Class 12 business studies Chapter 12 Consumer Protection
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NCERT Notes for Class 12 business studies Chapter 12 Consumer Protection
Class 12 business studies Chapter 12 Consumer Protection
It is the world of competition. Due to industrialization consumer gets large varieties of products. Today consumer is the king. Even though producers make huge profits by exploiting unorgnised and ignorant consumers. Due to huge competition in the market, businessmen indulge in unfair trade practices like adulterating products, manipulating weights, reducing quality, introducing duplicates, giving misleading advertisements etc. to increase sales and profits. So, Government of India passed ‘Consumer Protection Act’ in 1986 in order to protect the interest of Indian consumers.
Who is a consumer?
Consumer is an individual or organization who buys goods and services for a consideration.
Importance of Consumer Protection
Consumer Protection has a wide agenda. It not only includes educating consumers about their rights and responsibilities, but also helps in getting their grievances redressed. It is not only beneficial for consumers but it is equally importance for the businessmen also.
Importance of Consumer Protection
A-From the point of view of Consumers
1- Consumer Ignorance:
Consumers are not aware about their rights and reliefs available to them. It becomes necessary to educate them about the same.
2- Unorganised Consumers:
Consumers need to be organised in the form of consumer organisations which would protect their interests.
3- Widespread Exploitation of Consumers:
Businessmen exploits consumers by adulterating products, manipulating weights, reducing quality, introducing duplicates and giving misleading advertisements etc. Strict law is essential to protect consumers from the exploitation of businessmen.
Importance of Consumer Protection
B-From the point of view of businessmen
1- Long-term Interest of Business:
Satisfied customers not only lead to repeat sales but also provide good feedback to prospective customers and thus, help in increasing the customer-base of business. Thus, business firms should aim at long-term profit maximisation through customer satisfaction.
2- Business uses Society’ s resources:
Business organisations use resources which belong to the society. So, it is the obligation of the business to protect the interest of the society members.
3- Social Responsibility:
A business has social responsibilities towards various interest groups like employees, customers etc. Customer is an important stake holder because business firms earns money by selling goods and services to customers.
4- Moral Justification:
It is the moral duty of any business to take care of consumer’s interest and avoid any form of their exploitation.
5- Government Intervention:
If a business does not voluntarily serve the needs and interest of consumers, it would invite Government intervention.
Legal Protection to Consumers
Indian legal framework consists of a number of regulations which provide protection to consumers. Some of these regulations are as under:
1- The Consumer Protection Act(CPA), 1986:
The Consumer Protection Act, 1986 provides safeguards to consumers against defective goods, unfair trade practices and other exploitation. The Act provides for the setting up of a three-tier machinery, consisting of District Forums, State Commissions and the National Commission. It also provides for the formation of consumer protection councils in every District and State and at the apex level.
2- The Indian Contract Act, 1872:
The Act is formed to bind/fix people on their promises made in a contract. The Act also specifies the remedies available to parties in case of breach of contract.
3- The Sale of Goods Act, 1930:
The Act provides some safeguards and reliefs to the buyers of the goods in case the goods purchased do not comply with implied conditions or warranties.
4- The Essential Commodities Act, 1955:
The Act aims at controlling production, supply and distribution of essential commodities. The Act also provides for action against anti-social activities like hoarding, black marketing, adulteration etc.
5- The Standards of Weights and Measures Act, 1976:
It provides protection to consumers against the malpractice of under-weight or under- measure of products.
6- The Trade Marks Act, 1999:
The Act prevents the use of fraudulent marks on products and thus, provides protection to the consumers against such products.
7- The Competition Act, 2002:
This Act has repealed and replaced the Monopolies and Restrictive Trade Practices Act, 1969. The Act provides protection to the consumers against the evils of competition.
8- The Bureau of Indian Standards Act, 1986:
According to this Act IS marks and BIS certifications are ensured for the quality products.
9- The Agricultural Produce (Grading and Marking) Act, 1937:
The Act prescribes grade standards for agricultural commodities and live-stock products.
