Unfair Trade Practice Under the Consumer Protection Act in India

The Consumer Protection Act, 2019 plays a crucial role in safeguarding the interests of consumers in India. One of the significant aspects of this law is its provisions on unfair trade practices, which ensure that businesses do not exploit consumers through deceptive or unethical methods. Unfair trade practices are broadly defined as any trade practice that is dishonest or manipulative and harms consumers.

What is Unfair Trade Practice?

An unfair trade practice is defined as a practice that a business adopts in order to promote the sale, use, or supply of goods or services, through unfair or deceptive means. These practices not only mislead consumers but also cause them harm by taking advantage of their ignorance or vulnerability. The Consumer Protection Act, 2019 recognizes a wide range of practices that can be classified as unfair, including misleading advertisements, false representations, and manipulative pricing strategies.

In simple terms, unfair trade practices include any deceptive or unethical conduct by businesses aimed at promoting their products or services at the cost of consumer rights.

Examples of Unfair Trade Practices

The law recognizes various forms of unfair trade practices. Some common examples include:

1. False Representation
   A seller engages in false representation when they make claims about a product or service that are not true or cannot be substantiated. This includes:
   • Misleading Claims About Quality or Grade: When goods are not of the stated standard, quality, or grade. For instance, a manufacturer selling products as “premium quality” when the product is of substandard quality.
   • Selling Second-hand Goods as New: If second-hand or refurbished goods are sold under the pretext of being new, it is an unfair trade practice.
   • Lack of Authorization or Approval: If a product or service is being sold without the required certifications or approvals (e.g., a non-certified food product sold as safe).
   • Misleading Claims About Usefulness or Benefits: Selling products that do not perform as advertised or fail to provide the promised benefits, such as selling a health supplement with exaggerated claims.
   • False Warranty/Guarantee Claims: If a seller falsely claims that a product comes with a warranty or guarantee, or when the warranty is invalid, it is an unfair trade practice.
2. False or Misleading Advertisement
   Advertisements that mislead or deceive consumers regarding a product’s features, pricing, or offers are considered unfair trade practices. Examples include:
   • Bargain Price Deception: Advertisements that falsely claim that a product is on sale at a bargain price when, in reality, the price is inflated or no discount is offered.
   • Fake Prize Offers: Offering gifts, prizes, or rewards to lure customers into purchasing a product or service, without the intention of providing them.
   • Misleading Comparative Ads: Comparing products with competitors in a way that misrepresents facts or distorts the truth.
3. Sale of Goods That Do Not Meet Safety Standards
   If a seller offers goods or services that fail to meet safety standards set by regulatory authorities, it is an unfair trade practice. For example:
   • Selling defective electrical goods without proper safety certifications.
   • Selling food items that do not meet health and safety regulations.
4. Hoarding or Artificial Price Inflation
   Hoarding involves the practice of withholding goods or destroying them to create an artificial shortage, thereby increasing prices and manipulating supply chains. For example:
   • Hoarding essential goods like medicines, food, or fuel to raise their prices.
   • Manipulating market prices by creating false demand, such as during festivals or natural disasters.
5. Spurious or Counterfeit Products
   Selling products that are fake or of inferior quality under the guise of genuine goods is considered an unfair trade practice. For instance:
   • Selling counterfeit designer products.
   • Substituting the original product with a fake one (e.g., selling imitation perfumes as branded ones).
   • Manufacturing or offering spurious drugs or medical equipment that do not meet safety or regulatory standards.
6. Deceptive Practices in Service Provisions
   Unfair trade practices also extend to the provision of services. Some examples include:
   • Non-disclosure of hidden charges in service contracts (such as banking, telecom, or insurance).
   • Offering services without proper licenses or certifications.
   • Inaccurate billing or overcharging for services.
7. Non-Refund or Non-Exchange Policies
   Sellers often use certain clauses in their terms and conditions to avoid taking responsibility for substandard goods or services. For example:
   • “No returns, no exchange” or “No refund under any circumstances” written in store policies or service contracts is an unfair trade practice if the product or service is defective or not as described.
   • “All sales are final” clauses that limit consumer rights to a refund or replacement, especially if the goods are defective or do not match the product description.

Legal Framework for Addressing Unfair Trade Practices

The Consumer Protection Act, 2019 lays down a robust framework for addressing unfair trade practices. According to the Act, consumers can file complaints with the following authorities if they are victims of such practices:

• District Forum: If the value of the dispute is up to Rs. 20 lakhs.
• State Commission: If the amount in dispute is above Rs. 20 lakhs but does not exceed Rs. 1 crore.
• National Commission: For cases where the value of goods or services involved exceeds Rs. 1 crore.

Consumer Rights and Protection

Under the Consumer Protection Act, consumers are protected from unfair trade practices through several rights:

1. Right to Be Informed: Consumers have the right to be fully informed about the quality, quantity, and price of the goods or services they are purchasing.
2. Right to Choose: Consumers are entitled to choose from a variety of products and services at competitive prices.
3. Right to Seek Redressal: If a consumer faces an unfair trade practice, they have the right to seek compensation, a refund, or a replacement from the service provider or seller.
4. Right to Safety: Consumers should not be exposed to hazardous products or services that pose risks to their health or safety.
5. Right to Protection Against Unfair Trade Practices: This includes the protection from false advertising, misleading claims, and exploitation through unfair pricing.

How Consumers Can Protect Themselves

• Stay Informed: Consumers should stay informed about their rights and be cautious while making purchases.
• Check Product Authenticity: Verify product quality, price, and authenticity through reviews, ratings, and product certifications.
• Report Complaints: If you encounter an unfair trade practice, it’s crucial to report it to consumer forums, authorities, or seek legal advice.
• Legal Notice: Consumers can send a legal notice to the seller or service provider to claim a refund or compensation for the unfair trade practice.
• File a Complaint: If the seller refuses to resolve the issue, you can file a formal complaint with the District Forum, State Commission, or National Commission.

Conclusion

Unfair trade practices undermine consumer trust, distort markets, and exploit the vulnerability of consumers. The Consumer Protection Act, 2019 aims to curb such practices and provide consumers with the tools to seek justice. Consumers should remain vigilant and aware of their rights and take action when faced with unfair trade practices.

If you find yourself the victim of unfair trade practices, Legal Light Consulting can assist you in filing complaints, issuing legal notices, and pursuing your case with the relevant consumer forums to ensure that your rights are protected.