12th Standard Commerce — Consumerism Online Test

About Consumerism

Medium ~50 min study

Consumerism is the first chapter of Unit 6, Consumer Protection, in the Tamil Nadu State Board Class 12 Commerce book. It starts from the idea that the consumer is called the king of the market but in practice is often treated as a slave, cheated on quality, quantity, price and timely supply.

The lesson lists nine ways in which consumers are exploited, defines consumerism, traces its origin in America and its growth in India, and explains what business, government and consumers must each do. It closes with the main consumer laws, the Consumer Protection Act, 1986 and the principles of caveat emptor and caveat venditor.

This page gives the five book-back one mark questions with answers checked against the lesson, and additional questions on definitions, acts and years, roles and principles, each with a short explanation.

What you'll learn

• Define a consumer under the Consumer Protection Act, 1986.
• Describe the ways in which consumers are exploited, with examples of adulteration.
• Explain the meaning, importance, origin and growth of consumerism.
• State the role of business, government and consumers in consumer protection.
• List the important consumer laws in India with their years.
• Explain the features and objectives of the Consumer Protection Act, 1986 and the principles of caveat emptor and caveat venditor.

Before you start

• The idea of buyers, sellers and markets from earlier Commerce lessons.
• The marketing mix and modern marketing from Unit 5.
• A basic idea of a contract of sale.

Consumerism explained

What this lesson covers

Consumer and consumer exploitation

A consumer buys goods or services for a consideration paid, promised or deferred. A person who buys for resale or a commercial purpose is not a consumer, unless the goods are bought only to earn a livelihood by self-employment. Consumers are exploited by selling at higher price, adulteration, duplicate goods, artificial scarcity, sub-standard goods, product risk, denial of warranty service, unsuitable products and false advertisements.

Consumerism

Consumerism is the social force that protects and aids consumers. The term came into existence in 1960 in America. L. Massie called it an attempt to enhance the rights and powers of buyers in relation to sellers. Ralph Nader is the father of the Consumer Movement.

Consumer protection

Voluntary measures and law protect consumers. Business should avoid price hikes and hoarding, give true information and refund or replace defective goods; government should enforce laws; consumers should organise. The UN adopted consumer protection guidelines on April 9, 1985.

Laws and principles

Fifteen Acts are listed, from the Indian Contract Act, 1872 to the Food Safety Standard Act, 2006. The Consumer Protection Act, 1986 (COPRA) came into force on 15.04.1987 with a three-tier redressal machinery. Caveat emptor means let the buyer beware; caveat venditor means let the seller beware.

Common mistakes to avoid

• Treating a buyer for resale as a consumer. Only a person buying to earn a livelihood by self-employment is still a consumer.
• Giving 1986 as the date COPRA came into force. It was enacted in 1986 but came into force on 15.04.1987.
• Confusing caveat emptor (let the buyer beware) with caveat venditor (let the seller beware).
• Naming Mahatma Gandhi as father of the Consumer Movement. It is Ralph Nader.
• Thinking COPRA covers goods only. It applies to all goods and services, including medical services.

Test yourself on these with the practice test, then check the worked reasoning in the solved MCQs.

Frequently asked questions

Who is a consumer under the Consumer Protection Act, 1986?

A person who buys goods or services for a consideration that is paid, promised, partly paid and partly promised, or under a deferred payment system is a consumer. A person who obtains goods for resale or a commercial purpose is not, but one who buys them only to earn a livelihood by self-employment is still a consumer.

What is consumerism?

Consumerism is the social force that protects and aids consumers. It is an organised effort to fight unfair marketing practices and to bring back balance between buyers and sellers, because power normally lies with sellers. L. Massie defined it as an attempt to enhance the rights and powers of buyers in relation to sellers.

What is meant by artificial scarcity?

Artificial scarcity is created when shopkeepers put up a 'No Stock' board though plenty of stock is in the store. Consumers who badly need the goods then pay a hefty price, often in the black market. Cinema houses showing 'House Full' while tickets sell at higher prices outside is another example.

Who is the father of the Consumer Movement?

Ralph Nader is considered the father of the Consumer Movement. He pioneered the fight against monopoly and unethical trade practices of large companies in the United States, and initially fought against the automobile industry for violating safety standards and pollution control norms.

When did the Consumer Protection Act, 1986 come into force?

The Central Government enacted the Consumer Protection Act in 1986 and it came into force with effect from 15.04.1987. It was amended in 1993 and is called COPRA in short. It provides a three-tier machinery of District Forums, State Commissions and the National Commission.

What is the difference between caveat emptor and caveat venditor?

Caveat emptor means let the buyer beware: the buyer bears the risk and must inspect goods before buying. It was the rule before the Industrial Revolution. Caveat venditor means let the seller beware: sellers take responsibility, and goods are guaranteed to work if used for their intended purpose.

What is the role of business in consumer protection?

Business should avoid price hikes and hoarding, guarantee good quality, give correct product information, keep advertising truthful, protect consumers from hazardous goods, replace or refund defective products and handle consumer grievances within a definite time.