Dodgy ads, faulty products may lead to jail, hefty fines

Posted on Jan 7 2018 - 6:40pm by admin

 A new consumer protection bill tabled in the Lok Sabha on Friday seeks to enforce stringent provisions to protect consumers by regulating online sales, providing for higher manufacturer liabilities, even restricting tall claims, including some made through celebrity brand endorsers.

The Consumer Protection Bill 2018 seeks a complete overhaul in consumer rights, especially in areas of e-commerce, direct-to-consumer selling and advertisements. It also lays the ground for the creation of a new regulator, a central consumer protection authority.

When passed, the law will replace the archaic Consumer Protection Act 1986, and apply not only to physical products but also services.

The bill, which is expected to be cleared without too much opposition, also clearly articulates grounds for class-action

suits. The complaint of one consumer about a faulty product or service — such as a botched-up holiday or a defective battery — can be treated as representative, the law says.

The new consumer protection authority will have power to monitor and enforce the new regulatory regime that the bill seeks to implement.

“This fills an institutional void in the regulatory regime extant. Currently, the task of prevention of or acting against unfair trade practices is not vested in any authority,” the bill said.

Misleading ads in various media touting exaggerated claims are common because of a lack of clear legal provisions.

The bill seeks to specific what constitutes false and unfulfilled claims.

It provides for up to two years’ jail term and ~10 lakh fine for manufacturers making false claims in ads. This could go up to five years’ jail and ~50 lakh fine for repeat offenders.

Endorsers making such claims face a penalty of up to ~10 lakh and a ban of a year (from making endorsements) while repeat offenders will attract fines of up to ~50 lakh.

Endorsers who can prove they applied “due diligence” or appeared in an ad in “normal course of business” without knowledge of fraudulent intentions may use it as a “defence”, according to the bill.

“The burden of proof of such defence,” the bill however, states, “shall lie on the person raising such defence”.

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