Consumer Protection Act for Businesses: Liability, Ads, E-commerce

The Consumer Protection Act for businesses means four kinds of exposure under the Consumer Protection Act, 2019: product liability claims for harm caused by defective products or deficient services (sections 82 to 87), consumer complaints for unfair trade practices and deficiency before District, State and National Commissions, action by the Central Consumer Protection Authority (CCPA), including penalties up to ₹10 lakh for misleading ads (₹50 lakh for repeats), and criminal offences such as section 89. Online sellers must also follow the Consumer Protection (E-Commerce) Rules, 2020 and the 2023 dark patterns guidelines.

How the Consumer Protection Act for businesses works

The Act protects consumers, not business buyers; a company buying raw material usually goes to a civil court or arbitration. But the Consumer Protection Act for businesses that sell to the public, directly or through a marketplace, is unavoidable. Consumers file online on e-Jagriti, with no fee for claims up to ₹5 lakh, and the National Consumer Helpline (1915) often reaches a business before a formal complaint does.

The CCPA, set up under section 10, acts for consumers as a class. It can inquire into violations, order recalls of dangerous goods, order refunds, stop unfair practices, and direct the modification or withdrawal of misleading ads.

Product liability: who pays when a product causes harm

Chapter VI creates a product liability action for “harm”: damage to property other than the product itself, personal injury, illness or death, and mental agony attendant on these.

• Manufacturer (s.84): liable for a manufacturing defect, defective design, deviation from specifications, non-conformity to an express warranty, or inadequate instructions or warnings. Liable even without negligence on the express warranty.
• Service provider (s.85): faulty or deficient service, inadequate warnings, or non-conformity to the warranty or contract.
• Seller (s.86): liable where it exercised substantial control over design, packaging or labelling, altered the product, gave its own express warranty, sold a product whose manufacturer cannot be identified or served, or failed to take reasonable care in assembling, inspecting or maintaining it.
• Exceptions (s.87): include misuse, alteration or modification of the product, and for failure to warn, obvious or commonly known dangers.

Example: Agnika Appliances Private Limited, Faridabad, sells room heaters. A batch with faulty coils overheats and a buyer in Chandigarh suffers burns. Agnika faces a product liability claim as manufacturer and possible CCPA action for a recall. Its claim against the coil supplier is a separate contract matter, limited by whatever cap it agreed.

Unfair trade practices and unfair contract terms

Section 2(47) defines unfair trade practices widely. Common examples under the Consumer Protection Act for businesses:

• False claims about standard, quality, sponsorship or approval.
• Misleading claims about price, false guarantees and bait advertising.
• Refusing to take back defective goods or withdraw deficient services and refund within the stated period, or within 30 days if no period is stated.
• Disclosing a consumer’s personal information given in confidence, except as required by law.

Section 2(46) lets State and National Commissions declare unfair contract terms void, such as manifestly excessive security deposits, one-sided termination rights or disproportionate penalties. Standard terms written only for the seller’s comfort can be struck down.

E-commerce rules and dark patterns

The Consumer Protection (E-Commerce) Rules, 2020, notified on 23 July 2020, apply to marketplace and inventory e-commerce entities. Key duties:

1. Display legal name, address, customer care and grievance officer details.
2. Grievance officer to acknowledge a complaint within 48 hours and redress it within one month.
3. No price manipulation for unreasonable profit and no unreasonable cancellation charges.
4. Marketplaces disclose seller details and the main parameters for ranking; no fake reviews.
5. Show total price with break-up and country of origin where applicable; record consent by explicit action, not pre-ticked boxes.

The CCPA’s Guidelines for Prevention and Regulation of Dark Patterns, 2023 list 13 banned practices, such as false urgency, drip pricing and subscription traps. See our guide to dark patterns guidelines in India.

Penalties and how to handle a complaint

• Ignoring CCPA directions (s.88): imprisonment up to 6 months, or fine up to ₹20 lakh, or both.
• Not obeying a Commission’s order (s.72): imprisonment of one month to three years, or fine of ₹25,000 to ₹1 lakh, or both.
• Misleading ads: CCPA penalty under s.21 and criminal liability under s.89. See misleading advertisement law in India.

When a consumer notice arrives: log it, preserve the invoice, product records and correspondence, check whether a refund or replacement is due, and reply in time. Settling a genuine grievance early usually costs less than a Commission order with compensation and costs.

Frequently asked questions

How does the Consumer Protection Act for businesses affect a small online seller?

A small seller can face consumer complaints, product liability claims and CCPA action like any large brand. It must issue bills, honour refunds for defective goods, avoid misleading claims and dark patterns, and if it runs an e-commerce site, follow the 2020 E-Commerce Rules.

Can a business be sued in a Consumer Commission by another business?

Usually not. A buyer who purchases for resale or a commercial purpose is not a “consumer” under s.2(7), though purchases exclusively for earning a livelihood by self-employment are covered.

What is the penalty for not following a CCPA order?

Section 88 provides imprisonment up to six months, or a fine up to ₹20 lakh, or both.

Can a seller be liable for a product it did not make?

Yes, in the cases listed in s.86, for example where it altered the product, controlled its labelling, gave its own warranty, or the manufacturer cannot be identified or served.

Quick quiz

To build compliance around the Consumer Protection Act for businesses, see the Business Law for Managers certificate course.

Sources

• Consumer Protection Act, 2019: ss.2(7), 2(46), 2(47), 10, 21, 69, 72, 82 to 87, 88, 89
• Consumer Protection (E-Commerce) Rules, 2020
• Consumer Protection (Jurisdiction of the District Commission, the State Commission and the National Commission) Rules, 2021
• CCPA Guidelines for Prevention and Regulation of Dark Patterns, 2023

This page is for education and general information, not legal advice for a specific case. Law as on 31 October 2026.