CBSE Class 12 Business Studies Case Studies – Consumer Protection

CBSE Class 12 Business Studies Case Studies – Consumer Protection

ESSENTIAL POINTS TO SOLVE CASE STUDIES
Consumer protection encompasses entire range of activities by the Government, Consumers, NGOs and other parts of society to safeguard the rights of consumers.

Importance of Consumer Protection

1. FROM THE POINT OF VIEW OF CONSUMERS
   • Consumers are ignorant about their rights and duties. So they should be educated in order to remove their ignorance and lack of knowledge.
   • Consumers are unorganised as generally they do not have the necessary qualities to fight in an organised manner against frauds and malpractices.
   • Consumers are widely exploited by dishonest companies and business firms. They become victims of unfair trade practices, hoarding, black marketing, etc.
2. FROM THE POINT OF VIEW OF BUSINESS
   • Long-term Interest of Business. If business takes care of long-term interests of consumers then it grows.
   • Moral Justification. Adoption of good business ethics can be logically supported. These business ethics promote the welfare of consumers and in turn helps business.
   • Government intervention. In order to avoid legal intervention in present and future, business firms adopt good practices for consumers.
   • Business uses society’s resources. As business uses resources that belong to the society as inputs to produce goods as output, it should fulfill its responsibilities towards consumers.
   • Social responsibility. Business should take care of consumers as they are also important

Consumer Protection Act. 1986
According to the Act, a consumer is a person who buys goods/services with the approval of the seller for personal use (not for business motive). He buys these goods/services after paying the required amount of money (consideration).
Consumer Rights

1. Right to Safety
2. Right to be Informed
3. Right to Choose
4. Right to be Heard
5. Right to seek Redressal
6. Right to Consumer Education

Consumer’s Resposibilities
Consumer should –

1. read labels
2. have knowledge about standardised goods
3. buy only legal goods
4. read instructions given about the product
5. respect the environment
6. form Consumer organisation
7. take Cash Memo after paying for a product
8. file legal complaint in case he is cheated

Relief available to Consumers under the Consumer Protection Act. 1986
The manufacturer must –

1. Remove the defects in a good.
2. Replace the defective good with proper goods.
3. Refund the consumers
4. Stop production of hazardous goods.
5. Not offer hazardous goods.
6. Withdraw hazardous goods from sale.
7. Pay compensation and damage.
8. Make correction in the misleading advertisements.
9. Make payment to Consumer Welfare Fund (CWF) (not less than 5%) of the price of the good.

Three-tier Redressal Machinery

	District Forum	State Commission	National Commission
1. Composition	President and two members (At least one should be a woman).	President and not less than two members (Atleast one should be a woman).	President and atleast four members (Atleast one should be a woman).
2. Appointed by	State Government	State Government	Central Government
3. Value of goods and services	Should not exceed ?20 lakhs.	Exceeds Rs.20 lakhs but not Rs.1 crore.	Exceeds Rs.1 crore.
4. Where to Appeal if not satisfied?	If not satisfied with District Forum, one can appeal to the State Commission within 3 days.	If not satisfied with the State Commission one can appeal to the National Commission within 30 days.	If not satisfied with the National Commission one can appeal to Supreme Court. Only those cases will go to Supreme Court whose value is more than Rs.1 crore, otherwise not.

Role of Consumer Organisations

1. Educating the consumers about their rights, reliefs and and responsibilities.
2. Helping in protesting and taking other actions if consumers are exploited.
3. Publishing journals and magazines for creating awareness about consumer rights and other aspects connected with consumer protection.
4. Filing legal suites and providing legal assistance, whenever required.
5. Organising seminars and workshops for creating consumer awareness.

CASE STUDIES

Question 1.
Rajiv bought an electric geyser. One day while taking bath he felt an electric shock. He quickly called the company and asked the concerned person to replace the geyser or fix the problem. There was no response from the side of the company. The geyser was still in the warranty period. Later from other neutral sources lie came to learn that many other people have also felt the same problem and it is because the product is made up of substandard components.
In the above case identify the consumer rights violated.
Answer:
Following are the consumer rights violated in the above case:

1. Right to Safety. Many other people also have felt the same problem and it is because the product is made up of substandard components.
2. Right to Seek Redressal. There was no response from the side of the company. The geyser was still in the warranty period.

