source : indianlegalsolution.com
Drawbacks of Consumer protection law : Analysis by a Law Student.
Drawbacks of Consumer protection law
Author : Shiva Vishnoi
One of the world’s most outstanding and simple enactment of our parliament is Consumer Protection Act, 1986. Such a simple law is not gifted to many countries. Before the enactment of this act, there were certain enactments which protected the consumers only in an indirect way. Some of which are Prevention of Food Adulteration Act, Magic Remedies Act, Weights and Measures Act, Essential Commodities Act. But under these laws, the guilty ones are punished and no direct relief is available to the consumers. Then comes the Consumer Protection Act, 1986 which also provides relief by the way of compensation to the consumer of goods and services. The Act was brought into force from September 1, 1987, and was amended in 1993, enlarging its scope. The Act meets most of the demands of the consumers but still, there are various shortcomings and limitations in the implementation of the Act.
The position today is that only those services come within this Act for which specific payment is made, such as electricity, telephones, banking, etc. Thus the doctors, as well as hospitals including those where treatment is given free such as government hospitals, do not come within the ambit of the Act. Also, the mandatory civil services, such as sanitation, water supply, etc. provided by the State or local authorities are not covered by the Act
The Act incorporates only two clauses regarding the supply of hazardous goods, but it does not impose any strict liability on those who supply such goods. Section 2 (c) clause 5 says that the goods which will be hazardous to life and safety when used, are being offered for sale to the public in contravention of the provisions of any law for the time being in force requiring traders to display information in regard to the contents, manner, and effect of use of such goods. Section 6 which talks about the objectives of the central council, in subsection (a) says that the central council would protect the consumer against the marketing of goods and services which are hazardous to life and property. Also, the act does not provide any definition of safety requirements and the permitted hazardous levels.
A consumer can seek redressal under the Act only if he has suffered a loss or a damage as a result of the unfair trade practice or deficiency in service or the unfair trade practices resorted to by a trader. However, the per se rule is not invoked. The per se rule ensures that any act or practice which prima facie appears to be unfair shall be regarded as unfair and against consumer interest as such, pending its justifications by the opposite party.
The Act does not empower the Consumer Redressal Fora to issue either interim injunction or “case and desist orders”. Interim Injunction refers to temporary restraint. A temporary injunction is an order by which a party to an action is required to do, or refrain from doing, a particular thing until the suit is disposed of or until further orders of the court. A temporary injunction is interim in nature, granted on an interlocutory application of the plaintiff. Also, the Act does not empower the Consumer Redressal Forums to take up cases suo-moto.
The Act does not permit a consumer to lodge a complaint with the Consumer fora if an alternative remedy is available under some other law.
The Act does not impose liability on the chief executive, manager or director where an offence is shown to have been committed by an organisation. Also, the Act specifies a time frame within which the dispute is to be disposed of. The period specified is 90 days, but the actual time taken is much longer.
The Act concedes six rights of consumers viz. right to choose; the right to safety; the right to be informed; the right to be heard; the right to redress; and right to consumer education. But these rights have not been made justiciable. The Act completely ignores the right of consumers to a healthy environment. It acknowledges only six rights under Section 6 of the consumers as are recognised by the international organisation of consumer unions.
A major problem arising practically everywhere is that of execution of the orders passed by the Consumer Courts. In a large number of cases, there are defaults in compliance with the orders. There are cases where consumer courts have resorted to issuing of warrants to the defaulting parties. Cases have been taken to High Courts through writ petitions challenging the validity of issue of warrants.
Suggestions For Amendments In The Act And Improvements In Its Enforcement And Implementation
Section 2(1)(d) and 2(1)(0) of the Act should be suitably amended to modify the definition of the terms consumer and ‘services’ to make it clear that consideration shall not be a condition precedent in case of availing medical and municipal services provided by the government. A victim of medical negligence in a government hospital should be entitled to compensation by enlarging the definition of consumer and bringing free services provided to the public by the government.
The Consumer redressal Fora should be vested with powers to issue interim injunctions restraining an undertaking or person from carrying on any unfair trade practice as defined in Act.
The Consumer Redressal Fora should be empowered to take up the cases suo moto.
In case the unfair trade practice about which a complaint has been made and about which the consumer Redressal Forum has given relief to the complainant, then if Forum is of the opinion that the alleged unfair trade practice is against public interest, it should be empowered to pass an order that the practice shall be discontinued and shall not be repeated. This is commonly called ‘cease and desist’ ordered.
