Cabinet approves new Consumer Protection Bill

The Union Cabinet on 20 December 2017 approved a new Consumer Protection Bill that seeks to establish an authority to safeguard consumers' rights and has provisions for penalty and jail terms in case of adulteration and misleading ads by companies.

As per the new bill, the celebrities endorsing misleading advertisements will also be liable for a fine and ban up to three years.

Background

In August 2015, the Centre had introduced the Consumer Protection Bill in the Lok Sabha to repeal the 30-year-old Consumer Protection Act, 1986.

The new bill has been introduced by the consumer affairs ministry to replace the 2015 bill, as there were many amendments to the bill.

A Parliamentary Standing Committee had also submitted its recommendations on the same in April last 2016.

Provisions of the Bill

• The new bill seeks to enlarge the scope of the existing law and make it more effective and purposeful.

• It also seeks to establish a Central Consumer Protection Authority (CCPA) to protect consumer rights.

• It has provisions for post-litigation stage mediation as an alternate dispute resolution mechanism.

• It also provides for product liability action.

The Penalty

• The bill provides for fine and ban on celebrities for endorsing misleading advertisements:

• In case of the first offence, the penalty would include a fine of up to Rs 10 lakh and a one-year ban on any endorsement.

• For the second offence, the penalty would include a fine of up to Rs 50 lakh and a three-year-ban on endorsements.

• For manufacturers and companies, the penalty would be up to Rs 10 lakh and up to two years of jail term for the first offence.

• For any subsequent offence, the manufacturers and companies would have to pay a fine of Rs 50 lakh and serve a jail term of 5 years.

• The bill also provides for penalty up to life term jail sentence in case of adulteration.

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