Business Studies XII

NCERT Book Part II

Study Material-CHAPTER – 12

Ch.- Consumer Protection

Causes of consumer protection

*Adulteration of consumer goods

*Poor quality of goods and services
*Sale of counterfeit goods
*Black marketing and hoarding
Overcharging a product
Supply of inferior goods
*Short measures and underweight goods
*Creation of artificial scarcity by hoarding of goods

• As a result of this, consumers may be exposed to risks due to unsafe products- that is,
he may be cheated, may have to pay a higher price etc.

• Thus; there is a need to provide adequate protection to consumers against such

practices

 Consumer Protection includes not only educating consumers about their rights
and responsibilities, but also helps in getting their grievances redressed.
 It not only requires a judicial machinery for protecting the interests of consumers
but also requires the consumers to be united and form themselves into consumer
associations for protection and promotion of their interests.

Importance of Consumer Protection

(from Consumer’s point of view)

1. Consumers Ignorance: Majority of consumers are not aware of their rights

and reliefs available to them as a result of which they are exploited. In order to
save consumers from exploitation, consumer protection is needed.
2. Unorganized Consumers: In India consumers are still unorganized and there
is lack of consumer organizations also, thus consumer protection is required
about their rights and responsibilities,

3. Widespread Exploitation of Consumers: Consumers are exploited on large

scale by means of various unfair trade practices and consumer protection is
 Consumer Org. play an imp. role in educating consumers
required to protect them from exploitation.

From the point of Business

1. Long term Business Interest: It is always in the interest of the business to

keep its customer satisfied. Global competition could be won only after satisfying
customers. Satisfied customers lead to repeat sales and help in increasing
customer base of business.

2. Moral Justification: It is the moral duty of any business to take care of

consumer interest & avoid any form of their exploitation & unfair trade practices
like defective & unsafe products, adulteration, false and misleading advertising,
hoardings, black marketing etc.

3. Business uses Resources of Society: Every business uses the resources of

the society and thus it is their responsibility to work in the interest of the society.

4. Social Responsibility: A business has social responsibilities towards various

groups like owners, workers, government, customers etc. Thus, customers
should be provided qualitative goods at reasonable prices.

5. Government Intervention: If a business engages in any form of unfair trade

practices then government takes action against it, which adversely affects its
goodwill.

CONSUMER PROTECTION ACT, 2019 (CPA, 2019)

1. Set up to protect and promote consumer interests through a speedy and

inexpensive redressal of grievances.

2. Recognizes consumer rights

Redressal agencies– set up a three-tier agency to address consumer

grievances.
1.District Consumer Disputes Redressal Commission(District Commission)
2. State Consumer Disputes Redressal Commission(State Commission)
3. National Consumer Disputes Redressal Commission(National commission)

Scope of the act-

It is applicable to all types of undertaking:

• Large and small scale

• Private, public and co-operative sector

• Manufacturer or trader

• Firms supplying goods as well as services

Definition of a Consumer as per CPA 2019(Imp.)

 Any person who buys any goods and services for a consideration which has
been paid or partly paid, or under any scheme of deferred payment. It includes
any user of such goods with the approval of the buyer. But it does not include a
person who obtains goods for resale or any commercial purpose.

Rights of a Consumer

Consumer Protection Act, 2019 has provided six rights to the consumers, which are as
follows:

1. Right to Safety: Consumer has the right to be protected against products, & services
which are hazardous to health, life & property.
For instance, electrical appliances which are manufactured with substandard parts or
do not conform to the safety norms, might cause serious injury.

Consumer has the right to safety against any loss caused by such products.

Consumers are educated that they should use ISI marked electrical appliances.

2. Right to be Informed: Consumer has right to have complete information about the

product before buying it including its ingredients, date of manufacture, price, quantity,
direction for use etc.

Such information protects the consumers from deceptive advertising, misleading

labeling, products with expired life etc.

3. Right to choose/Right to be assured: Consumer has a right to choose any product

out of the available products and services at competitive prices as per his own decision
making.

This implies that marketers should offer wide variety of products in terms of quality,
brand, prices, size etc. and allow the consumer to make a choice from amongst these.
4. Right to be Heard: Consumer has the right to file a complaint to be heard in case of
dissatisfaction with goods or services (use of grievance cell).