It is absolutely essential to ensure the quality and competence of non-judicial members who are selected to work on the Benches of Consumer redressal agencies.
The consumer redressal agencies should be equipped with the personnel for execution of their orders, and in chis way the necessity of depending on Civil or Criminal Courts would be obviated.
There is a need to prescribe the essential infrastructure to the District Forums and State Commissions so that they are not hamstrung functioning effectively.
The presence of lawyers should be permitted only where the complainant engages a lawyer who will justify the engagement of the lawyer by the respondent. Otherwise. a lawyer should be allowed only where the court specifically permits or considers it necessary. Further, it should be provided that in no case more than two adjournments will be allowed. Furthermore, a procedure must be established which makes it incumbent on the court to immediately give a copy of the order to the parties so that no excuse is given for the delay in submission of appeals.
The Act should be amended to empower Consumer Courts to publish the names of manufacturers, traders and dealers whose goods are found to be hazardous to public safety. This empowerment would work as a deterrent to the erring business community.
The Act should be amended as to streamline the procedure that would facilitate expeditious disposal of consumer cases.
One drawback to consumer-protection regulations is that – Consumer-protection regulations often lead to higher prices, starting from higher production prices, all the way to the actual higher prices in the store where you're buying something.Which of these inspires consumer confidence, increases purchases, and speeds up the flow of investment and wages in the circular flow of the free-market system? consumer-protection regulations YOU MIGHT ALSO LIKE…View this answer. One drawback of consumer protection regulations is that they often can make business difficult for manufacturers and other companies. If a state sets… See full answer below.
5.07 The Government Is a Referee Flashcards | Quizlet – Small or medium-sized companies stand the risk of being swallowed by the larger corporation. Also, one drawback of deregulation is that reduces the level of accountability. This, in turn, leads to certain moral hazards. This can in turn negatively impact the system.what is one drawback to consumer-protection regulations have a budget surplus when the government runs a budget deficit what must it eventually do in order to pay back its debt tests products such as drugs and automobiles for safetyThe regulations resulting from these initiatives and later laws would draw both criticism and celebration for their perceived advantages and disadvantages. Health and Safety
What is one drawback to consumer protection regulations – The new Package Travel Regulations, which came into force at midnight, comprise the biggest shake-up of holiday protection in a generation. They are designed to give holidaymakers who book through4. It takes money to implement the new regulations in Dodd Frank. Because companies are spending more money to make sure that they stay in regulatory compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, there is less of it available in the general economy.New regulations to protect consumers from unfair, misleading or aggressive selling practices came into force on 26th May 2008. The Consumer Protection from Unfair Trading Regulations 2008 (the CPRs) implement the EU Unfair Commercial Practices Directive. They introduce a general prohibition against unfair commercial practices, specific prohibitions against misleading and aggressive practices and a blacklist of 31 practices that will be deemed unfair in all circumstances.
Empreender do Zero – Burocracia – In today's video we will talk
about the first annoying little rule for start your business well: Bureaucracy.
It doesn't get out of there. What's up, jewel? I'm almir and if you
not yet subscribed to the channel subscribe activate the bell and if you want to follow
us on social networks the links are down there in the description. As I said before our
focus here is to save money. And in the bureaucratic part of the opening
of your company the best way to do this is through the MEI the
individual microentrepreneur MEI is the simplest and most
economical for you to open your cnpj. The national register of legal entities. It covers various branches of activity including upholstery cleaning. Is that you
can and should research whether your industry may be covered by the MEI. Because of the advantages that we are going to talk about now. The first advantage is that you
you can register here on the internet. No need to go to
the accounting office. And I'll leave the link for you to do this here in the video description as well. The second advantage is that you
is required to have an accountant. Not even when the company opened, nor for company maintenance and that
takes us to the third advantage that different from other CNPJ's, you do not need to send every month
your purchase and sale notes Just needing to make a
annual billing statement here also over the internet. There you will declare only
how much you earned each month. without the need to send any
document, no notes or anything like that. The fourth advantage is that the MEI is
exempt from some taxes and that today also some companies
already offer several facilities for the purchase of raw materials and others
items for those registered in the MEI The first disadvantage is that you
you can only hire one employee. The second disadvantage is that you have
an annual billing threshold and if you exceed that limit,
