Consumer Protection Class 12 Business Studies, Meaning, Importance

Consumer Protection Class 12 Business Studies explains how consumers are protected from unfair trade practices and exploitation in the market. It focuses on consumer rights, responsibilities, and the legal system that helps resolve consumer complaints. Consumer Protection Class 12 Business Studies is important for Class 12 students as it builds awareness about safe buying practices and ethical business behaviour. Understanding Consumer Protection helps students learn how laws like the Consumer Protection Act, 2019 safeguard buyers and ensure fairness, transparency, and accountability in business activities.

Meaning of Consumer Protection

Consumer Protection involves safeguarding consumers from anti-consumer activities by manufacturers and sellers, promoting consumer interests against malpractices, exploitative practices, and unfair trade practices. Common examples of such practices include:

• Black Marketing: Unauthorized selling (e.g., private petrol sales).

• Hoarding: Withholding stock to inflate prices.

• Adulteration: Mixing inferior substances (e.g., water in milk).

• Charging Higher Prices: Selling above the Maximum Retail Price (MRP).

• Under-weighing: Using faulty scales.

• Defective and Dangerous Items: Selling unsafe products.

• False and Misleading Advertising: Unsubstantiated claims.

The goal is to shield consumers and provide speedy, inexpensive redressal of grievances by educating them and offering legal support.

The approach to consumer rights has evolved significantly:

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Importance of Consumer Protection

Consumer protection benefits both consumers and businesses. The Consumer Protection Act, 2019, which replaced the 1986 Act, is instrumental in this.

A. From the Consumer's Point of View:

1. Combating Consumer Ignorance: The Act transformed consumer ignorance into consumer awareness, empowering individuals about rights.

2. Organizing Consumers: Fostered unity, forming consumer societies for organized action against exploitation.

3. Curbing Widespread Exploitation: Significantly reduced widespread exploitation via legal consequences and deterrence.

B. From the Business's Point of View:

1. Long-Term Interest of Business: Satisfying customers and ethical practices ensure long-term interest and sustainability.

2. Business Uses Society's Resources: Businesses must serve society by protecting consumer interests, using societal resources.

3. Social Responsibility: Consumer protection is a key aspect of a business's social responsibility.

4. Moral Justification: Ethical conduct provides moral justification for an enterprise's existence.

5. Avoiding Government Intervention: Adhering to principles avoids government intervention (inspections, inquiries) that disrupt operations.

Who is a Consumer?

The Consumer Protection Act provides a specific legal definition, differing from the general understanding of a consumer.

A. Consumer of Goods

A consumer is defined as: Any person who buys any good for a consideration, which has been paid, promised, partly paid and partly promised, or under any scheme of deferred payment. This also includes any user of such goods when the use is made with the approval of the buyer (Example: If a father buys a phone and gives it to his son, the son, using it with his father's approval, is the consumer).

It explicitly does not include a person who buys goods for resale or for any commercial purpose.

B. Consumer of Services

A consumer of services is: Any person who hires or avails of any service for a consideration, which has been paid, promised, partly paid and partly promised, or under any scheme of deferred payment. This also includes any beneficiary of such services when availed with the approval of the person who hired them.

It does not include a person who hires or avails services for any commercial purpose.

Procedural Aspects of Complaints

A. Who Can File a Complaint?

The following can file a complaint under the Act:

1. Any consumer.

2. Any registered consumer association (e.g., Common Cause, VOICE).

3. The Central Government or any State Government.

4. One or more consumers on behalf of numerous others with shared interest (Example: Parents can file on behalf of all students affected by a mid-day meal).

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

B. Against Whom Can a Complaint Be Filed?

A complaint can be filed against:

1. The seller, manufacturer, or dealer of goods if the goods are defective (faulty or imperfect).

2. The provider of services if the service is deficient (shortcoming or inadequacy in quality).

Three-Tier Redressal Machinery

The Consumer Protection Act establishes a three-level system for resolving consumer disputes, providing compensation or remedy.

Reliefs and Remedies Available to Consumers

If a complaint's validity is accepted, the redressal agency can direct the opposite party to:

1. Remove Defects: Rectify defects in goods or deficiencies in services.

2. Replace Goods: Exchange a defective product with a new, defect-free one.

3. Refund Price: Return the price paid for the product or service.

4. Compensate for Loss: Pay reasonable compensation for loss or injury due to negligence.

5. Discontinue Unfair Practices: Cease restrictive or unfair trade practices.

6. Withdraw Hazardous Goods: Stop offering and withdraw existing stock of hazardous goods.

7. Cessation of Manufacturing: Stop manufacturing hazardous goods.

8. Pay to Consumer Welfare Fund: Pay an amount (min. 5% of defective goods/services value) to a Consumer Welfare Fund, especially if the consumer died, for a related cause.

9. Corrective Advertising: Issue a corrective advertisement to counter misleading claims.

10. Pay Costs: Cover the complainant's costs incurred in pursuing the case.

Consumer Rights

The Consumer Protection Act grants several fundamental rights:

1. Right to Safety: Protection against goods and services hazardous to life and property. (Consumers should look for the ISI mark on electrical appliances for safety standards).

2. Right to be Informed: Complete information about a product, including its ingredients, date of manufacture, price (MRP), quantity, and quality.

3. Right to Choose (or Right to be Assured): The right to select from a variety of products at competitive prices, free from forced purchases.

4. Right to be Heard: The right to file complaints and have them addressed. Businesses often have customer service and grievance cells.

5. Right to Seek Redressal: The right to receive relief or compensation if a product or service fails expectations (e.g., replacement, refund, damages).

6. Right to Consumer Education: The right to acquire knowledge and skills to be an informed consumer. This includes awareness campaigns like "Jago Grahak Jago."

Consumer Responsibilities

Consumers also have responsibilities:

1. Be Aware of Your Rights: Educate oneself about the available rights under the Act.

2. Gather Full Information: Actively seek and utilize information for informed purchasing.

3. Insist on a Cash Memo: Always obtain a cash memo or bill, which is crucial legal proof of purchase.

4. Be Cautious of Misleading Advertisements: Critically analyze claims and report misleading ads instead of blindly trusting them.

5. Be Quality Conscious: Look for quality assurance marks like ISI Mark (electrical), Agmark (agricultural), Hallmark (jewelry), FPO Mark (fruit products), and FSSAI (food products).

6. File a Complaint for Grievances (Redressal): Report losses to discourage unfair practices, regardless of the amount.

7. Protect the Environment: Avoid consuming goods or services detrimental to the environment.

8. Be Honest: Conduct dealings ethically and avoid illegal activities like black marketing.

9. Form Consumer Societies: Participate in or establish consumer organizations to strengthen the consumer movement.

Role of Consumer Organizations and NGOs

Consumer organizations and NGOs play a vital role in protecting and promoting consumer interests. They advocate for consumers and pressure businesses for ethical practices.

Examples in India include:

• Consumer Protection Council (CPC)

• Common Cause (Delhi)

• Voluntary Organisation in Interest of Consumer Education (VOICE) (Delhi)

Key functions:

1. Educating the Public: Conduct seminars and workshops on consumer rights.

2. Publishing Periodicals: Provide information through magazines and publications.

3. Comparative Testing: Test and publish quality assessments of competing products.

4. Encouraging Protest: Motivate action against unscrupulous trade practices.

5. Providing Legal Assistance: Offer advice and aid for seeking redressal.

6. Filing Complaints: Lodge complaints in consumer courts on behalf of consumers.

7. Producing Awareness Materials: Create films and videos on issues like adulteration.

8. Organizing Exhibitions: Demonstrate malpractices and promote awareness through skits.