NCERT Solutions for Class 12 Business Studies Chapter 12 - Consumer Protection
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Very Short Answer Type Questions
1. Under which consumer right does a business firm set up consumer grievance cell?
Ans. Under the Right to seek Redressal consumer grievance cell is set up. A consumer has the right to seek redressal and compensation in case of any exploitation. The Consumer Protection Act provides for compensation in various forms such as replacement of product, cash compensation and repair/removal of defects, among others.
2. Which quality certification mark is used for agricultural products?
Ans. Food Process Order FPO Mark is the quality certification mark used for agricultural products.
3. What is the jurisdiction of cases that can be filed in a State Commission?
Ans. State Commission has a jurisdiction to entertain complaints where value of goods and services paid as consideration exceeds ₹1 crore but does not exceed ₹10 crore rupees.
4. State any two relief available to consumers under CPA.
Ans. Relief available under CPA, 2019 are:
(i) To remove the defect in goods or deficiency in service.
(ii) Replacing the defective product with a new one, free from any defect.
5. Name the component of product mix that helps the consumer to exercise the right to information.
Ans. Labelling component of product mix helps a customer exercise his Right to Information as it acknowledged all the mandatory details of the product in the package.
Short Answer Type Questions
1. Enumerate the various Acts passed by the Government of India which help in protecting the consumer’s interest?
Ans. The Indian legal framework consists of a number of regulations which provide protection to consumers.
Some of these regulations are as under:
(i) The Consumer Protection Act, 1986: This Act provides security to consumers against defective goods, deficient services, unfair trade practices of sellers etc.
(ii) The Contract Act, 1982: The Act lays down the conditions in which the promises made by parties to a contract will be binding on each other.
(iii) The Sale of Goods Act, 1930: The Act provides some safeguards and assistance to the buyers of the goods in case, the goods purchased do not comply with express or implied conditions or warranties.
(iv) The Essential Commodities Act, 1955: The Act aims at controlling the delivery and supply of commodities or products, whose interference could affect the lives of the common people to a great extent.
(v) The Agricultural Produce Act, 1937: The Act prescribes grade standards for agricultural commodities and livestock products.
(vi) The Prevention of Food Adulteration Act, 1954: This Act aims to check adulteration of foods articles and ensure their purity, so as to maintain public health.
(vii) The Standards of Weights and Measures Act, 1976: This Act facilitates protection to consumers against the malpractice of under-weight or under-measure of goods
or products.
(viii) The Trade Marks Act, 1999: The Act prevents the use of fraudulent marks on products and thus provides protection to the consumers against such products.
(ix) The Competition Act, 2002: The Act provides protection to the consumers in case of practices adopted by business firms which hamper competition in the market.
(x) The Bureau of Indian Standard Act, 1986: The bureau has two major activities: formulation of quality standards for goods and their certification through the BIS
certification scheme. The bureau has also set up a grievance cell, where consumers can make a complaint about quality of products carrying the ISI mark.
2. What are the responsibilities of a consumer?
Ans. A consumer should keep in mind the following responsibilities while purchasing, using and consuming goods and services:
(i) Be aware about various goods and services available in the market, so that an intelligent and wise choice can be made.
(ii) Buy only standardised goods as they provide quality assurance. Thus, look for ISI mark on electrical goods, FPO mark on food products and Hallmark on jewellery etc.
(iii) The consumer must learn about the risks associated with products and services.
(iv) Read labels carefully, so as to have information about prices, weight, manufacturing and expiry dates etc.
(v) Assert yourself to get a fair eal.
(vi) Be honest in your dealings. Choose only from legal goods and services.
(vii) Ask for a cash-memo on purchase of goods and services. This would serve as a proof of the purchase made. He/she must have a cash memo for filling a complaint in appropriate consumer court in case of defect in goods/services.
3. Who can file a complaint in a consumer court?
Ans. A complaint can be made by:
(i) Any consumer.
(ii) Any registered consumer’s association.
(iii) The Central Government or any State Government.
(iv) One or more consumers, on behalf of numerous consumers having the same interest.
(v) A legal heir or representative of a deceased consumer.
4. FSSAI (Food Safety and Standards Authority of India) has made a proposal for hotels and other food outlets to declare the kind of oil/fat used in cooking each of the food items on their menus. Name and explain the Consumer Right being reinforced by this proposal.