automatically your CNPJ will be changed and that will result in a fine. So if you realize that this
limit is going to be crossed you must change your CNPJ before to get rid of this burden. So if you want to start
hiring more employees or your business plan
imagine that this billing threshold the MEI will not be enough
not an option for you And if you think mei is not good
for your business plan there are other CNPJ's that you can consult such as: the micro company, EIRELI, a limited liability company, or a limited liability company. And consulting an accountant you trust it will help you decide
what is the best option for you. Even if you have a lot of questions or
is more comfortable than a professional take care of this area for your company. Yes, you can hire an accountant
to do this job. We said that the microentrepreneur
individual does not need an accountant. But if you think this is the best option,
It's up to you. As our model
business aims to save the maximum, the most obvious reasoning is that
saving that money you can reinvest it in another area. If you invest this monthly fee
on Google for example, for sure your return will
be too big. Regardless of the type of CNPJ you open will immediately begin to arrive
some letters with billets that make themselves seem mandatory,
but in reality they are not. If you are MEI, your only obligation
monthly payment is DAS. And any other type of payment slip
state, federal unions or anything like that doesn't have
mandatory payment If you have doubts look for your
accountant or if you don't have ask for information for someone who has a
little more knowledge in that area. Don't pay for everything that comes to you. In addition to the CNPJ, regardless of its type of
company you will need a Municipal Registration. It’s not very complicated to do and you can ask for more information at the city hall
your city, in the responsible sector. For those who offer services to
State registration is exempt. Now if you plan to sell products
it is indeed necessary. As the focus of our content is for cleaning upholstery and also for providing services, I'm not going to go into that very much. But for sure you find content explaining very well about how you go
do this here on youtube Of course, you can start your
company without CNPJ, without opening a municipal registration and having the
your business license. But legally this is not quite correct. In addition to not
doing this you will be on the same level as any of your competitors. When you do service for
a company for example, they ask you
issues a note. Although the microentrepreneur is not obliged,
in most cases, to issue the invoice the person who is hiring you does not
wants to know what your right is. She needs the service and she needs
you issue a note. And if you can't do it she will find
another company that succeeds. Incidentally to explain a very recurring doubt, the only situation where a microentrepreneur
is required by law to issue the invoice, is when it pays
service to another legal entity and that company does not make an A / P invoice. However, as in Brazil, many laws are conflicting. Including consumer law
says he has a right to receive the invoice for each purchase you make. So it's much simpler than you
have your municipal registration, that even there you will be able to issue
electronic invoices and when asked you
simply issues the note. Instead of claiming the
your rights or explain to person that you are not required to do this. Because although you are right, you will not be hired to perform this service and you’re going to lose the money. For all that we said
and also for the ease you open your individual microentrepreneur, of course it is very advisable that
you take all these steps Because besides you being
working correctly, speaking legally, you will still be
ahead of many of your competitors For today I'm staying here. Don't forget to leave the like,
If you liked the video A hug and see you next! .
Introduction to Interfaces – .
Volcker Rule – The Volcker Rule refers to § 619 of the Dodd–Frank
Wall Street Reform and Consumer Protection Act, originally proposed by American economist
and former United States Federal Reserve Chairman Paul Volcker to restrict United States banks
from making certain kinds of speculative investments that do not benefit their customers.
argued that such speculative activity played a key role in the financial crisis of 2007–2010.
The rule is often referred to as a ban on proprietary trading by commercial banks, whereby
deposits are used to trade on the bank's own accounts, although a number of exceptions
to this ban were included in the Dodd-Frank law. The rule's provisions were scheduled
to be implemented as a part of Dodd-Frank on July 21, 2012, with preceding ramifications,
but were delayed. On December 10, 2013, the necessary agencies approved regulations implementing
the rule, which were scheduled to go into effect April 1, 2014. On January 14, 2014,
after a lawsuit by community banks over provisions concerning specialized securities, revised
final regulations were adopted. Background
Volcker was appointed by President Barack Obama as the chair of the President's Economic
Recovery Advisory Board on February 6, 2009. President Obama created the board to advise
the Obama Administration on economic recovery matters. Volcker argued vigorously that since
a functioning commercial banking system is essential to the stability of the entire financial
system, for banks to engage in high-risk speculation created an unacceptable level of systemic
risk. He also argued that the vast increase in the use of derivatives, designed to mitigate
risk in the system, had produced exactly the opposite effect.
