ABSTRACT

Behavioural economics has emerged as a crucial discipline in understanding real-world consumer behaviour by questioning the traditional assumption of rational decision-making. Consumers are often influenced by cognitive biases, limited information, persuasive advertising, and digital choice architectures. In an era marked by rapid industrialisation, globalisation, and technological advancement, particularly the rise of e-commerce, consumers face increased vulnerabilities alongside expanded choices. In India, these challenges prompted a significant legislative shift with the enactment of the Consumer Protection Act, 2019 (CPA 2019), replacing the Consumer Protection Act, 1986.

This research article critically analyses the Consumer Protection Act, 2019 through the lens of behavioural economics and economic theory. It examines whether enhanced consumer rights, product liability provisions, and stricter regulatory mechanisms promote consumer welfare without adversely affecting economic growth and market efficiency. The study adopts a doctrinal and analytical methodology, supported by case law, statistical data, and economic reasoning. It argues that while stringent consumer protection laws may initially increase compliance costs and affect supply-side dynamics, their long-term benefits—enhanced consumer trust, reduction of information asymmetry, and promotion of innovation—outweigh the short-term economic burdens. The paper concludes that a balanced and technology-driven regulatory framework is essential to ensure that consumer protection laws contribute positively to sustainable economic growth.

Keywords: Consumer Protection, Behavioural Economics, Consumer Behaviour, Trade and Commerce, E-commerce, Economic Growth