Ans. Right to be Informed has been enabled by the FSSAI by proposing to furnish details about the kind of oil used in cooking by food outlet. A consumer has the right to be completely informed regarding the quality, quantity, price, ingredients, weight, etc., of goods and services. In India, it is legally mandatory for manufacturers to provide all the relevant information on the packages and the labels of goods.
5. Who is a consumer as per CPA?
Ans. As per the Consumer Protection Act, a consumer is defined as follows:
(i) Any individual who purchases any good for which he has paid or promised to pay; partly paid and promised to pay the remaining part. That is, it includes all individuals who use the goods with the approval of the seller. However, those individuals who purchase the goods for the purpose of resale or for commercial purposes are not considered as consumers.
(ii) Any individual who avails any service or hires a service for which he has paid or promised to pay; partly paid and promised to pay the remaining part. That is, it includes all individuals who have availed the service with the approval of the seller.
Long Answer Type Questions
1. Explain the importance of consumer protection from the point of view of business.
Ans. A business cannot survive without paying attention on protecting the consumers interest and adequately satisfying them. Hence, consumer protection is important because of the following reasons:
(i) Long Term Interest of Business: A business firm can grow only if they are able to satisfy customers needs. Business firms should aim at long term profit maximisation through customer satisfaction. Satisfied customers not only lead to repeat sales but also provide good feedback to prospective customers and thus help in increasing the customer base of business.
(ii) Business Uses Society’s Resources: Business organisation uses resources which belong to the society, as they have a responsibility to supply such products and render such services which are in public interest.
(iii) Social Responsibility: A business has social resposibility towards various interest groups such as employees, owners, govt. etc. Business organisations make money by selling goods and providing services to consumers. Thus, consumers form an important group among the many stakeholders of business and like other stakeholders, their interest has to be well taken care of.
(iv) Moral Justification: The moral duty of any business is to take care of consumer’s interest and securing them from exploitation. Thus, a business must avoid insecure loss, exploitation and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black marketing etc.
(v) Government Intervention: A business engaging in any form of exploitative trade practices would invite government intervention or action. This would tarnish the image of company. Thus, it is advisable that business organisation voluntarily resort to such practices, where the customers need and interests will be taken care of.
2. Explain the rights and responsibilities of a consumer.
Ans. The Consumer Protection Act provides six rights to consumers. They are as follows:
(i) Right to Safety: The consumer has a right to be protected against goods and services which are hazardous to life and health, e.g., sometimes we purchased the food items of low quality which causes severe problems. Thus, in this case, we should purchase good quality and FPO labelled products.
(ii) Right to be Informed: The consumer has a right to have complete information about the product, which he/she intends to buy including its ingredients, date of manufacture, price, quantity, directions for use etc. Under the legal framework of India; manufacturers have to provide such information on the package and label of the product.
(iii) Right to Choose: The consumer has the freedom to choose from a variety of products. The marketers should offer a wide variety of products at different prices and allow the consumer to make a choice and choose the product which is most suitable.
(iv) Right to be Heard: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or a service. It is because of this reason that many enlightened business firms have set up their own consumer service and grievance cells. Many NGOs and consumer organisations are also working for redressel of consumer grievances.
(v) Right to Seek Redressal: The Consumer Protection Act provides a number of reliefs to the consumer including replacement of the product, removal of defect in the product, compensation paid for any loss or injury suffered by the consumer etc.
(vi) Right to Consumer Education: The consumer has a right to acquire/gain knowledge about products. He should be aware about his rights and the reliefs available to him in case of a product/service falling short of his expectations. Many consumer organisations and some enlightened businesses are taking an active part in educating consumers in this respect.
Consumer Responsibilities: A consumer must be aware about these responsibilities while purchasing, using and consuming goods and services:
(i) Consumer must be aware of all their rights.
(ii) Consumer must be careful while purchasing a product.
(iii) He should file complaint for the redressal of genuine grievances.
(iv) Consumer must buy a standardised good.
(v) He should ask for a cash-memo on purchase of goods and services.
3. What are various ways in which the objective of consumer protection can be achieved?
Ans. There are various ways in which the objective of consumer protection can be achieved:
(i) Self Regulation by Business: Socially responsible firms follow ethical standards and practices to deal with their customers. Many firms have set up their customer service and grievance cells to redress the problems and grievances of their consumers.
