CCPA Investigation on IAS Coaching Institutes

Context:

The Central Consumer Protection Authority (CCPA) is probing 20 IAS coaching institutes for making misleading claims in their advertisements and for unfair trade practices. Four of the twenty institutions have already been slapped with a penalty of Rs 1 lakh.

Relevance:

GS II: Polity and Governance

Dimensions of the Article:

1. Consumer Protection Authority Investigation on IAS Coaching Institutes
2. Coaching Industry in India: Market Size and Growth Factors
3. About Central Consumer Protection Authority
4. Consumer Protection Act, 2019

Consumer Protection Authority Investigation on IAS Coaching Institutes

Investigation Details:

• The Central Consumer Protection Authority (CCPA) in India is currently investigating 20 IAS coaching centers.
• The investigation focuses on alleged misleading advertisements and unfair trade practices by these coaching centers.

Accusations Against Coaching Centers:

• The coaching centers are accused of utilizing the names and pictures of toppers and successful candidates to influence prospective aspirants.

Penalties Imposed:

• As a result of the ongoing investigation, four of the coaching centers have already been fined Rs 1 lakh each.

CCPA’s Observations:

• Coaching institutes engage in extensive advertising campaigns each time competitive exam results, such as the UPSC Civil Services, are announced.
• Names and pictures of top rankers are prominently featured in these ads to showcase their association with the institute.
• However, crucial information regarding the nature of their enrollment, such as the specific course they pursued, is not disclosed.
• According to CCPA, this lack of transparency qualifies as deliberate concealment of important information and falls under the category of ‘misleading advertisement’ as per Section 2(28) of the Consumer Protection Act, 2019.

Penalty Structure:

• First-time violations may result in penalties of up to Rs 10 lakh.
• Subsequent violations could attract penalties of up to Rs 50 lakh, coupled with the possibility of additional legal action for persistent non-compliance.

Coaching Industry in India: Market Size and Growth Factors

Market Size and Growth Projection:

• The coaching class market in India is projected to reach approximately Rs 1.79 lakh crore by 2030.
• The expected growth is at a Compounded Annual Growth Rate (CAGR) of 14.07% over the forecast period spanning from 2023 to 2030.

Market Categorization and Share:

• Higher education dominates the coaching class market, holding the largest market share at around 32.75% in 2022.
• This market share is anticipated to increase to 34.75% during the forecast period.

Factors Driving the Thriving Market:

• Poor Quality of School Teaching:
  • Inadequate teaching quality in schools has driven students and parents towards coaching institutes.
• High Competition:
  • Intense competition, particularly in academic pursuits, encourages students to seek additional support from coaching classes.

Parental Preference for High-Quality Education:

• Parents increasingly prefer high-quality education for their children, contributing to the demand for coaching institutes.

• Quick Achievement Orientation:
  • The new generation’s inclination towards achieving goals quickly and easily has fueled the demand for coaching services.
• Increased Income Levels:
  • Rising income levels have enabled more families to invest in supplementary education for their children.
• Higher Education and Professional Courses:
  • The growing number of students pursuing higher education and professional courses has significantly contributed to the coaching industry’s expansion.
• Competitive Edge and Academic Improvement:
  • Students seek coaching institutes to gain a competitive edge and enhance their academic performance.
  • Coaching institutes offer tools like practice exams, study guides, and individual tutoring to support students in their educational journey.

About Central Consumer Protection Authority

• CCPA is a regulatory body established in 2020 based on the provisions of the Consumer Protection Act, 2019.
• CCPA works under the administrative control of the Ministry of Consumer Affairs.

Composition:

• It will have a Chief Commissioner as head, and only two other commissioners as members — one of whom will deal with matters relating to goods while the other will look into cases relating to services.
• The CCPA will have an Investigation Wing that will be headed by a Director General.
• District Collectors too, will have the power to investigate complaints of violations of consumer rights, unfair trade practices, and false or misleading advertisements.

Objective:

• To promote, protect and enforce the rights of consumers as a class.
• To conduct investigations into violation of consumer rights and institute complaints/prosecution.
• To order the recall of unsafe goods and services, discontinuation of unfair trade practices and misleading advertisements.
• To impose penalties on manufacturers/endorsers/publishers of misleading advertisements.

Powers and Functions:

• Inquire or investigate into matters relating to violations of consumer rights or unfair trade practices suo moto, or on a complaint received, or on a direction from the central government.
• Recall goods or withdrawal of services that are “dangerous, hazardous or unsafe.
• Pass an order for refund the prices of goods or services so recalled to purchasers of such goods or services; discontinuation of practices which are unfair and prejudicial to consumer’s interest”.
• Impose a penalty up to Rs 10 lakh, with imprisonment up to two years, on the manufacturer or endorser of false and misleading advertisements. The penalty may go up to Rs 50 lakh, with imprisonment up to five years, for every subsequent offence committed by the same manufacturer or endorser.
• Ban the endorser of a false or misleading advertisement from making endorsement of any products or services in the future, for a period that may extend to one year. The ban may extend up to three years in every subsequent violation of the Act.
• File complaints of violation of consumer rights or unfair trade practices before the District Consumer Disputes Redressal Commission, State Consumer Disputes Redressal Commission, and the National Consumer Disputes Redressal Commission.

Consumer Protection Act, 2019:

Replacement of Previous Legislation:

• The Consumer Protection Act, 2019, replaced the earlier Consumer Protection Act of 1986, with the aim of expanding its scope to address a broader range of consumer concerns.

Scope of Offences Recognized:

• The new Act identifies offenses, including providing false information regarding the quality or quantity of goods or services.
• It also addresses the issue of misleading advertisements, acknowledging the impact on consumer rights.

Action Against Dangerous Goods and Services:

• The Act outlines specific actions to be taken if goods and services are deemed “dangerous, hazardous, or unsafe,” prioritizing consumer safety.

Enforcement and Empowerment:

• Enforced in July 2020, the Consumer Protection Act, 2019, aims to empower consumers by providing them with a legal framework to safeguard their rights.
• The Act’s various notified rules and provisions serve as tools for consumers to take action and seek redressal for any grievances related to goods and services.

-Source: Indian Express