.
3. Consumer Awareness: An aware consumer is the best protection. Consumers must know their rights and reliefs. Government, media, and consumer organizations play a role here.
4. Consumer Organizations / NGOs: Non-governmental organizations play a vital role in educating consumers, advocating for them, testing products, filing suits, etc. (Examples: Consumer Guidance Society of India (CGSI), VOICE (Delhi), CERC (Ahmedabad)).
5. Government: Provides legal protection through various laws, the most significant being the Consumer Protection Act, 2019.

7. Redressal Agencies under CPA, 2019 (Three-Tier Machinery):

• Key Changes in CPA 2019: Increased pecuniary limits, provision for e-filing, hearing via video conferencing, establishment of Central Consumer Protection Authority (CCPA), concept of 'Product Liability', provision for Mediation.

1. District Consumer Disputes Redressal Commission (District Commission):

   • Establishment: Set up by the State Government in each district.
   • Composition: A President and not less than two other members.
   • Jurisdiction (Pecuniary): Complaints where the value of goods or services paid as consideration does not exceed ₹1 crore. (Note: This limit was ₹50 Lakhs under the draft rules initially proposed, but the final notified rules under CPA 2019 set it at ₹1 Crore. Always verify the latest notified limits as they can change.)
   • Complaint Filing: Can be filed by consumer, consumer association, government, or group of consumers. Can be filed electronically.
   • Powers: Similar powers as a Civil Court. Can order removal of defects, replacement, refund, compensation, discontinuation of UTP/RTP, withdrawal of hazardous goods, payment of costs.
   • Appeal: Against the order can be made to the State Commission within 45 days.

2. State Consumer Disputes Redressal Commission (State Commission):

   • Establishment: Set up by the State Government in the state capital.
   • Composition: A President (who is or has been a High Court Judge) and not less than four other members.
   • Jurisdiction (Pecuniary): Complaints where the value of goods or services paid as consideration exceeds ₹1 crore but does not exceed ₹10 crore. Also hears appeals against District Commission orders.
   • Powers: Similar to District Commission, plus appellate powers.
   • Appeal: Against the order can be made to the National Commission within 30 days.

3. National Consumer Disputes Redressal Commission (National Commission):

   • Establishment: Set up by the Central Government. Located in New Delhi.
   • Composition: A President (who is or has been a Supreme Court Judge) and not less than four other members.
   • Jurisdiction (Pecuniary): Complaints where the value of goods or services paid as consideration exceeds ₹10 crore. Also hears appeals against State Commission orders.
   • Powers: Similar to lower commissions, plus appellate and supervisory powers over State Commissions.
   • Appeal: Against the order can be made to the Supreme Court of India within 30 days.

8. Key Features Introduced/Strengthened by CPA, 2019:

• Central Consumer Protection Authority (CCPA): Established to promote, protect, and enforce consumer rights. Can conduct investigations, recall unsafe goods/services, impose penalties for misleading ads.
• Product Liability: Manufacturers/sellers/service providers are responsible for compensating for harm caused by defective products or deficient services.
• E-filing of Complaints: Facilitates easier filing.
• Mediation: Provision for settlement of disputes through mediation cells attached to the Commissions.
• Unfair Contracts: Consumers can challenge contracts that are unreasonable or biased against them.
• Misleading Advertisements: Stricter penalties, including jail terms and fines for endorsers (like celebrities) if they don't exercise due diligence.

9. Role of Consumer Organizations and NGOs:

• Educating the general public about consumer rights.
• Publishing periodicals and journals (e.g., 'Consumer Reports', 'Insight').
• Carrying out comparative testing of consumer products.
• Encouraging consumers to protest against exploitation.
• Providing legal assistance to consumers.
• Filing complaints/suits on behalf of consumers.
• Taking initiative in filing cases in consumer courts in the interest of the general public.

Multiple Choice Questions (MCQs) for Practice:

1. The Consumer Protection Act, 2019 replaced which previous Act?
   (a) The Sale of Goods Act, 1930
   (b) The Indian Contract Act, 1872
   (c) The Consumer Protection Act, 1986
   (d) The Competition Act, 2002
   Answer: (c)

2. Which consumer right ensures protection against goods hazardous to life and health?
   (a) Right to Choose
   (b) Right to Safety
   (c) Right to be Informed
   (d) Right to Seek Redressal
   Answer: (b)

3. Under CPA 2019, where would a consumer file a complaint if the value of goods/services is ₹75 lakhs?
   (a) National Commission
   (b) State Commission
   (c) District Commission
   (d) Central Consumer Protection Authority (CCPA)
   Answer: (c) (As ₹75 lakhs is within the jurisdiction of up to ₹1 crore for District Commission)

4. Which quality mark should you look for while buying agricultural products like spices or honey?
   (a) ISI Mark
   (b) Hallmark
   (c) FPO Mark
   (d) AGMARK
   Answer: (d)

5. Which of the following is considered a 'consumer' under CPA, 2019?
   (a) A person buying goods for resale
   (b) A person using goods bought by someone else, with the buyer's approval
   (c) A person availing a service for a commercial purpose
   (d) A shopkeeper buying goods in bulk for his store
   Answer: (b)

6. The apex body in the three-tier redressal machinery under CPA, 2019 is:
   (a) District Commission
   (b) State Commission
   (c) National Commission
   (d) Supreme Court
   Answer: (c) (Supreme Court is the final appeal body, but not part of the three-tier machinery itself)

7. Which new authority was established under CPA, 2019 to promote, protect and enforce consumer rights?
   (a) Consumer Welfare Fund
   (b) Bureau of Indian Standards (BIS)
   (c) Central Consumer Protection Authority (CCPA)
   (d) Advertising Standards Council of India (ASCI)
   Answer: (c)

8. The responsibility of a consumer to check details like MRP, expiry date, ingredients falls under:
   (a) Being Honest
   (b) Asking for a Cash Memo
   (c) Reading Labels Carefully
   (d) Asserting Yourself
   Answer: (c)

9. The concept holding manufacturers/sellers liable for harm caused by defective products under CPA 2019 is known as:
   (a) Caveat Emptor
   (b) Unfair Trade Practice
   (c) Product Liability
   (d) Deficiency in Service
   Answer: (c)

10. Which of the following is NOT a primary role of Consumer Organizations/NGOs?
    (a) Educating consumers about rights
    (b) Setting quality standards for products (like ISI)
    (c) Filing complaints on behalf of consumers
    (d) Publishing journals related to consumer issues
    Answer: (b) (Setting standards like ISI is typically done by government-recognized bodies like BIS, not NGOs).

Remember to focus on the provisions of the CPA, 2019, especially the pecuniary jurisdictions and the new features like CCPA and Product Liability, as these are highly relevant for current exams. Good luck with your preparation!