(ii) Business Associations: The associations of trade, commerce and business like Federation of Indian Chambers of Commerce of India (FICCI) and Conference of Indian Industries (ClI) have laid down their code of conduct which lays down for their members the guidelines in their dealings with the customers.
(iii) Consumer Awareness: A consumer, who is well informed about his rights and the reliefs, would be in a position to raise his voice against any unfair trade practices or exploitation by sellers.
(iv) Consumer Organisations: Consumer organisations play an important role in educating consumers about their rights and protecting them. These organisations can force business firms to avoid malpractices and exploitation of consumers.
(v) Government: The Government can protect the interests of the consumers by enacting various legislations. The legal framework in India encompasses various legislations which provide protection to consumer, the most important of these regulations is the Consumer Protection Act, 1986. The Act provides for a three-tier machinery at the District, State and National levels for redressal of consumer grievances.
Role of Consumer Organisations and NGOs: Consumer organisation and NGOs perform several functions for the protection and promotion of interest of consumers. In India, these associations are performing lots of functions. Some of them are:
(i) Educating the general public about consumer rights by organising training programmes, seminars and workshops.
(ii) Publishing periodicals and other publications to impart knowledge about consumer problems, legal reporting, reliefs available and other matters of interest.
(iii) Carrying out comparative testing of consumer products in accredited laboratories to test relative qualities of competing brands and publishing the test results for the benefit of consumers.
(iv) Encouraging consumers to strongly protest and take an action against unscrupulous. exploitation and unfair trade practices of sellers.
(v) Providing legal assistance to consumers by providing aid, legal advice etc in seeking legal remedy.
(vi) Filing complaints in appropriate consumer courts on behalf of the consumers.
(vii) Taking an initiative in filing cases in consumer court in the interest of the general public, not for any individual.
4. Explain the redressal mechanism available to consumers under the Consumer Protection Act, 2019.
Ans. Under the Consumer Protection Act, a three-tier machinery has been set for the redressal of consumer grievances and complaints. The machinery works at the District level, State level and National level and are known as District Consumer Dispute Redressal Forum (or District Forum), State Consumer Dispute Redressal Commission (State Commission) and National Consumer Dispute Redressal Commission (National Commission) respectively.
The following is a brief explanation of the machinery under the Consumer Protection Act.
- District Forum: District Forum is set up in each district by the concerned State Government. It comprises of a Chairman and two or more members, one of whom should be a woman. A consumer can file a complaint in a District forum if the value of goods is in question, along with the compensation that is claimed is less than `20 lakh. As the Forum receives the complaint, it refers it to the concerned party against whom the compliant is registered. After considering the tests and reports and on hearing both the concerned parties, the Forum passes a judgement order. Moreover, in case the party filing the complaint is not satisfied with the order, an appeal can be filed in the State Commission within 30 days of passing the judgment.
- State Commission: The State Government sets up State Commission for the redressal of consumer grievances. Alike District Forum, State Commission also comprises of a President (who is or has been a judge of a High Court) and two or more members one of whom should be a woman. In State Commission, a complaint can be filed by a consumer in case the value of goods /services in question along with the compensation claimed is more than `20 lakh but is less than `1 crore. After receiving the complaint, the Commission refers the complaint to the party against whom the complaint is registered. If necessary, the samples of the goods are sent for testing in the laboratory. After considering the tests of the reports and on hearing the concerned parties, the Commission passes an order. An appeal can be filed against the order of the Commission before the National Commission within 30 days of judgement.
- National Commission: The National Commission is set up by the Central Government. It consists of a President (who is or has been a judge of the Supreme Court) and four or more members one of whom is a woman. A consumer can file a complaint in the National Commission in case the value of goods in question along with the compensation claimed is more than `1 crore. After referring to the sample proofs and on hearing the concerned party, the Commission passes an order. In case the aggrieved party is not satisfied with the order, an appeal can be filed before the Supreme Court.
Available Reliefs: In case the concerned forum passes an order in favour of the aggrieved party, it can pass one or more of the following directions to the opposite party:
(i) Repair the defective goods or remove the deficiency in the service.
(ii) Replacement of the defective good with a new one.
(iii) Refund the price paid by the consumer for the good or the service.
(iv) Payment of compensation in cash for the loss or injury suffered.
(v) Elimination of punitive damages.
(vi) Remov al of misleading advertisement and issue of a correct advertisement.
