CONSUMER PROTECTION
UNIT 3: Legal Framework and Consumer Organizations
MRTP Act and Competition Act – Provisions Relating to Consumer Protection
a) MRTP Act, 1969 (Monopolies and Restrictive Trade Practices Act)
- Objective: To prevent concentration of economic power, control monopolies, and prohibit unfair trade practices.
- Consumer Protection Provisions:
- Dealt with restrictive trade practices (price rigging, tying arrangements, etc.)
- Curbed unfair trade practices like false advertising, misleading representations, and deceptive pricing.
- Set up the MRTP Commission for redressal of complaints.
- Limitation: Focused more on monopoly regulation than consumer welfare.
- Status: Repealed in 2002 and replaced by the Competition Act, 2002.
b) Competition Act, 2002
- Objective: To promote and sustain competition, protect consumer interests, and ensure freedom of trade.
- Key Provisions for Consumers:
- Anti-Competitive Agreements: Prohibits collusion among businesses that reduce competition (like cartels).
- Abuse of Dominance: Prevents dominant firms from using their power unfairly (like predatory pricing).
- Regulation of Combinations: Monitors mergers/acquisitions that may negatively affect competition.
- Consumer Benefits:
- Encourages fair pricing, innovation, and better product quality.
- Ensures more choices and prevents exploitation.
- Implemented by: Competition Commission of India (CCI) – investigates and penalizes violators.
Role of Voluntary Consumer Organizations
Voluntary Consumer Organizations (VCOs) play a vital non-governmental role in protecting and empowering consumers.
Functions and Roles
- Consumer Education & Awareness: Organize workshops, seminars, and awareness campaigns about rights and responsibilities.
- Assistance in Complaint Redressal: Help consumers draft complaints, file them in consumer courts, and provide legal aid.
- Watchdog Role: Monitor product quality, advertising, packaging, and pricing practices.
- Policy Advocacy: Represent consumer interests in policymaking at state and national levels.
- Research and Publications: Publish consumer magazines, safety reports, and product comparisons.
Examples of Indian Consumer Organizations
Consumer Voice
Consumer Coordination Council
Consumer Education and Research Centre (CERC)
CUTS International
Formation and Registration of a Voluntary Consumer Organization
A VCO can be set up as a society, trust, or non-profit company.
Steps for Formation
- Define Objective: The mission must focus on consumer protection and welfare. Consumer organizations are formed by individuals coming together voluntarily to protect consumer interests. Their primary aim is to promote, safeguard, or advance the rights and interests of consumers.
- Form a Governing Body: A consumer organization can register under the Societies Registration Act, 1860, or the Companies Act, 1958. Generally, organizations with a profit motive register under the Companies Act, while those focused on consumer welfare register under the Societies Act. Includes President, Secretary, Treasurer, and other members.
- Draft Memorandum & Rules: Outline the scope, governance, and operations.
- Registration: Under
- Societies Registration Act, 1860 (for societies)
- Indian Trusts Act, 1882 (for trusts)
- Companies Act, 2013 - Section 8 (for non-profit companies)
- PAN and Bank Account: For financial transactions and eligibility for grants.
- Apply for Recognition (Optional): With the government to receive support and participation in public forums.
Business Self-Regulation
Business self-regulation involves companies voluntarily adopting ethical practices, quality standards, and consumer protection norms without legal compulsion.
Key Features
- Code of Conduct: Internal ethics rules covering marketing, safety, grievance redressal, etc.
- Grievance Mechanisms: Internal customer service units or ombudsman systems.
- Third-party Certifications: Seeking ISI, AGMARK, ISO certifications for credibility.
- Corporate Social Responsibility (CSR): Undertaking initiatives for consumer education, sustainability, and fair practices.
- Advertising Standards: Following codes set by Advertising Standards Council of India (ASCI) to avoid misleading ads.
Benefits
Builds consumer trust
Improves brand reputation
Reduces regulatory scrutiny
Consumer Awareness – Role of Media and Government
Role of Media
- Information Dissemination: Educates consumers on scams, recalls, consumer rights, and legal remedies.
- Public Opinion Creation: Highlights unethical business practices, raising public consciousness.
- Product Reviews: Helps consumers make informed choices.
- Social Media Platforms: Powerful tools for raising complaints and gaining public support.
Role of Government
- Policy and Legislation: Enacts laws like CPA, Competition Act, FSSAI Act, etc.
- Consumer Education: Campaigns like "Jago Grahak Jago" to promote awareness.
- Redressal Forums: Sets up consumer courts and commissions for legal remedies.
- Regulatory Bodies: Ensures standardization, food safety, fair advertising, etc.
- Grievance Portals: Platforms like E-Daakhil, National Consumer Helpline, and CPGRAMS for filing complaints.
