The above statement is False. The correct statement is “Consumer Protection Act was Passed in the interest of Consumers” and not for the sellers.
The following points emphasis the importance of consumer protection:
1. Seller dominant market: -If the market is dominated by sellers than the consumer's choice as well as his welfare gets the last preference. All the transactions are finalized in favour of sellers, middlemen and manufacturers. E.g. if there is shortage of goods then the buyer will have to buy a product at the price quoted by the seller.
2. Ignorance of consumers: -Ignorance of consumers about their rights, market conditions, price levels, product details, etc. result into consumer exploitation. Many times consumers do not even realize that they are being cheated. E.g. a shopkeeper may sell a product which is actually received by him as free sample; fee gifts offered by company may not reach upto the consumer.
3. Tendency of the Consumers: -Majority of the consumers get attracted towards the products of cheap prices, discounts, various schemes, etc. this weakness of the consumers leads to their exploitation without their knowledge.
4. Unorganized Consumers: -Consumers are neither organized nor united. Compared to them the producers and sellers are in a superior position. An individual consumer cannot fight against powerful traders. Thus, it is easy to exploit unorganized and widely spread consumers.
5. Nature of Products: -Modern products are the end results of complicated production processes. It is beyond the capacity of poor and illiterate consumers to judge the quality or safety aspects of a product. Moreover these consumers/customers cannot take legal help even though they realize that they are being cheated because they do not understand production process thoroughly.
6. Lack of Information:- Today's consumer lives in a complex world. Distance between producer and consumer is vast. It is impossible to establish direct contact between producer and consumer. After globalization and liberalization policy of the government, the market is full of domestic as well as imported products. But it is difficult for the consumer to get reliable information about the product before it is purchased.
7. Lack of Participation of Consumers: -It is observed that certain decisions, which directly affect consumer's interest, are taken without any consultation with consumers or their organizations. E.g. charges of daily necessities such as public transport, cooking gas, telephone, electricity, etc. only a strong consumer movement can pressurize various organizations to allow consumer participation in the decision making process.
8. Increase in consumption rate: -compared to earlier period, consumption rate is increased due to increase in population as well as tendency of the people to lead a comfortable life. It results into mass production, many varieties, increased prices, unfair trade practices, etc. such a situation in the market confuses the consumers and they fall prey (victim) to exploitation.
9. To restrict unfair trade practices:-When more and more consumers start talking support of Consumer Protection Act (1986) to resolve their grievances then it will automatically pressurize the manufacturers, middlemen and traders for not conducting the trade by unfair means.
