The New Consumer Protection Act 2019: Provision for heavy fines and even jail terms for misleadings ads

• As per the new legislation, manufacturers, service providers, celebrity endorsers will be held accountable for coming up with misleading advertisements.
• Provision for heavy fines and even jail terms updated in the new act.
• The new law provides flexibility to encourage consumers to e-file complaints against misleading ads electronically and for hearing and/or examining parties through video-conferencing.

The New Consumer Protection Act 2019, that replaces more than a three-decade-old Consumer Protection Act, 1986, brings some cheer for consumers. It has tried to address the challenges that digital media has imposed on consumers.

The law widens the definition of ‘consumer’ -- includes any person who buys goods, digitally or offline, via teleshopping, direct selling or multi-level marketing. The earlier act did not include e-commerce.

The new law also provides flexibility to encourage consumers to file complaints against misleading ads electronically and for hearing and/or examining parties through video-conferencing.

As per the act, a regulatory authority known as Central Consumer Protection Authority, headed by a government-appointed chief commissioner, will also be set up in Delhi. It will regulate violations of false or misleading advertisements, consumer rights and unfair trading practices.

The law will hold manufacturers, service providers, celebrity endorsers accountable for coming up with misleading advertisements. They may be imposed with a penalty of up to Rs 1,000,000 for a false or misleading advertisement. They may also be sentenced to imprisonment for up to two years for the same.

In case of a subsequent offence, the fine may extend to Rs 5,000,000 and imprisonment of up to five years. It can also disbar the endorser of a misleading advertisement from endorsing that particular product up to one year. For every subsequent offence, the period of prohibition may extend to three years.

In case of unfair trade practices endorsed by a celebrity, the new act holds the endorser responsible. It says that it is the endorser’s responsibility to take the onus and exercise due diligence to cross-check the authenticity of the claims made in the ad to falsify the liability claims.