Plus Two Business Studies Notes Chapter 12 Consumer Protection

Kerala State Board New Syllabus Plus Two Business Studies Notes Chapter 12 Consumer Protection.

Kerala Plus Two Business Studies Notes Chapter 12 Consumer Protection


There is a need for providing adequate protection to consumers against unscrupulous, exploitative and unfair trade practices of the sellers.

Importance of Consumer Protection

1) From Consumers’ point of view:

  • It is necessary to educate the customers about their rights.
  • Consumers need to be organised in the form of consumer organisations that would take care of their interests.
  • To protect consumers from unscrupulous, exploitative, and unfair trade practices.

2) From the Point of View of Business:

  • Business firms should aim at long-term profit maximization through customer satisfaction.
  • Business organisations use resources that belong to society.
  • A business has social responsibilities towards various interest groups.
  • It is the moral duty of any business to take care of consumer’s interest and avoid any form of their exploitation.
  • A business engaging in any form of exploitative trade practices would invite government intervention or action.

Legal Protection to Consumers

The Indian legal framework consists of a number of regulations which provide protection to consumers.
They are:

  • The Consumer Protection Act 1986
  • The Indian Contract Act 1812
  • The Sale of Goods Act 1930
  • The essential commodities Act 1955
  • The Agricultural Produce (Grading & Marketing) Act 1937
  • The Prevention of Food Adulteration Act 1954
  • The Standards of Weights and Measures Act 1976
  • The Trade Marks Act of 1999
  • The Competition Act 2002
  • The Bureau of Indian Standards Act 1986.

The Consumer Protection Act, 1986 (CPA): The Consumer Protection Act was passed in 1986 and it came into force from 1 July 1987. The main objectives of the Act are to provide better and all-round protection to consumers and effective safeguards against different types of exploitation. It also makes provisions for simple, speedy, and inexpensive machinery for redressal of consumers’ grievances.

Features of Consumer Protection Act 1986:

  • It applies to all goods and services except the goods exempted by the government.
  • Public, private and the co-operative sectors are covered by the Act.
  • It safeguards consumers against different types of exploitation.
  • It covers important consumer rights.

Consumer Rights

  • Right to Safety: The consumer has a right to be protected against goods and services which are hazardous to life and health.
  • Right to be Informed: The consumer has a right to have complete information about the product he intends to buy including its ingredients, date of manufacture, price, quantity, directions for use, etc.
  • Right to Choose: The consumer has the freedom to choose from a variety of products at competitive prices.
  • Right to be Heard: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with goods or services.
  • Right to seek Redressal: The consumer has a right to get relief in case the product or service falls short of his expectations.
  • Right to Consumer Education: The consumer must be educated about the rights and remedies available under different laws.

Consumer’s Responsibilities

  • Be aware of various goods and services available in the market.
  • Buy only standardised goods as they provide quality assurance.
  • Learn about the risks associated with products and services, follow the manufacturer’s instructions and use the products safely.
  • Read labels carefully so as to have information about prices, net weight, manufacturing and expiry dates, etc.
  • Choose only from legal goods and services.
  • Ask for a cash memo on purchase of goods or services.
  • File a complaint in an appropriate consumer forum in case of poor quality of goods or services.
  • Form consumer societies which would play an active part in educating consumers.

Ways and Means of Consumer Protection

  • Self Regulation by Business: Many firms have set up their customer service and grievance cells to redress the problems and grievances of their consumers.
  • Business Associations: The Associations of trade, commerce and business like Federation of Indian Chambers of Commerce of India (FICCl) and Confederation of Indian Industries (Cl I) have laid down their code of conduct for their members in their dealings with the customers.
  • Consumer Awareness: A consumer, who is well informed about his rights, responsibilities and the reliefs available to him, would be in a position to raise his voice against any unfair trade practices or unscrupulous exploitation.
  • Consumer Organisations: Consumer organisations play an important role in educating consumers about their rights and providing protection to them.
  • Government: The government can protect the interests of the consumers by enacting various legislations.

Redressal Agencies under the Consumer Protection Act 1986

For the redressal of consumer grievances, the Consumer Protection Act provides for setting up of a three-tier enforcement machinery at the District, State, and the National levels. They are:

  1. District Forum
  2. State Commission
  3. National Commission

1) District Forum: This is established in each district by the state government. The District Forum consists of a president and two other members. A complaint can be made to the appropriate District Forum when the value of the goods or services and compensation claimed does not exceed Rs. 20 lakh. In case the aggrieved party is not satisfied with the order of the District Forum, he can appeal before the State Commission within 30 days of the passing of the order.

2) State Commission: It is established by the state government. The State Commission consists of a president and not less than two other members. A complaint can be filed before the State Commission where the value of goods or services and the compensation claimed exceeds Rs. 20 lakh but does not exceed Rs. 1 crore.ln case the aggrieved party is not satisfied with the order of the State Commission he can appeal to the National Commission within 30 days of passing of the order.

3) National Commission: The National Commission was constituted by the central government. The National Commission consists of a president and at least four other members. It is the apex body in the three-tier judicial machinery set up by the government for the redressal of consumer grievances. All complaints pertaining to those goods or services and compensation whose value is more than Rs. 1 crore can be filed directly before the National Commission. An appeal can be filed against the order of the National Commission to the Supreme Court within 30 days from the date of order passed.

Relief Available to Consumers (Remedies)

  • To remove the defect in goods or deficiency in service.
  • To replace the defective product with a new one, free from any defect.
  • To refund the price paid for the product.
  • To pay a reasonable amount of compensation for any loss or injury suffered by the consumer.
  • To discontinue the unfair/restrictive trade practice.
  • Not to offer hazardous goods for sale.
  • To withdraw the hazardous goods from sale.
  • To issue corrective advertisement to neutralise the effect of a misleading advertisement.

Role of Consumer Organisations and Non-governmental Organizations (NGOs.)

  • Educating the general public about consumer rights by organising training programmes, seminars, and workshops.
  • Publishing periodicals and other publications.
  • Collecting various samples of different goods and testing their quality.
  • Encouraging consumers to protest against exploitative and unfair trade practices of sellers.
  • Providing legal assistance to consumers by way of providing aid, legal advice, etc.
  • Filing complaints inappropriate consumer courts on behalf of the consumers.
  • Encouraging consumers to boycott defective goods.
  • Encouraging consumers to purchase consumer-friendly products.
  • Taking an initiative in filing cases in consumer courts in the interest of the general public.

Some of the important consumer organisations and NGOs engaged in consumer protection are:

  • Consumer Co-ordination Council, Delhi.
  • Voluntary Organisation in Interest of Consumer Education (VOICE).
  • Common Cause, Delhi.
  • Consumer Protection Council, Ahmedabad.
  • Consumer Guidance Society of India, Mumbai.
  • Consumer’s Association, Kolkatta, etc.


Under the Consumer Protection Act, a consumer is defined as:

  1. Any person who buys any goods for consideration.
  2. Any person who hires or avails of any service, for a consideration.

Who can File a Complaint?: Complaint before the appropriate consumer forum can be made by

  • Any consumer.
  • The Central Government or any State Government.
  • One or more consumers, on behalf of numerous consumers having the same interest.
  • A legal heir or representative of a deceased consumer.