(vii) Payment of an appropriate amount (not less than 5% of the good in question) to be credited to Consumer Welfare Fund.
(viii) Ceasing the manufacturing of hazardous goods.
5. Explain the role of consumer organisations and NGOs in protecting and promoting consumer’s interest.
Ans. Consumer organisations and NGOs play an important role in protecting and promoting consumers’ interests. Some of the important NGOs and consumer organisations include Consumer Coordination Council, Common Cause, Consumer Protection Council, Consumers’ Association, Mumbai Grahak Panchayat, etc.
The following are the functions performed by these organisations in regard of safeguarding the interest of the consumers:
(i) Consumer Education: The NGOs and consumer organisations educate the consumer about their rights through various training programmes and workshops.
(ii) Publishing Journals: They publish journals and periodicals to spread knowledge and awareness about various consumer problems, legal remedies available and other such matters.
(iii) Legal Assistance: They also provide legal assistance to the consumers and help them in seeking suitable redressal.
(iv) Encouraging Protest against Exploitation: They encourage the consumers to protest against any form of exploitation and unfair trade practices.
(v) Assistance in Filing Complaints: They encourage the consumers to file complaints in appropriate forums and also file complaints on their behalf.
(vi) Taking Initiatives: They not only encourage the consumers to register complaints but also take initiatives themselves in filing cases in the general interest of the public.
(vii) Testing Quality of the Products: They carry out the quality tests for various products in laboratories and publish the results.
6. Mrs. Mathur sent a jacket to a laundry shop in January 2018. The jacket was purchased at a price of `4,500. She had previously sent the jacket for dry cleaning with Shine Dry Cleaners and the jacket was cleaned well. However, she noticed that her jacket had white discoloration marks when she collected the jacket this time. On informing the dry cleaner, Mrs. Mathur received a letter confirming that discolouration indeed appeared after the jacket was dry cleaned. She contacted the dry cleaner multiple times and requested for compensation for discoloured jacket but to no avail.
Upon Consumer Court’s intervention, Shine Dry Cleaners agreed to compensate `2,500 to Mrs. Mathur for the discoloured jacket.
(a) Which right was exercised by Mrs. Mathur at the first instance ?
(b) Name and explain the right which helped Mrs. Mathur to avail the compensation.
(c) State which consumer responsibility has been fulfilled by Mrs. Mathur in the above case.
(d) State any other two responsibilities to be assumed by the consumers.
Ans. (a) Right to be Heard was exercised by Mrs. Mathur on first instance. In case of any grievance or dissatisfaction, a consumer has the right to file a complaint under appropriate forums established by the government.
(b) Right to Seek Redressal enabled Mrs. Mathur to seek compensation. A consumer has the right to seek redressal and compensation in case of any exploitation. The Consumer Protection Act provides for compensation in various forms such as replacement of product, cash compensation and repair/removal of defects, among others.
(c) Yes, Mrs. Mathur was responsible consumer as she checked the jacket pre and post dry cleaning. She also complained the Dry Cleaners before moving to the court.
(d) The following are some of the responsibilities that a consumer must fulfil:
- Awareness: A consumer should be well aware of the availability of various goods and services in the market so that he can choose carefully and wisely.
- Look for Quality Marks: Before buying a product, a consumer must always look for the quality certification marks, such as ISI in case of electrical goods , AGMARK in case of agricultural goods, etc.
7. Explain the role of consumer organisations and NGOs in protecting and promoting consumers’ interest.
Ans. Consumer organisation and NGOs perform several functions for the protection and promotion of interest of consumers. In India, these associations are performing lots of functions, some of them are:
(i) Educating the general public about consumer rights by organising training programmes, seminars and workshops.
(ii) Publishing periodicals and other publications to impart knowledge about consumer problems, legal reporting, reliefs available and other matters of interest.
(iii) Carrying out comparative testing of consumer products in accredited laboratories to test relative qualities of competing brands and publishing the test results for the benefit of consumers.
(iv) Encouraging consumers to strongly protest and take an action against unscrupulous exploitation and unfair trade practices of sellers.
(v) Providing legal assistance to consumers by providing aid, legal advice etc. in seeking legal remedy.
(vi) Filing complaints in appropriate consumer courts on behalf of the consumers.
(vii) Taking an initiative in filing cases in consumer court in the interest of the general public, not for any individual.
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