Mumbai: When comedian Kunal Kamra began posting videos of old, dusty piled up scooters lying before Ola Electric service centres, he seemingly triggered a tidal wave of rants by Ola customers who had long given up on any redressal. Kamra’s X (formerly Twitter) post blew up with photos and videos of non-functional scooters. Customers posted videos of being chased away from service centres by company bouncers. Someone set a service centre on fire. And while founder Bhavish Aggarwal fought with Kamra online over an October weekend, shares of Ola Electric crashed on Monday. But, who was helping the customers?
Enter: Central Consumer Protection Authority (CCPA). India’s newest regulator, set up in 2020 to exclusively protect consumer rights, issued a show-cause notice to Ola Electric for violating consumer rights. Two weeks later, when the company said it had successfully settled over 99% of all consumer complaints, CCPA dismissed the claims and initiated its most lethal weapon of legal enforcement: a class-action lawsuit.
All this should give customers of Ola Electric, and any other brand, reason to cheer. For decades, Indian customers have struggled helplessly against brands that sell them faulty, harmful, or poisonous goods, refused refunds and returns, or ran scammy ads. The only legal recourse and source of compensation is to fight a case against savvy corporate lawyers in the slow, overburdened consumer dispute courts. Can CCPA, empowered to prevent harm and protect customers as a class, bring some relief?
It depends.
Interviews with the current and former commissioner of CCPA, legal experts, and people familiar with the regulator’s thinking, reveal the inner workings of India’s newest regulator. And while it is determined to do good, it may be trying to do so with one hand tied behind its back.
The regulator was born when the Consumer Protection Act, 1986, was amended to include a regulatory body dedicated to protecting Indian consumers as a class. It was given the power to issue ‘subordinate legislation’, meaning the guidelines, advisories, and orders it issued had legal backing. Besides, it was given the powers to initiate class-action lawsuits against errant companies and brands on behalf of customers (more on this later), as it did against Ola Electric this year.
The regulator began operations in 2020, just before the covid-19 pandemic spread. However, almost all its top officers were on ‘additional charge’, meaning CCPA was an additional duty along with their regular jobs.
The additional secretary of the consumer affairs ministry, Nidhi Khare (now secretary), became its chief commissioner, while joint secretary Anupam Mishra was appointed commissioner. The job of investigating CCPA cases was handed to two officers—the director-generals of the Bureau of Indian Standards (body that ensures compliance to Indian Standards) and the National Test House (central government’s testing laboratory). This arrangement continues today.
But finally, Indian consumers had a body solely looking out for them. Before this, a customer’s sure shot way to get justice from a brand was to sue in the consumer courts—a tedious, time-consuming, and rather expensive task, with rare results.
In 2021, the regulator passed its first set of orders, largely indicting consumer brands for falsely advertising protection from covid-19. Brands selling soap, ply and laminate, and even linen received CCPA notices for falsely advertising antiviral and antibacterial properties, allegedly preying on people’s pandemic anxieties.
Besides, CCPA launched a concerted effort to help consumers get refunds for airline tickets that were cancelled once the lockdown was imposed. All major online travel aggregators received notices and follow-ups for two years until they had returned their customers’ money. “We were able to very successfully carry out a class-action lawsuit against online travel agents,” CCPA chief commissioner Nidhi Khare told Mint in an interview. “When the honourable Supreme Court ordered airlines to refund cancelled tickets, tour and travel agencies were not refunding the amount they had received to consumers, giving some reason or the other. CCPA ensured refunds to individual customers of ₹1.5 crore. That is not a small amount.”
Since then, CCPA has issued over 100 orders. It has also initiated class-action lawsuits against brands against whom consumer complaints on social media and with the National Consumer Helpline are piling up.
“The intent is there to fix things,” a consumer rights advocate told Mint, requesting anonymity. “The officers are good, unlike your typical babus [officers].”
However, he added, on-ground action has slowed down. “For example, CCPA issued guidelines around dark patterns in December last year,” he said. “But almost a year later, it has not issued a single notice against anyone indulging in this practice. There are plenty of examples of everyday dark patterns including ride cancellations in ride-hailing apps, seat assignment flows in airline booking platforms. So while the intent is there, officers do need to get to work.”
A dark pattern is a design in an app or interface that tricks a user into choosing an option they did not want to. For instance, changing the standard location of Yes/No options in a popup or language that shames a user for wanting to leave an app are examples of commonly found dark patterns.
While the regulator has kept itself busy these last four years, how effective has it been on ground?
CCPA scores over other means of redressal for the Indian consumer. The Advertising Standards Council of India (ASCI), an industry body, has no legal backing to enforce its guidelines against misleading advertisements and stealth advertising on social media. Meanwhile, the consumer courts system is clogged with pending cases. For instance, in 2023, consumer commissions disposed of 136,000 cases between December 2022 and September 2023, but 545,000 cases were still pending, per latest data made available by the consumer affairs ministry.
The law empowers CCPA to enforce its orders and guidelines, and act preemptively to protect consumers so they need not resort to navigating the consumer courts system.
“A loose analogy for CCPA could be the Federal Trade Commission (FTC) in the US,” Jaideep Reddy, partner of technology, media and telecom practice at law firm Trilegal told Mint. “However, the US statute is focused on a few short sections and the FTC interprets these on a case-by-case basis,” he said. The FTC, for instance, interprets the terms ‘unfair’ and ‘deceptive’ in each case. However, India’s Consumer Protection Act 2019 is more prescriptive and lays down statutory norms.