10- The Prevention o f Food Adulteration Act, 1954:
The Act aims to check adulteration of food articles and ensure their purity so as to maintain public health.
The Consumer Rights
The Consumer Protection Act (CPA) provides for six rights of consumers: –
- Right to safety
- Right to be informed
- Right to choose
- Right to be heard
- Right to seek Redressal
- Right to Consumer Education
1- Right to safety
The consumer has a right to be protected against goods and services which are dangerous to his life and health.
For instance, goods which are manufactured with substandard products. Manufacturing defects of vehicles pressure cooker etc. may endanger the life of consumers.
2- Right to be informed
The consumer has a right to have complete information about the product he intends to buy including its ingredients, date of manufacture, price, quantity, directions for use, etc. It implies that the producer should disclose all the material facts regarding his products.
3- Right to Choose:
The consumer has the freedom to choose from a variety of products at competitive prices.
4- Right to be Heard:
The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or a service. It is because of this reason that many enlightened business firms have set up their own consumer service and grievance cells.
5- Right to seek Redressal:
The consumer has a right to get compensation when consumers are cheated or exploited. The Consumer Protection Act provides a number of reliefs to the consumers including replacement of the product, removal of defect in the product, compensation paid for any loss or injury suffered by the consumer, etc.
6- Right to Consumer Education:
The consumer has a right to acquire knowledge and to be a well-informed consumer throughout life. He should be aware about his rights and the reliefs available to him in case of a product or service falling short of his expectations. Many consumer organisations and some enlightened businesses are taking an active part in educating consumers in this respect.
Consumer protection can, in effect, be achieved only when the consumers also understand their responsibilities. A consumer should keep in mind the following responsibilities while purchasing, using and consuming goods and services.
1- Awareness about goods and services
Be aware about various goods and services available in the market so that an intelligent and wise choice can be made.
2- Quality Alert
Buy only standardised goods as they provide quality assurance. Thus, look for ISI mark on electrical goods, FPO mark on food products, Hallmark on jewelry etc.
3- Risk Conscious
Learn about the risks associated with products and services, follow manufacturer’s instructions and use the products safely.
4- Get to know the product
Read labels carefully so as to have information about prices, net weight, manufacturing and expiry dates, etc.
5- Understand the transaction
Assert yourself to ensure that you get a fair deal.
6- Insist on cash memo
Ask for a cash memo on purchase of goods or services. This would serve as a proof of the purchase made.
7- Be honest in dealings
Be honest in your dealings. Choose only from legal goods and services and discourage unscrupulous practices like black-marketing, hoarding etc.
8- File Complaints
File a complaint in an appropriate consumer forum in case of a shortcoming in the quality of goods purchased or services availed. Do not fail to take an action even when the amount involved is small.
Ways and Means of consumer Protection
There are various ways in which the objective of consumer protection can be achieved.
1- Self-regulation by business:
Enlightened business firms realise that it is in their long-term interest to serve the customers well. Socially responsible firms follow ethical standards and practices in dealing with their customers.
2- Business associations:
Associations like Federation of Indian Chambers of Commerce of India (FICCI) and Confederation of Indian Industries (CII) have laid down their code of conduct which lay down for their members the guidelines in their dealings with the customers.
3- Consumer awareness:
A consumer, who is well-informed about his rights and the reliefs available to him, would be in a position to raise his voice against any unfair trade practices or unscrupulous exploitation.
4- Consumer organisations:
Consumer organisations play an important role in educating consumers about their rights and providing protection to them. These organisations can force business firms to avoid malpractices and exploitation of consumers.
The government can protect the interests of the consumers by enacting various measures. For example, the GOI has set up a toll-free national consumer Helpline Number 1800114000 (9:30 am – 5:30 pm) for this purpose. The legal framework in India encompasses various legislations which provide protection to consumers. The most important of these regulations is the Consumer Protection Act, 1986. The Act provides for a three-tier machinery at the district, state and national levels for redressal of consumer grievances. The redressal mechanism under this threetier machinery has been explained hereunder.
