(Subject Notes) Business Studies

- Consumer Protection -

2-3 marks Q should not exceed 30-40 words

4-5 marks Q should not exceed 60-80 words

6 marks Q should not exceed 100 words

Consumer Protection (2+4 = 6 marks)

(a) The rationale of consumer protection – concept, aspect and need

(b) Importance of Consumer Protection

(c) Consumer rights and responsibilities

(d) Ways and Means of Consumer Protection

(e) Role of Consumer Organizations

Explain briefly the meaning of “consumer” with reference to Consumer Protection Act 1986 - 2 marks

The Act defines consumer as:

1. One who buys goods or hires services for consideration.
2. One who uses the goods or hired services with the approval of the buyer or hirer of the service.
3. One who uses the goods/services to earn livelihood by self-employment.

What are the salient features of Consumer Protection Act? – 4 marks

• The Act applies to all goods and services unless specially exempted by Union Government
• It covers all sectors – public, private or cooperative
• Provisions of the Act are compensatory in nature
• It enshrines all consumers rights - to choose, to be heard, to be informed, to safety, education and redressal (CHISER)
• It empowers consumers seeking discontinuance of trader’s malpractices, defective goods, service deficiencies or withdrawal of hazardous goods from the market.

What does “Consumer Protection” refer to?

• It refers to protection of consumers against anti consumer trade practices by producers/traders.
• These anti trade include adulteration, sub standard quality, overcharging, making misleading claims in advertisements, etc
• The essence of consumer protection is curbing such practices through legislative and other measures

Giving any six points, explain the need/importance for consumer protection? OR Why is consumer protection needed in India – 6 marks

Business is a means of human welfare:

Business serves the customer and therefore it is a means and not an end in itself. Hence it is in the interest of both the consumer and the businessman to ensure that the business is run well because ignoring the interest of the consumer may be a sure death of the business.

Growth with social justice:

We are a secular country and growth with social justice is the cornerstone of our economic philosophy. Exploitation of consumers is against the directive principles of State Policy laid down in our Indian Constitution.

Single versus multiple objectives:

Business works for all stakeholders – consumers, shareholders, employees, government, and the public. It is both a social and economic institution. Therefore it cannot just make profit by ignoring the interest of the society. For the survival and growth of business it must work for the interest of the stakeholders in general and consumers in particular.

Power Centre:

Business has considerable influence over society and government. Therefore it has to set standards regarding food, dress habits, living styles, etc which will not damage the cause of society and serve the interest of a few persons only.

Self interest:

• Due to liberalization and globalization, firms have to compete with multinationals. Unless they become customer oriented and provide right quality, quantity and price they cannot satisfy a customer and without customer satisfaction no business can survive for long and will be out beaten by competition from multinationals.
• Moreover, Government has enacted laws to protect the interest of the consumers. Hence if a firm violates the laws they are likely to lose their goodwill and clients permanently.

Ethical obligations:

Firms that adapt ethical values, attain glories in the business world. Business without ethical values is nothing but a criminal activity and no civil society will tolerate a business without ethical values for long.

(½ mark for naming each point and ½ mark for each explanation)

Explain in brief any six rights of consumers as provided under the Consumer Protection Act, 1986 – 6 marks

Or

Explain the following rights: (6 marks)

The right to safety

It refers to the right to be protected against products, production processes and services which are hazardous to health or life. It includes concern for consumers immediate and long term needs.

The right to be informed

Consumers have a right to be informed about the quality, quantity, potency, purity, standard and price of goods or services so that they can make the right decision and protect themselves against malpractices.

The right of choice

The consumer has the right to be assured of a choice of various goods and services of satisfactory quality and competitive price.

Right to representation (or right to be heard)

It is a right and the responsibility of civil society to ensure consumer interest prevails while formulating and executing policies which affect the consumers, as well as right to be heard while developing or producing a product or service.

Right to seek redressal of aggrievances.

The consumer has the right go to court if he has been unscrupulously exploited against unfair or restrictive trade practices and receive compensation for supply of unsatisfactory or shoddy goods.

