Consumers cheer the introduction of Class Action Suits

As the government notified the Consumer Protection Act 2019, consumers have cheered the introduction of class action suits.

A 95 per cent believe that it will make redressal for misleading advertisement, defective products and deficient services easier, according to a Local Circles survey.

A 51 per cent said in the last 3 years they could not get resolution when they found they had a defective product.

With CCPA having the powers to take up cases suo-moto based on consumer complaints, many issues affecting a group of consumers could find resolution.

Earlier this week on July 20, the Ministry of Consumer Affairs notified the Consumer Protection Act 2019 bringing in a long pending consumer reform. The act includes the establishment of the Central Consumer Protection Authority, CCPA which is empowered to conduct investigations into violation of consumer rights, order recall of unsafe goods and services as well take suo- moto complaints against brands where a class of consumers is impacted due to a defective product or deficient service.

Initiating action as a class comes as an additional mode of relief for the consumers which can be used along with individual complaints to address grievances, thereby empowering the consumers and giving them an option to carry out two parallel proceedings. Common examples of such complaints are a mobile phone model having an inherently defective battery, a service billed for but the delivery defaulted upon or consumers regularly presented with unsubstantiated and misleading advertisements, and where hundreds or thousands of consumers are impacted.

In India, on the LocalCircles online community in association with the Department of Consumer Affairs, hundreds of complaints are received each month where a large number of consumers are impacted. Cases include a defunct keyboard in a particular laptop model to a service provider not honouring warranty repair and from overcharging by private hospitals to misleading advertisement leading to severe damages for consumers.

To understand the extent of the issues faced by consumers and areas where the Class Action reform should focus first, LocalCircles conducted a survey to get consumer insights. The survey received more than 48,000 responses from consumers located in 270 districts across the country.

In the first question, 49 per cent consumers said that they have had one or more inherently defective products in the last 3 years while 38 per cent said they had never faced such an issue.

The next question asked consumers in the last 3 years, when they identified a defective product how did they get the issue resolved. To this, 41 per cent said they raised the issue with the brand and they fixed it. 21 per cent said they raised the issue with the brand and they refused to fix it. 5 per cent said they raised it with the brand, they refused but the consumer won in consumer court. 13 per cent said they raised the issue with the brand, they refused to fix so the consumer created awareness about it on social media. 4 per cent said they never raised the issue with the brand as they could not reach them and 8 per cent said they never raised the issue with the brand and got it fixed locally.

The poll shows that most consumers currently suffer when they have a defective product in hand, a deficient service received or have been misled by an advertisement. Other than the lengthy process of consumer courts, till now there is no easy way to get redressal.

Other service areas where a large number of consumers face issues regularly are billing for mobile telephone services, DTH services etc. Consumers were also asked if they believed that a class action suit mechanism (where a large number of consumers facing the same issue with a defective product come together) will be instrumental in getting companies to accept returns of defective products. 95 per cent consumers agreed with it.

For instance, if a particular television model is found to have a faulty display, basis survey of other consumers owing that same model, it can be determined if a high majority is facing the same display issue. Accordingly, the brand can be approached by CCPA to initiate a product recall and if not done, a Class Action Suit framework can be utilised to take action against the brand or the company.

A 96 per cent consumers also believe that a functional class action suit mechanism should be made applicable in case of a service contract and it should be made available in this scenario.

In the next question, 93 per cent consumers said they believe that a functional class action suit mechanism should also be made applicable in case of a brand engaging in unfair trade practice or misleading advertisements.

The Consumer Protection Act 2019, under the CCPA, will also have a dedicated wing to inquire and investigate matters relating to consumer rights, unfair trade practices and misleading advertisements. According to the Consumer Protection Act 2019, the CCPA will have the powers to initiate a class action 'Suo moto'.

It will also have the ability to enforce recall, refund and/or return of products. With the Consumer Protection Act 2019 introducing the protection of consumers as a class, consumers hope that the cases of unfair trade practices, misleading ads will greatly reduce and commitment of brands towards resolving issues of defective products and service deficiencies will increase.

The success or failure of class action suits under Consumer Protection Act 2019 will be heavily dependent on how effectively is the CCPA structured and whether it takes Class Action cases on priority. With this report, the consumers have clearly identified the areas of priority as far as Class Action issues go.

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