Many firms and many consumer organizations are also working towards this direction
and helping consumers in redressal of their grievances.

5. Right to Seek Redressal: Consumer has the right to get relief in case the product or
service falls short of his expectations or is dangerous. He may be provided with
replacement/removal of defect or compensation for any loss. Various redressal forums
are set up by the Govt. at District, State and National level.

6. Right to Consumer Education: Consumer has the right to acquire knowledge and

to be well informed throughout life. He should be made aware of his rights and reliefs
available to him in case of the product or service falls short of his exceptions. The Govt.
of India has included consumer education in the school curriculum & is making use of
media to make consumers aware of their rights.

Responsibilities / Duties of a Consumer

Consumer Responsibilities:

1. Ask for a cash memo

Consumer must ask for a cash memo on purchase of goods or services. This would
serve as a proof of the purchase made.

2. Be aware
About various goods and services available in the market so that an intelligent and wise
choice can be made.

3. Buy only standardized goods

As they provide quality assurance. Thus, look for

ISI mark on electrical goods,

FPO mark on food products,

Hallmark on jewelry,

Eco-mark on Env. friendly products &

Agmark on agricultural products etc.

4. Follow manufacturer‘s instructions

Learn about the risks associated with products and services, and use the products
safely.

5. Read labels carefully

So as to have information about prices, net weight, manufacturing and expiry dates,
etc.

6. Assert yourself
To ensure that you get a fair deal.

7. Be honest in your dealings.

Choose only from legal goods and services and discourage unscrupulous practices like
blackmarketing, hoarding etc.

8. 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.

9. Form consumer societies

Which would play an active part in educating consumers and safeguarding their
interests.

10. Respect the environment.

Avoid waste, littering and contributing to pollution.

THE SALIENT FEATURES AND Scope / PROVISIONS OF CONSUMER

PROTECTION ACT, 2019

It seeks to protect and promote the consumers’ interest through speedy and
inexpensive redressal of their g0rievances.

Q. Who Can File A Complaint Under CPA, 2019

A complaint before the appropriate consumer forum can be made by:

1. Any consumer.

2. Any registered consumer association.

3. The central or state government.

4. One or more consumers on behalf of numerous consumers having same interest.

5. A legal heir or representative of a deceased consumer.

Complaints can be filed and compensation claimed with respect to

• Fraudulent practices by traders and manufacturers

• Defective goods

• Deficiency in services in connection with 9 services such as banking, transportation,

insurance, supply of electricity and gas, house construction, medical service.

Note:

Q. Within what period can the complaint be filed?

Ans. – The complaints must be filed within 3 months of purchase and if some testing of
goods is required then within 5 months.

Against whom a complaint can be filed?

1. In case of any defective good supplied, a complaint can be filed

against the manufacturer or seller or dealer.
2. For any deficient services rendered, a complaint can be filed against
the provider of services.

REDRESSAL AGENCIES UNDER CONSUMER PROTECT ACT, 2019

 For the redressal of consumer grievances the act provides a three–tier
machinery as:

1. DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION (District

Commission)

District forum are set up in each district by the state concerned. The important
features are:
(a) It can receive consumer complaints where value of goods or services paid as
consideration does not exceed Rs. 1 crore.

(b)Either on the 1st hearing or at any later stage, if itv appears to District Commission
that there exists elements of settlement which may be acceptable to the parties, it
may direct them to give their consent for settlement of dispute through mediation
within 5 days.

(c ) However in the failure of settlement by mediation, the District Commission

proceeds with the complaint.

(e) On receiving the complaint, the district forum shall refer the complaint to the
opposite party concerned and send the sample of goods for testing in a laboratory.

(d) The district forum after being satisfied that goods are defective or there is some
unfair trade practice can issue an order to opposite party directing him to either
replace or return the price or pay compensation. In case the aggrieved party is not
satisfied with the order of district forum. He can appeal before state forum within
45 days of passing an order.

2. STATE COMMISSION

It is set up in each state by the govt. concerned. The salient features are:

(b) Complaints where value of goods or services paid as consideration at least Rs. 1

crore but not more than 10 crore can be filed with state commission. The appeals
against the orders of a District forum can also be filed before the state commission
within a period of 30 days.