The right to consumer education

It is the right to acquire knowledge and skills to be an informed consumer because it is easier for the literate to know their rights and to take actions to influence factors that affect consumer’s decisions. The Union and State Governments have accepted the introduction of consumer education in school curriculum.

Right to basic needs

It is the right to receive the eight basic necessities that are required to survive and lead a dignified life. These eight basic necessities include food, clothing, shelter, health care, sanitation, education, energy and transportation.

Right to healthy environment

It is the right to be protected against environmental pollution and environmental degradation so as to enhance the quality of life of both the present and future generation.

Explain any six responsibilities of a consumer ( 6 marks)

It is the responsibility of the consumer to:

• Be aware of his rights and exercise them with regard to products purchased or services rendered.
• Be quality conscious and thoroughly examine the product before purchasing it.
  • Check the quality mark i.e. AGMARK, ISI, PDS, BIS, etc.
  • Ask for a guarantee card if there is one.
• Insist on a cash memo which is required as proof of purchase in case of a complaint.
• File a complaint for redressal of grievance however small, to discourage malpractices.
• Do not get carried away by advertisements but check the actual use of the product with that given in the advertisement. If there is a discrepancy, it should be brought to the notice of the sponsor.
• Form Consumer Awareness organizations, which can be represented at various committees formed by the government for the welfare of the consumers.

Mr. Soni a consumer purchased medicines without noticing the date of expiry. He also did not obtain the cash memo. Do you think he will be able to protect himself by the loss caused due to expired medicine? Give reasons to support your answer. – 4 marks

No, Mr. Soni cannot protect himself from the above loss due to the following reasons:

1. He should have been a cautious consumer and should have thoroughly examined the product including the expiry date of the medicine before purchasing it and not depended on the seller.
2. He should have insisted on a cash memo, which is required as proof that he has purchased the medicine from that particular trader, failing which he cannot sue for compensation.

Explain any six ways and means of consumer protection followed in India – 6 marks

The following are some of the ways and means of consumer protection followed in India:

Lok Adalats: How do Lok Adalat & publicity measures help in protecting the consumer? – 6 marks

• The Consumer can approach the Adalat with his grievance. The issue is discussed and decision is taken on the spot. This saves time and money
• Lok Adalat has become a speedy, effective and economical redressal system.
• Indian Railways, Delhi Transport Corp, Delhi Development Authority, Delhi Vidhyut Board, etc hold Lok Adalat from time to time to sort out problems faced by users.

Publicity Measures: How do Lok Adalat & publicity measures help in protecting the consumer? – 6 marks

• 15th March is celebrated as World Consumer Right Day all over the world ever year.
• In 1995 this day was organized at Vigyan Bhawan, New Delhi.
• In addition, the Ministry with the help of DAVP undertook a massive outdoor publicity program such as displaying hoardings, banners, bus panels, etc.
• Telecasting on consumer protection is also done by Doordarshan on a fortnightly basis.

Public Interest Litigations: (Under what circumstances can a public interest litigation be filed?

The Indian legal system does not provide legal services to large segments of the population such as the poor, environmentalists, consumers, minorities, etc. Thus the Public Interest Litigations legally represents such groups with the result that any individual or organization can approach the court for remedial action for effective implementation of the law, environmental protection or any other social evils like bonded labour, etc.

Environmentally Friendly Products:

• The Ministry of Environment and Forests has introduced an “Eco-Mark” scheme. It is a label that has a symbol of an earthen pitcher. If this label appears on a product, it means that the manufacturer has satisfied the conditions laid down regarding the production processes and used environmental friendly materials.
• This scheme has been started with consumer items like soap, detergents, paints, food items, edible oil, etc.
• This scheme is consumer oriented so that people manufacture, use and dispose off products which are least harmful to the environment.

Redressal Forums & Consumer Protection Councils:

Under the Consumer Protection Act 1986 a judicial machinery such as the District Forums, State and National Commissions have been set up to provide speedy, effective and economical redressal of consumer grievances and disputes.