Question 2.
Adesh had some problem walking on the road. He purchased a pair of shoes with high heels. After some time of using these shoes his pain increased as he did not know that there were medically recommended shoes available in the market for this problem. .After a few days of giving himself rest he approached a shop where the medically recommended shoes were sold. He v,as amazed to learn that the company making the shoes was holding workshops at different places in order to make the people suffering with such problem aware of an available option.

1. Which consumer responsibility was not fulfilled by Adesh?
2. Which right has been helped protected by the company selling the medically recommended shoes?

Answer:

1. The consumer responsibility not fulfilled by Adesh is ‘be aware about various goods and services available in the market’. He did not know that there were medically recommended shoes in the market for his problem.
2. The right which has been helped protected by the company selling the medically recommended shoes is ‘Right to be Informed’. The company making the shoes was holding workshops at different places in order to make the people suffering with his problem aware of an available option.

Question 3.
Manuj bought a packet of chips from a local shopkeeper and found that the ingredients given on the label were not legible. He complained about it to the company. The company sent a written apology stating that they will make sure that existing packets are withdrawn from the market and new packets with legible labels are soon made available.
State the consumer right which Manuj exercised.
Answer:
Right to seek redressal which states that a consumer has a right to get relief such as replacement of product, removal of defeat in the product, compensation for any loss or injury suffered by the consumer in case the producer or service falls short of his expectations.

Question 4.
Suman bought a box of cheese of a reputed brand from a local shopkeeper. On opening the box she found a piece of stone in the cheese. She reported the matter to jpkeeper who forwarded her complaint to the concerned company. Within a week the representative of the company visited Soman’s residence with an apology and as a replacement offered her a new cheese pack with four other varieties of cheese as compensation for the inconvenience to her.
State the consumer right which Suman exercised.
Answer:
Right to seek redressal which states that a consumer has the right to get relief such as replacement of product, removal of defect in the product, compensation for any loss or injury suffered by the consumer in case the product or service falls short of his expectations.

Question 5.
In a colony several people purchased mosquito killing rackets from a company. The majority of rackets turned useless within a period of two months. Rishank who was one of the residents of the colony decided to take the matter to the consumer court but the residents were not united and he felt himself alone on the issue. The price of the racket was ?450. Meanwhile one of the friends of Rishank who was a journalist reported about the incident in a daily newspaper. When the company learnt about the situation it decided to take a milestone step. The company decided to lake back or repair all the faulty rackets from the residents of the society. The whole slory took an interesting twist when a technician from the company told the management that in the instruction book provided with the racket it was written to clean the racket with special care after every one month. When enquired it was found that the residents with faulty rackets including Rishank didn’t clean their rackets after one month.

1. Which important aspect from consumer point of view is highlighted in the above case?
2. At which level of consumer court could Rishank apply for the claim of his loss?
3. What was the important aspect from the point of view of business which compelled the company to take such a milestone step?
4. Which consumer responsibility was not followed by the residents of Rishant’s colony?
5. Which consumer right was helped protected by the company?

Answer:

1. The important aspect from consumer point of view highlighted in the above case is ‘Unorganised Consumers’. Rishank who is one of the residents of the colony decided to take the matter to the consumer court but the residents were not united and he felt himself alone on the issue.
2. Since the compensation claimed by Rishank would have been less than 10 lakhs (as the price of racket is Rs.450) he could have approached the District Forum.
3. The important aspect from the point of view of business which compelled the company to take such a milestone step was ‘Moral Justification’. The Company came to know for the first time through newspaper news. Had they been earlier informed and would not have taken any action the answer would be ‘Government Intervention’.
4. The consumer responsibility not followed by the residents of Rishank’s colony was ‘Following manufacturer’s instructions’. In the instruction book provided with the racket, it was written to clean the racket with special care after every one month. When enquired it was found that the residents with faulty rackets including Rishank didn’t clean their rackets after one month.
5. The consumer right which was helped protected by the company was ‘Right to be Informed’. The Company from its side gave ‘directions for use’ which showed that this right of consumer was protected.

Question 6.
On the eve of Diwali Kalpana purchased two kilograms of sweets from VV Koyal Sweets. On consumption of sweets her two children and husband fell sick and were to be hospitalized. Kalpana wanted to file a case in the consumer forum but could not
do so because she did not have any proof of buying sweets from Koyal sweets. What proof could Kalpana have obtained for filing the claim in the consumer court?
Answer:
Kalpana could have obtained cash memo for filing the claim in consumer court.