Proposal The Volcker Rule was first publicly endorsed
by President Obama on January 21, 2010. The proposal specifically prohibits a bank or
institution that owns a bank from engaging in proprietary trading that is not at the
behest of its clients, and from owning or investing in a hedge fund or private equity
fund, and also limits the liabilities that the largest banks can hold. Under discussion
is the possibility of restrictions on the way market-making activities are compensated;
traders would be paid on the basis of the spread of the transactions rather than any
profit that the trader made for the client. On January 21, 2010, under the same initiative,
President Obama announced his intention to end the mentality of "Too big to fail."
In a February 22, 2010 letter to The Wall Street Journal, five former Secretaries of
the Treasury endorsed The Volcker Rule proposals. As of February 23, 2010, the US congress began
to consider a weaker bill allowing federal regulators to restrict proprietary trading
and hedge fund ownership by banks, but not prohibiting these activities altogether.
Senators Jeff Merkley, Democrat of Oregon, and Carl Levin, Democrat of Michigan, introduced
the main piece of the Volcker Rule – its limitations on proprietary trading – as
an amendment to the broader Dodd-Frank financial reform legislation that was passed by the
United States Senate on May 20, 2010. Despite having wide support in the Senate, the amendment
was never given a vote. When the Merkley-Levin Amendment was first brought to the floor,
Senator Richard Shelby, Republican of Alabama, objected to a motion to vote on the amendment.
Merkley and Levin responded by attaching the amendment to another amendment to the bill
put forth by Senator Sam Brownback, Republican of Kansas. Shortly before it was due to be
voted upon, Brownback withdrew his own amendment, thus killing the Merkley-Levin amendment and
the Volcker Rule as part of the Senate bill. Despite this vote, this proposal made it into
the final legislation when the House-Senate conference committee passed a strengthened
version of the rule that included the language prepared by Senators Merkley and Levin. The
original Merkley-Levin amendment and the final legislation both covered more types of proprietary
trading than the original rule proposed by the administration. It also banned conflict
of interest trading. Senator Levin commented on the importance of that aspect: "We are
also pleased that the conference report includes strong language to prevent the obscene conflicts
of interest revealed in the Permanent Subcommittee on Investigations hearing with Goldman Sachs.
This is an important victory for fairness for investors such as pension funds and for
the integrity of the financial system. As the Goldman Sachs investigation showed, business
as usual on Wall Street has for too long allowed banks to create instruments which are based
on junky assets, then sell them to clients, and bet against their own clients by betting
on their failure. The measure approved by the conferees ends that type of conflict which
Wall Street has engaged in." However, conferees changed the proprietary
trading ban to allow banks to invest in hedge funds and private equity funds at the request
of Senator Scott Brown, whose vote was needed in the Senate to pass the bill. Proprietary
trading in Treasurys, bonds issued by government-backed entities like Fannie Mae and Freddie Mac,
as well as municipal bonds is also exempted. Since the passage of the Financial Reform
Bill, many banks and financial firms have indicated that they don't expect The Volcker
Rule to have a significant effect on their profits.
Implementation Public comments to the Financial Stability
Oversight Council on how exactly the rule should be implemented were submitted through
November 5, 2010. Financial firms such as Goldman Sachs, Bank of America, and JPMorgan
Chase & Co. posted comments expressing concerns about the rule. Republican representatives
to Congress have also expressed concern about the Volcker Rule, saying the rule's prohibitions
may hamper the competitiveness of American banks in the global marketplace, and may seek
to cut funding to the federal agencies responsible for its enforcement. Incoming Chairman of
the House Financial Services Committee, Representative Spencer Bachus, has stated that he is seeking
to limit the effect of the Volcker Rule, although Volcker himself has stated that he expects
backers of the rule to prevail over such critics. Regulators presented a proposed form of the
Volcker Rule regulations for public comment on October 11, 2011, which was approved by
the SEC, The Federal Reserve, The Office of the Comptroller of the Currency and the FDIC.
The proposed regulations were immediately criticized by banking groups as being too
costly to implement, and by reform advocates for being weak and filled with loopholes.
On January 12, 2012 the U.S. Commodity Futures Trading Commission issued substantially similar
proposed regulations. Volcker himself stated that he would have
preferred a simpler set of rules: "I'd write a much simpler bill. I'd love to see a four-page
bill that bans proprietary trading and makes the board and chief executive responsible
for compliance. And I'd have strong regulators. If the banks didn't comply with the spirit
of the bill, they'd go after them." Regulators gave the public until February
13, 2012 to comment on the proposed draft of the regulations. Under the Dodd-Frank financial
reform law, the regulations went into effect on July 21, 2012. However, during his report
to Congress on February 29, 2012, Federal Reserve Chairman Ben S. Bernanke said the
central bank and other regulators would not meet that deadline.