National Youth Award on consumer protection:

To encourage consumers and youths to participate in the field of consumer protection, every year the Union Ministry gives two national awards – National Award on Consumer Protection and National Youth Award on Consumer Protection. The Ministry also gives a National Woman Award to involve women in outstanding work in the field of consumer protection.

Consumer Welfare Fund :

The Revenue Department of the Union Ministry of Finance has passed the Central excise and Customs laws (Amendment) Act 1991. According to this Act, a consumer welfare fund is created and the excess amount of excise/custom duties which is not refundable to manufacturers or importers is credited into this fund and used for:

• Promoting the welfare of the consumers.
• Community based rural awareness projects
• Setting up a consumer guidance bureau to handle complaints, counseling and guidance
• Setting up consumer product testing laboratories.
  (½ mark for naming each means + ½ mark for its explanation)

Which type of complaints can be lodged by consumers?
The Act provides that consumers can lodge complaints and claim compensations with respect to :

• Trader’s malpractices,
• Defective goods; and
• Service deficiencies. These include services in connection with banking, entertainment, financing, insurance, transport, supply of gas and electricity, medical services, boarding and lodging. (clue: BEFITS medical, boarding & lodging)

What type of judicial machinery is there to deal with consumer grievances and disputes?

• The Act further provides that the consumer can approach the following 3-tier judicial machinery depending upon the amount of loss involved

• The complaint must be disposed off as speedily as possible within 3 months or within 5 months if testing or analysis of goods is required to be done.
• The consumer has the right to file an appeal within 30 days with the next higher forum if he feels justice has not be done to him.
• The prescribed fee to file an appeal is as follows:
  • State Commission - 50% of the amount payable or Rs. 25,000 whichever is less
  • National Commission – 50% of the amount payable or 35 % whichever is less

What are the remedies/reliefs available to consumers under the Consumer Protection Act 1986? Discuss – 6 marks

The relief/remedies available to the consumer are:

Explain the role of Consumer Organisations/Non govt. Organisations

Or

Explain in brief any six functions of consumer organizations in the area of consumer protection.– 6 marks

• Bringing out journals, brochures, monographs
• Arranging conferences, seminars, workshops on consumer problems and solutions
• Supporting government agencies against malpractices, adulterated & hazardous goods.
• Investigating into problems of consumers
• Collecting data on different products and testing them
• Filing suits and petitions in the court on behalf of the consumers
• Organizing protests against price rigging, adulteration, underweight selling, etc
• Encouraging consumers to boycott defective bad quality goods

In what type of activities is Consumer Coordinating Council involved?

• It is the main body of the Consumer Organizations of India.
• It conducts several programmes on consumer education for activists, etc
• It has published training manuals on
• Consumer Protection Act
• Water, Food and Public Distribution System
  • Health drugs and cosmetics
  • Road Transport and Railways

Explain the role of press in consumer protection? – 6 marks

• The press has been responding to consumer needs in several ways even much before the Consumer Protection Act was enacted.
• Besides publishing articles, columns etc. it has rescued harassed consumers. For example the Indian Express was the first newspaper to start a column on consumer complaints. It not only published the problems and grievances of consumers but also forwarded them to the concerned authorities for redress. In many cases the results were published and consumers were able to get their grievances settled.
• The success and popularity of the Indian Express column, motivated other newspapers to follow suit and today almost all newspapers, including regional language newspapers, publish consumer complaints on a weekly basis.

Explain the role of universities and schools in consumer protection?

• Indira Gandhi National Open University (IGNOU) has developed a comprehensive syllabus, which provides the basic framework for other universities to develop a curriculum for consumer education.
• The Kakitaya University in Andhra Pradesh is offering a one-year post graduate course in consumer law.
• The Maharashtra Open University in Pune is offering courses in consumer education.
• CBSE has published a Teachers’ Manual on consumer education for students.
• Many other voluntary consumer organizations have mushroomed but due to lack of resources their contribution in this field has been insignificant. There is therefore an urgent need of an apex (main) Consumer Organisation that will help to coordinate the activities of these voluntary organizations in India.

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