Finance minister proposes lawsuits against errant e-sellers

Addressing the national conference on effective functioning of consumer fora, Finance Minister Arun Jaitley said they needed to be given powers to file ‘class action’ suits against errant sellers, especially in the wake of a growing ecommerce trade.

“The volume of trade in e-commerce is going to increase... Under these circumstances, we need very powerful and efficient consumer forums,” Jaitley had said. He pointed out that the concept of jurisdiction was getting diluted with goods being traded on ecommerce platforms and in this context some judicial pronouncement or legislative intervention would have to determine those factors.

“The manner in which representations are made and the underlying principle of buyer being aware of the nature of goods and services itself will now have to be rewritten,” said Jaitley. With the increase in consumer spending in view of the Indian economy transforming in the past 20 years, he said the Consumer Protection Act, 1986, needed to be taken to the next stage, giving powers to consumers to file class-action suits.

The finance minister emphasized that while the concept of class-action suit was there in the Act, it had never been used. Such suits can be filed by a group of people when there is a class or category of goods that is defective and a very large number of people have been deceived by it.

“Globally the best practice is you allow a class action in these cases. You also have to regulate the extent of reviews and appeals and the grounds on which multiple appeals can be filed,” Jaitley said. “The 1986 Act has served us well... Now with the passage of time, having learnt from that experience, you go on to the next stage,” he added.

Amended consumer protection laws to cover ecommerce

In a move to safeguard the interest of consumers, including online shoppers, the government has announced its decision to amend the three-decade-old consumer protection laws to cover ecommerce and product liability.

Union Minister of Consumer Affairs, Food and Public Distribution Ram Vilas Paswan said amendments to the Act had already been finalized. Apart from simplifying procedures to seek justice, the government wants to make it abreast with business and commerce conducted in modern times.

“The Act dates back to 1986, when the concept of ecommerce was not in vogue. Now the bulk of business is in the category of ecommerce,” Paswan said. The view in the ministry is that the present laws are inadequate to safeguard consumers from dubious e-marketing.

The growing stature of ecommerce is also confirmed as per a recent Assocham-Deloitte study. It says the quantum of business was to the tune of Rs 87,000 crore in 2014. As per the same study, this is expected to reach Rs 1.02 lakh crore by the end of this calendar year.

Under the Consumer Protection Act, product liability will increase the compass of liability on the goods and service providers. A cross-section of products will be covered by it. The goods providers will be liable to penalties ranging from possible forfeiture of his licenses to recall of products.

Presently, the individual gets compensation, if any, from the product providers. In the new dispensation, if a complainant’s charge is true, then it will be assumed that the entire assembly line of the product is faulty. Simply put, if a consumer complaints of delivery of a faulty car and his charge is proved correct, not only will he be compensated, all those who purchased the product from the assembly line will also be deemed to be aggrieved parties.

Clarifying on how the government would operationalize this new mechanism, Paswan said the proposed amendment to the Act sought to constitute an ‘authority’ that would have the power to investigate and make recommendation to the National Consumer Disputes Redressal Commission.