(c) On receiving the complaint, the state commission can also refer the complaint to
opposite party and send the goods for testing in laboratory.
(d) The state commission after being satisfied can order to opposite party to either
replace or repay or pay compensation. In case the aggrieved party is not satisfied,
they can appeal before national commission within 30 days of passing an order.

3. NATIONAL COMMISSION

It is setup by Central Govt. The provisions of act are:

(a  All complaints are pertaining to goods and services of value along with the
compensation is more than Rs. 10 crore can be filed with national commission.

(b) If any party is not satisfied by the order of national commission can appeal against
such order to the Supreme Court of India within a period of 30 days.

Important: An order passed by the National Commission is appealable before the

Supreme Court within a period of 30 days of such order but this mean that only those
appeals:

i) where the value of goods and services along with the compensation claimed,
exceeds Rs. 10 crore and
ii) where the aggrieved party was not satisfied with the order of the National
Commission, can be taken to the Supreme Court of India.

REMEDIES AVAILABLE TO CONSUMERS

• Remove defect in goods and deficiency in services.

• Replace defective goods with one with no defects

• Refund price paid

• Pay a reasonable amount of compensation for any loss or injury suffered.

• Pay punitive damages in appropriate circumstances.

• Discontinue unfair/restrictive trade practice

• Not to offer hazardous goods and services for sale

• Withdraw hazardous goods from sale

• Cease manufacturing hazardous goods

• Pay an amount to consumer welfare fund/ person (not less than 5%) to be utilized in
the prescribed manner

• Issue corrective advertisement to neutralize the effect of misleading ads.

• Pay adequate costs to parties.

CONSUMER ORG.

Some important consumer organization and NGO’s engaged in protecting consumer

interests are:

1. Consumer coordination council, Delhi.

2. Voluntary organization in Interest of Consumer Education, Delhi.

3. Mumbai Grahak Panchayat, Mumbai.

4. Consumer Association, Kolkata.

5. Consumer Unity and Trust Society Jaipur.

Role of Consumer organizations and NGO’s

1. Educating the general public about consumer rights by organizing training

programmes, seminars and workshops.

2. Publishing periodical & other publications to educate consumers.

3. Providing legal assistance to consumers by providing legal advice etc.

4. Producing films or cassettes on food adulteration, misuse of drugs etc.

5. Filing complaints in appropriate consumer courts on behalf of consumers.

6. Encouraging consumers to take on action against unfair trade practices.
7. Taking an initiative in filing cases in consumer courts on behalf of consumers.

Business Studies XII

Worksheet 1 (2020-21)
Ch.-Consumer Protection
(Concept, Importance , Consumer Protection 1986,
Consumer Rights, Consumer Responsibilities)

Q1 In developing countries like India the no. of consumer organizations are very less. This is related
to which importance of consumer protection?

a. Widespread exploitation of consumers

b. Consumer ignorance
c. Unorganized consumers
d. None of the above
Q2 Labeling, of a product help the consumer to exercise:

a. Right to safety
b. Right to information
c. Right to consumer education
d. Right to be heard
Q3 “Jago Grahak Jago” advertisement is highlighting which consumer right?

a. Right to safety
b. Right to be heard
c. Right to information
d. Right to consumer education
Q4 While purchasing gold jewellery which mark one should look for?
 a. Hall mark b. ECO mark c. ISI mark d. All of the above
Q5 Neha’s elder brother purchased “I Phone 11-Apple” mobile phone for Rs. 65000 without cash
memo from one of his friend an authorized dealer with a guarantee that the mobile will be
replaced with a new one if any of its parts become defective within 1 year from the date of
purchase. Within 1 month, the mobile stopped working. When Neha’s brother approached his
friend for replacement of mobile, he refused.

Can he file a complaint against the dealer/ Why?

Q6 Right of consumer protection are protected under: 1

a. CPA 1988 b. CPA 1984

C CPA 2019 d. CPA 1982

Q7 True\False

a. The right to be heard provides compensation to consumers.

b. Services provided by a Dr. or a Lawyer are covered under CPA.
Q8 Which consumer right gives the right to the consumer to get compensation or seek redressal
against unfair trade practices?

Q9 Which consumer right protects the consumers against the marketing of goods and services?
Explain the right.

Q10 To publish a magazine under the title “Upbhokta Jagran”is the example of which consumer
right? Explain the right.