Question 7.
Nitish went to a shop to purchase a shirt. The shopkeeper offered him three colours of shirts. Nitish asked him to show him the shirt which was on display. The shopkeeper told him that he could not buy that shirt and would have to choose from the options provided by him. Out of necessity and lack of time Nitish purchased a shirt out of the shirts shown by the shopkeeper. He paid him cash and didn’t take the cash memo. Later, when he wore the shirt at home and was about to leave, he found one button of the shirt missing. He went to the shop the next day and asked for replacement. The shopkeeper bluntly denied that the shirt was purchased from him.

1. Which consumer right of Nitish is violated here?
2. Which consumer responsibility was no! fulfilled by Nitish which led to this situation?
3. Can Nitish file complaint against the shopkeeper?
4. From the point of view of business which type of interest has been overlooked by the shopkeeper? Why?

Answer:

1. The consumer right of Nitish which is violated here is ‘Right to Choose’. The shopkeeper told him that he could not buy that shirt and would have to choose from the options provided by him.
2. The consumer responsibility which was not fulfilled by Nitish was ‘Ask for a cash memo after purchasing goods and services’. He paid him cash and didn’t take the cash memo.
3. No, Nitish can’t file the complaint against the shopkeeper as there is no proof of purchase since he forgot to take the cash memo from him.
4. From the point of view of business the interest which has been overlooked by the shopkeeper is ‘Long-term interest of business’ because a good businessman knows that the customer should be satisfied for repeat purchase and customer retention which eventually helps in increasing the customer base.

Question 8.
Amit went to purchase a fridge from a showroom having electrical appliances. He purchased a fridge for Rs.10,000. However, when he confirmed the price of the fridge form his friends and searched on the net he found that the price of the fridge was Rs.9,500. When he contacted the showroom owner he was told that the prices of the fridge model has come down and that the cash memo handed over to him also had the billing of Rs.10,000. But at the time the model was introduced the price of the model was Rs.10,000 only.

1. Do you think Amit should get his Rs.500 back?
2. Do you think Amit has proof of purchase?
3. Which consumer right of Amit has been violated here?

Answer:

1. Amit should get his Rs.500 back because the current price of the model is Rs.500 less than what he paid.
2. Amit has proof of purchase as he got cash memo from the fridge seller. The cash memo handed over to him also had the billing of Rs.10,000.
3. The consumer right of Amit which has been violated here is ‘Right to be informed’. However when he confirmed the price of the fridge form his friends and searched on the net he found that the price of the fridge was Rs.9,500.

Question 9.
Ramit is running an organisation which is beyond the control of
government and the motive of the organisation is welfare of the consumers. One day Sujata comes to his office and tells that her mom. purchased a fridge two years back. She is no more and the fridge was purchased in her name. However the warranty period of the fridge is still active. But the company is denying her the services.

1. Which type of organisation is being ran by Ramit?
2. Name one such example of an organisation.
3. Can Ramit help Sujata file a case against the company?
4. Which consumer right of Sujata has been violated here?

Answer:

1. The type of organisation run by Ramit is an NGO. Ramit is running an organisation which is beyond the control of government and the motive of the organisation is welfare of the consumers.
2. One example of such an NGO is Consumer Coordination Council (Delhi).
3. Yes, Ramit can help Sujata file a complaint against the company because she is representative of a deceased consumer. Her mom is no more and the fridge was purchased in her name.
4. The consumer right of Sujata which has been violated here is ‘Right to Seek RedressaT. However the warranty period of the fridge is still active. But the company is denying her the services.

Question 10.
‘Amazing Duniya’ is a tourist agency. It also has a group of hotels. The company offers new types of schemes to the potential customers. Amit was offered a scheme of staying in a hotel for 6 days and 5 nights for free. However when he reached the destination he was told that every room of the hotel was booked. He told tlhem that he was told earlier that his room was booked. He even showed them the confirmation he received on his mail.

1. Can Amit file a complaint against the tourist agency?
2. Will he get a relief in this case?
3. Name the relief he will get.
4. Which consumer right has been violated in this case?