The very prescriptive law that gives CCPA legal power to prosecute and enforce, also holds it back from taking effective punitive action. Consider this: the highest penalty the regulator can impose on a guilty brand or firm under the Consumer Protection Act 2019 is ₹50 lakh. In most cases, it prescribes fines ranging from ₹3-20 lakh per offence.
“How much is ₹5 lakh or ₹10 lakh for a large company?” a senior official familiar with the workings of CCPA told Mint, requesting anonymity. “This is simply not a big enough deterrent for large companies.”
Even the former secretary of the consumer affairs ministry, Rohit Kumar Singh, agreed. “In terms of enforcement powers, CCPA is constrained by the law itself,” he told Mint. “That needs to be amended. However, the setting up of CCPA has been a good start. Prior to the 2019 Act, there was no provision for such a protection authority.” Singh, who retired from the IAS earlier this year, is also a member of the National Consumer Disputes Redressal Commission (NCDRC).
Besides, any brand hit by a CCPA order can appeal in the consumer courts. This would test the limits of CCPA’s powers to investigate and prosecute a company.
Here’s another challenge. Much of the work of protecting consumers overlaps with the work of other regulators, such as telecom, aviation, and food manufacturing. Consider CCPA’s recent notices to quick commerce firms over violations of the Legal Metrology Act. Officials aware of the developments pointed out that ensuring compliance with this act was the responsibility of the Food Safety and Standards Authority of India (FSSAI) under the ministry of health. CCPA reportedly sent notices to firms including Zepto and Blinkit for failing to display expiry dates among other charges in late October. A couple of weeks later, the FSSAI issued an official order to online food sellers, asking them to comply.
Similarly, in the case of Ola Electric, CCPA’s investigation and action may be limited to misleading advertisements. “At best, they can pass an order against the company saying your scooters are malfunctioning, which means your ads were misleading,” the official quoted above said. “But there are many ways to argue a case of misleading ads, especially once they appeal in a consumer court. It will be difficult for CCPA to make a case of unfair trade practices against Ola Electric; a battery catching fire is a faulty product, not unfair practice.”
Besides, this official added, CCPA is not empowered to properly investigate unfair practices at Ola Electric or effectively prosecute it for not servicing and replacing faulty scooters. “CCPA should not have issued that press release,” he said, referring to the show cause notice the regulator sent to Ola Electric in early October. “They don’t even have a team that can investigate this case properly. In the Legal Metrology case, it was the FSSAI that was equipped to investigate violations.”
To be sure, any new regulator will need time to find its feet and clearly carve out its jurisdiction. In CCPA’s case, it will need to successfully pursue several cases to establish a precedent of what it can, or can’t, do.
Even four years after inception, its top investigative positions are staffed by officers with additional charge. “Except for some young professionals, there is not even one top-ranked person who is on the permanent rolls of the CCPA,” the official said.
“CCPA needs to be strengthened in terms of human resources” former consumer affairs secretary Singh said. “Apart from the chief commissioner (Nidhi Khare), the authority needs more independent commissioners and investigators to carry out its work.”
Secretary Khare is aware of the problem; she told Mint the ministry was in the process of hiring more people but did not share specifics or a timeline.
Overworked officers juggling several responsibilities can also dull the impact of a new regulator. As of now, some public policy and corporate affairs executives engaging with the regulator say its top people lack ‘bite’.
With all these challenges, CCPA’s best bet for now may be to focus on the biggest violation of consumer rights – advertisements.
“CCPA is primarily handling the issue of misleading advertisements, since that is what affects the most number of consumers at the same time,” former secretary Singh said. “The advertisement is the first point of contact between a brand and a customer. With increasing digital marketing, this menace of misleading ads is also growing exponentially,” he added.
However, it’s hard to monitor the tidal wave of contemporary ads and identify those violating consumer trust. CCPA can ask for help from other bodies, such as ASCI.
“The ASCI is doing a very good job,” former secretary Singh said. “But being a self-regulatory body, it cannot do much if a member defies its directives. When CCPA issues an order, you are bound by law to comply. In my opinion, the consumer affairs ministry should use ASCI as the first level of screening and take their advice on both reporting and enforcement in respect of misleading ads. ASCI is in a better position to monitor errant advertisers on ground,” he added.
But the real glory in protecting consumers comes from decisive action, including fining violators and ensuring affected customers get compensation along with their money back. In this regard, CCPA has had limited success so far, except for the refund of airline tickets booked before the lockdown.
The regulator’s most potent tool is initiating class action lawsuits on behalf of affected customers. Now, the Consumer Protection Act, 1988, always allowed customers to come together and pool their complaints into a class-action in the consumer courts. But in India, this provision hasn’t picked up much. Unlike the US, where lawyers often take no upfront fees from customers and earn a share of the compensation awarded, customers suing in India must bear the cost of litigation. According to Trilegal’s Reddy, Indian consumer courts don’t award litigation costs easily, even to the winning party.
In the long run, the true test of CCPA’s power will lie in its effective use of class-action lawsuits, enforcing the many guidelines, orders, and advisories it issues. For now, there is a long way to go.