Redressal agencies under the Consumer protection Act
In India under the Consumer Protection Act, consumer grievances are redressed by the three- tire machinery at the district level, state level and national level.
- District Forum
- State commission
- National Commission
1- District Forum:
The District Forum consists of a President and two other members, one of whom should be a woman. They all are appointed by the State Government concerned. A complaint can to be made to the appropriate District Forum when the value of the goods or services in question, along with the compensation claimed, does not exceed Rs. 20 lakhs.The District Forum shall pass an order after considering the test report from the laboratory and hearing to the party against whom the complaint is filed. In case the aggrieved party is not satisfied with the order of the District Forum, he can appeal before the State Commission within 30 days of the passing of the order.
2- State commission:
Each State Commission consists of a President and not less than two other members, one of whom should be a woman. They are appointed by the State Government concerned. A complaint can to be made to the appropriate State Commission when the value of the goods or services in question, along with the compensation claimed, exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore. The appeals against the orders of a District Forum can also be filed before the State Commission. The State Commission shall pass an order after considering the test report from the laboratory and hearing to the party against whom the complaint is filed. In case the aggrieved party is not satisfied with the order of the State Commission, he can appeal before the National Commission within 30 days of the passing of the order.
3- National Commission
The National Commission consists of a President and at least four other members, one of whom should be a woman. They are appointed by the Central Government. A complaint can to be made to the National Commission when the value of the goods or services in question, along with the compensation claimed, exceeds Rs. 1 crore. The appeals against the orders of a State Commission can also be filed before the National Commission. The National Commission shall pass an order after considering the test report from the laboratory and hearing to the party against whom the complaint is filed.
Who can file a complaint?
A complaint before the appropriate consumer forum can be made by:
- Any consumer can file a complaint on his/her own and does not need the services of advocate/ professionals
- Any registered consumers’ association
- The Central Government or any State Government
- One or more consumers, on behalf of numerous consumers having the same interest
- A legal heir or representative of a deceased consumer
- A complaint under Section 2 (b) of the Consumer Protection Act 1986.
If the consumer court is satisfied about the genuineness of the complaint, it can issue one or more of the following directions to the opposite party.
- To remove the defect in goods or deficiency in service.
- To replace the defective product with a new one, free from any defect.
- To refund the price paid for the product, or the charges paid for the service.
- To pay a reasonable amount of compensation for any loss or injury suffered by the consumer due to the negligence of the opposite party
- To pay punitive damages in appropriate circumstances.
- To withdraw the hazardous goods from sale.
- To issue corrective advertisement to neutralise the effect of a misleading advertisement.
- To pay adequate costs to the appropriate party.
Role of consumer organisations and NGOs
In India, several consumer organisations and non-governmental organisations (NGOs) have been set up for the protection and promotion of consumers’ interests. Non governmental organisations are non-profit organisations which aim at promoting the welfare of people. Consumer organisations and NGOs perform several functions for the protection and promotion of interest of consumers. These include:
- Educating the general public about consumer rights by organising training programmes,
- Publishing periodicals and other publications to impart knowledge about consumer problems, legal reporting, reliefs available and other matters of interest.
- Carrying out comparative testing of consumer products in accredited laboratories to test relative qualities of competing brands and publishing the test results for the benefit of consumers.
- Encouraging consumers to strongly protest and take an seminars and workshops. action against unfair trade practices of sellers.
- Providing legal assistance to consumers by way of providing aid, legal advice etc. in seeking legal remedy.
- Filing complaints in appropriate consumer courts on behalf of the consumers.
Some of the important consumer organisations and NGOs engaged in protecting and promoting consumers’ interests include the following.
- Consumer Coordination Council, Delhi
- Common Cause, Delhi
- Voluntary Organisation in Interest of Consumer Education (VOICE), Delhi
- Consumer Education and Research Centre (CERC), Ahmedabad
- Consumer Protection Council (CPC), Ahmedabad
- Consumer Guidance Society of India (CGSI), Mumbai