Answer:

1. Yes, he can file a complaint against the tourist agency as he has got the confirmation as the proof. He even showed them the confirmation he received on his mail.
2. Yes, he will get a relief as he has proof of confirmation of his booking. He will get relief as his time and money (Fare charges for travelling purpose) are wasted.
3. The relief he will get is ‘he will be compensated for the loss of time and money and also for filing the complaint’. The second relief will be directed towards the company which will have to stop this wrong trade practice for future.
4. The consumer right which has been violated here is ‘Right to be Informed’. This was the responsibility of the company to inform him before hand if the rooms were not available. They did the worse by giving him confirmation and denying him the hotel room at the last moment.

Question 11.
Himanshu purchased a new car from ‘Galaxy Motors’ for Rs.25 lakhs. He was offered free insurance for the first year and three free servicing to be availed after the car had covered 5,000 km, 10,000 km and 15,000 km respectively. When Himanshu took the car for the first free servicing, he was told that the car was not new and first service had already been availed on this car. He felt cheated and filed a complaint in the State Commission. Being not satisfied with the decision of the State Commission, after two months he decided to file an appeal against it.
Can Himanshu appeal against the decision of the State Commission? Give reason in support of your answer.
Answer:
No, Himanshu cannot appeal against the decision of the State Commission as the aggrieved party can appeal further only within 30 days of the passing of the order.

Question 12.
‘RO Youth Club’ organised a visit of its members to an Old Age Home to inculcate the habit of social work among them. The visit revealed that the living conditions of the inmates of the Old Age Home were not hygienic. So, the RO Youth Club members decided to clean the premises. During their cleanliness drive, they realised that the Old Age Home also required pest control. But some of the inmates of the Old Age Home were reluctant for it because they believed that the pest control may create health problems for them. RO Youth Club, therefore, decided to provide ethical, safe and odourless pest control. They showed to the inmates of the Old Age Home a pamphlet of the proposed pest control product which promised easy, inexpensive and long-lasting pest control. The inmates happily agreed and the pest control was carried out. The effect of the pest control started wearing off after a fortnight. RO Youth Club contacted the pest control company which kept on postponing their visit. After waiting for a month, RO Youth Club filed a case in the consumer court.
The consumer court was satisfied about the genuineness of the complaint and issued necessary directions to the pest control company.

1. State any six directions that might have been issued by the court.
2. Identify any two values that are being communicated by RO Youth Club to the society.

Answer:

1. Following are certain directions that might have been issued by the court:
   • Removal of the defect or deficiency in service.
   • To give a refund of the charges paid for the service.
   • Discontinuance of unfair/restrictive trade practice and not repeating the same in the future.
   • To issue corrective advertisement to neutralize the effect of misleading pamphlet.
   • To pay a reasonable amount of compensation for any loss or injury suffered by the inmates of the old age home due to the negligence of the opposite party.
   • To pay any amount (not less than 5% of the deficient service) to the credit of Consumer Welfare Fund or any other organisation, to be utilized in the prescribed manner.
2. Two values that are being communicated by RO Youth Club:
   • Welfare of the society
   • Concern for cleanliness, hygiene and health of the people.
   • Sensitivity towards environment.
   • Respect for the elderly.

Question 13.
Raghu purchased a truck worth Rs.35 lakhs. The truck had some inbuilt problems and after some days stopped starting. Since it was in the guaranty period it was shown to the company. The people in the company refused to attend to his complaints. It was heart breaking for him so he decided to file a complaint in the state commission. The state commission on hearing the pleas from both the parties gave decision in favour of the truck company. It was shockingly bad news for Raghu.

1. At what level of authority should Raghu file a complaint now?
2. In how many days should he file his complaint at the next level?

Answer:

1. Raghu should now file a complaint at the level of ‘National Commission’.
2. He should file his complaint at the next level within 30 days.

Question 14.
Suresh has opened an NGO for the welfare of the consumers. He has got a degree in law. In order to utilize his education he quite often helps people in their legal affairs. Now that he has started an NGO he assures that whenever a consumer in his knowledge is deprived of his consumer rights he should file a complaint on his behalf in the consumer court and fight for his cause. His organisation has some of the people with journalist background. The three of them along with Suresh from the side of their NGO have launched a monthly magazine which creates awareness about the rights, reliefs and responsibilities of the consumers. All the members of this NGO work with a lot of enthusiasm. Recently in the central part of the city they organized a training program in which all the information related to the exploitation of consumers, consumer ignorance, consumer rights and reliefs available to the consumers were the key highlights. The government has also provided support to their organisation. The government laboratories are easily in touch with them and are ready for any type of confirmation of results related to the purity of products. More and more members are getting attached with the organisation. The membership is increasing. The organisation recently helped few ladies stage a demonstration outside the showroom of a company responsible for selling a fake electrical appliance responsible for the death of one man. In totality the NGO is doing a great job.
In the above case identify the various functions performed by the NGO for the protection of the interests of the consumers.
Answer:
The various functions performed by the NGO for the protection of the interests of the consumers are:

1. It helps the consumer to file their complaints in the concerned consumer courts. Now that he has started an NGO he assures that whenever a consumer in his knowledge is deprived of his consumer rights he should file a complaint on his behalf in the consumer court and fight for his cause.
2. It publishes periodicals to impart knowledge about issues concerned with consumer interests. The three of them along with Suresh from the side of their NGO have launched a monthly magazine which creates awareness about the rights, reliefs and responsibilities of the consumers.
3. Educates the general public about the issues related with consumer interests. Recently in the central part of the city they organized a training program in which all the information related to the exploitation of consumers, consumer ignorance, consumer rights and reliefs available to the consumers were the key highlights.
4. Carries out comparative tests of consumer products in the certified laboratories for getting to the truth. The government laboratories are easily in touch with them and are ready for any type of confirmation of results related to the purity of products.
5. Encourages customers to stage a strong protest against exploitative and unfair practices. The organisation recently helped few ladies stage a demonstration outside the showroom of a company responsible for selling a fake electrical appliance responsible for the death of one man.

Question 15.
Shobhit wants to purchase a sandwich maker. He goes to a nearby mall and enters the shop where electric gadgets are kept. He asks the salesman about the area where sandwich makers are kept. The sales man takes him to that place where different types of sandwich makers are kept. He very patiently observes all the electronic gadgets, sees their functions, reads their instructions, compares their prices and sees their warranty periods. After some time when he pays the concerned person, tells him to note his home address and telephone number for future contact. He also asks him to inform him about any new products in the market.

1. In the above case name one consumer responsibility Shobhit should follow?
2. In the above case when Shobhit reads the instructions which consumer right is maintained?
3. Which mark should be checked by Shobhit on the electronic appliance as he purchases it?
4. What is the significance of this mark?

Answer:

1. The consumer responsibility that Shobhit should follow is collecting Cash Memo so that the proof of his purchase remains with him.
2. When Shobhit reads instructions his ‘Right to be Informed’ is maintained.
3. The mark which should be checked in the case of any electrical appliance is an ‘ISI mark.
4. The significance of this mark is that the product is standardised and is safe to use.

Question 16.
Dr. Ahuja purchased a washing machine of a renowned company. The price of the machine was Rs.10,000. The company provided the cash memo on purchase. The money was paid in cash. The machine model was semi-automatic and it was with a warranty of 3 years. For 3 years 1 month there was no problem in the functioning of the machine. But due to water logging around the machine while washing clothes the main rotator of the machine got fused. When the complaint was registered with the company it was told that the warranty period of the machine had expired and Dr. Ahuja would have to pay for the service charges as well as the replacement of rotator motor.

1. Is the company justified in not providing free service to Dr. Ahuja?
2. Can Dr. Ahuja file a complaint against the company?
3. Which consumer right of Dr. Ahuja is overlooked here?
4. Was any party at fault?
5. Did Dr. Ahuja fulfill her consumer responsibility?

Answer:

1. Yes, the company is justified in not providing free service to Dr. Ahuja as the warranty period of the company had expired. When the complaint was registered with the company it was told that the warranty period of the machine had expired.
2. No, Dr. Ahuja can’t file a complaint against the company as the warrant period of 3 years is over. The machine model was semi-automatic and it was with a warranty of 3 years.
3. No consumer right of Dr. Ahuja is overlooked here.
4. No party was at fault.
5. Yes, Dr. Ahuja fulfilled her consumer responsibility by taking the cash memo when she purchased the semi-automatic machine. The Company provided the cash memo on purchase.

Question 17.
‘Amazing Yummy Cakes’ is a renowned cake making company. The cakes are packed in beautiful packaging. The company produces both egg containing as eggless cakes. Once it so happened that 300 cakes containing egg were packed in packaging having green signs. Vishal who is a strict vegetarian ate it. He realised something different in the smell of the cake and went on to enquire about the content of the cake. On his questioning one staff member agreed to the fault committed.
Which consumer right of Vishal was violated here?
Answer:
The consumer right which is violated here is ‘Right to be Informed’.

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