Q11 Who is a consumer according to CPA 2019?

Q12 Raju, a consumer purchased medicines without noticing the date of expiry. He also did not take
the cash memo. Do you think he will be able to protect himself by the loss caused due to expired
medicine? Give 2 reasons.
 Business Studies XII

Answer Key- Worksheet 1 (2020-21)

Ch.-Consumer Protection
ANSWER KEY

Q1 C

Q2 B

Q3 D

Q4 A

Q5 No, He can not as he did not take cash memo.

Q6 C

Q7 a. F
b. T
Q8 Right to seek redressal

Q9 Right to safety

Q10 Right to consumer Education

Q11 Definition of a consumer

Q12 i. Did not go through the instructions mentioned on the label.

ii. Did not take cash memo.
 MAHARAJA SAWAI MAN SINGH VIDYALAYA
Business Studies XII
Worksheet 2 (2020-21)
Ch.-Consumer Protection

Q1 Within what period can the complaint be filed?

Q2 Who is not considered as consumer under CPA 2019?

Q3 Who can file a complaint?

Q4 If the value of product is Rs. 50 Lakhs, the consumer can file a case in :
a. District Forum b. State Commission
C. National Commission d. All of the above

Q5 If the value of product or sevice is more than Rs.20 Lakhs but less than one crore, then the
consumer can file a case in :
a. District Forum b. State Commission
C. National Commission d. All of the above

Q6 If a customer is not satisfied with the judgment of state commission, he can file appeal in :
a. District Forum b. State commission
C. National Commission d. Supreme court

Q7 As per CPA 2019, the retailer or wholesaler is

a. A consumer b. Not a consumer
C. Both (a) and (b) d. None of the above

Q8 To avail the benefits of the CPA, the consumer

a. Must insist on cash memo
b. No necessity of cash memo
c. Cv. Need a certificate of consumer
 d. None of the above

Q9 The members of the Disrict Forum are appointed by

a. Central govt. b. Local authority
C. State govt. d. None of the above

Q10 The president and members of National commission are appointed by…………

Q11 State commission entertains complaints of goods and services, whose value exceeds……….and
less than……….

Q12 Consumer can file direct case in Supreme court. (T/F) 1

Q13 Appeal against District Forum can be filed in National commission. (T/F) 1

Q14 State any 2 reliefs that the consumer court can grant to consumers in case of genuine complaints 6
in each of the following situations:
i) Divya was charged more than the printed max. retail price (MRP) for a bottle of
water.
ii) Sami was sold a car with a defective engine.
iii) Any suffered injury while using newly bought defective electric heater.

Q15 Gopal, Mohan and Shyam are 3 friend shaving their separate manufacturing units in an 3
industrial estate. They are hardworking and honest. And undertake their production activities
following the good practices of business. They use good quality material and adopt standardized
process. They fix the prices of their products with a reasonable profit margin. But all of them
are worried about the malpractices like manufacturing sub standard, duplicate and defective
goods by the fellow manufacturers. Therefore they decided to form an org. with a constitution
which is free from govt. interference.
The org. would encourage consumers to strongly protest and take action against unscrupulous
and unfair trade practices of sellers.
State 3 other functions which may be performed by this org. in addition to those mentioned
above.
 Business Studies XII
Answer Key- Worksheet 2 (2020-21)
Ch.-Consumer Protection
Q1 30 days

Q2 The person who obtain goods for resale.

Q3 i. Any consumer
ii. Any registered consumer ass.
iii. The central or state govt.
iv. One or more consumers on behalf of numerous consumers
v. A legal heir or representative of a deceased person
Q4 A

Q5 B

Q6 National commission

Q7 B

Q8 A

Q9 C

Q10 Central govt.

Q11 20 Lakh and 1 crore

Q12 F

Q13 F

Q14 i) To refund the price paid

To discontinue unfair trade practices
ii) To remove the defect in engine
To replace the engine
iii To remove the defect
To replace
To pay punitive damage
 To refund the price paid

Q15 i. Educating the general public about rights, training programmes, seminars and
workshops
ii. Publishing periodicals and other publications
iii. Carrying out comparative testing of consumer products
Providing legal assistance
Q16 1. Self regulation by business
2. Business Ass.
3. Consumer Awareness
4. Consumer org.
5. Govt.