As of February 26, 2013, the rule was still not implemented. Occupy the SEC filed a suit
in the Eastern District Court of New York naming the Federal Reserve, the SEC, CFTC,
OCC, FDIC, and the U.S. Department of the Treasury and calling for the court to set
a deadline for implementation. Subsequently, it was reported that the Volcker Rule was
not likely to be in effect until July 2014 and that some industry lobbyists were pushing
for extension beyond that date. On December 10, 2013, the Volcker Rule regulations
were approved by all five of the necessary financial regulatory agencies. It is set to
go into effect April 1, 2014. The final rule had a longer compliance period and fewer metrics
than earlier proposals. Furthermore, the final rule put the onus on banks to demonstrate
that they are operating their trading activities in compliance with the rule and required CEO
certification of the effectiveness of the compliance program.
However, after a lawsuit was filed to stay the effect of the Volcker Rule regulations
over whether or not banks could be required to sell or divest collateralized debt obligations
backed by trust-preferred securities, on December 27, 2013 the Federal Reserve Board, FDIC,
OCC, CFTC and SEC all announced they were reviewing whether it would be appropriate
to exempt a small subset of securities from the rule, on which they would rule by January
15, 2014, at the latest. On January 14, 2014, interim final regulations were adopted to
permit certain banking entities to retain those investments.
On January 14, 2014, revised final regulations were approved.
Ongoing regulatory debate in the US and the European Union
Mainland European scholars and lawmakers have also discussed the necessity of banking reform
in light of the current crisis, recommending the adoption of specific regulations limiting
proprietary trading by banks and their affiliates- notably in France where SFAF and World Pensions
Council banking experts have argued that, beyond fragmented national legislations, such
rules should be adopted and implemented within the broader context of statutory laws valid
across the European Union. The Liikanen report or Report of the European
Commission's High-level Expert Group on Bank Structural Reform is a set of recommendations
due to be published in September 2012 by a group of experts led by Erkki Liikanen, governor
of the Bank of Finland and ECB council member. The "Liikanen Group" was molded after the
UK's Independent Commission on Banking and the President's Council on Jobs and Competitiveness:
it was established in Brussels by EU Commissioner Michel Barnier in February 2012.
On July 25, 2012, former Citigroup Chairman and CEO Sandy Weill, considered one of the
driving forces behind the considerable financial deregulation and "mega-mergers" of the 1990s,
surprised financial analysts in Europe and North America by "calling for splitting up
the commercial banks from the investment banks. In effect, he says: bring back the Glass-Steagall
Act of 1933 which led to half a century, free of financial crises."
Effects The proposed Volcker Rule has led to an exodus
of top proprietary traders from large banks to form their own hedge funds or join existing
hedge funds including Todd Edgar and Roger Jones from Barclays, Sutesh Sharma from Citigroup,
George "Beau" Taylor and Trevor Woods from Credit Suisse, Pablo Calderini, Nelson Saiers
and Boaz Weinstein from Deutsche Bank, Pierre-Henri Flamand, Bob Howard, and Morgan Sze from Goldman
Sachs, Deepak Gulati and Mike Stewart from JP Morgan, Peter Muller from Morgan Stanley,
and Jean Bourlet from UBS. Critics of the rule have pointed to the subsequent brain
drain of top talent, although strictly speaking the trading expertise thus lost would only
relate to the activity to be curtailed by the new framework.
Historical antecedents The Volcker Rule has been compared to, and
contrasted with, the Glass–Steagall Act of 1933. Its core differences from the Glass–Steagall
Act have been cited by scholars as being at the center of the rule's identified weaknesses.
See also 2008–2010 bank failures in the United States
2008–2009 Keynesian resurgence Brown–Kaufman amendment
References External links
Examining the Impact of the Volcker Rule on Markets, Businesses, Investors, and Job Creation:
Joint Hearing before the Subcommittee on Financial Institutions and Consumer Credit and the Subcommittee
on Capital Markets and Government Sponsored Enterprises of the Committee on Financial
Services, U.S. House of Representatives, One Hundred Twelfth Congress, Second Session,
January 18, 2012 Final regulations from the OCC, Board, FDIC,
and SEC in the Federal Register Final regulations from the CFTC in the Federal