What is unfair trade practice?

Unfair trade practices are deceptive, misleading, or unethical business practices that violate the rights of consumers. Under the Consumer Protection Act, 2019, these practices are prohibited to ensure that consumers are not exploited by businesses. Unfair trade practices can range from false advertising to selling substandard goods. The law provides remedies for consumers who fall victim to such practices, ensuring a fair and transparent marketplace.

What Constitutes Unfair Trade Practice?

The Consumer Protection Act, 2019, defines unfair trade practices as actions or omissions by a business that deceive, mislead, or exploit consumers. These practices can take various forms, ranging from false advertising to the sale of counterfeit products. The goal of the law is to protect consumers from dishonest or unethical business behavior that compromises their rights and interests.

Some of the main types of unfair trade practices include:

False Advertising

• False or misleading advertisements are a common form of unfair trade practice. If a business makes claims about its product that are untrue or exaggerated, it deceives consumers into purchasing products that may not meet their expectations.

Misleading Claims

• Misrepresentation of the quality, quantity, or characteristics of a product or service is another unfair trade practice. For example, claiming a product is made of pure material when it is not, or overstating the benefits of a service.

False Representation of Products

• Businesses may falsely represent the origin or quality of goods, such as selling counterfeit or substandard products disguised as genuine or premium items. This is particularly prevalent in sectors like pharmaceuticals, electronics, and clothing.

Bait and Switch

• A company may advertise a product at a very low price to attract customers, but once the consumer expresses interest, they are told the advertised product is unavailable and are then offered a more expensive alternative.

Deceptive Pricing

• Charging consumers more than the stated or advertised price, or hiding hidden costs, is also an unfair trade practice. It can include practices like adding unexpected charges at checkout or selling products with undisclosed extra fees.

Counterfeit Products

• Selling counterfeit goods as original products is another example of an unfair trade practice. Counterfeits often violate intellectual property laws and can be dangerous for consumers, especially in the case of medical, automotive, or electrical products.

False or Misleading Warranties

• A business may offer a warranty that is either non-existent or significantly different from what is advertised, misleading consumers into believing they are covered for repairs or replacements when they are not.

Non-Delivery of Goods or Services

• Selling goods or services without the intention or ability to deliver them as promised is an unfair trade practice. This includes accepting payments for goods that are not available or services that are not rendered.

Legal Remedies for Unfair Trade Practices

Consumer Complaints

• Under the Consumer Protection Act, a consumer who has been misled or harmed by unfair trade practices can file a complaint with the District Consumer Forum, State Commission, or National Commission. The forum may direct the seller to pay compensation, replace the goods, or refund the purchase price.

Penalties for Sellers

• Sellers found guilty of unfair trade practices may face penalties, including fines, refunds to consumers, and compensation. In some cases, their business license or registration may also be revoked.

Product Recall

• If a product is found to be part of an unfair trade practice (e.g., counterfeit or substandard), the business may be required to issue a product recall, remove the goods from the market, and provide compensation or replacements to consumers.

Prohibition Orders

• The Central Consumer Protection Authority (CCPA) has the power to issue directions prohibiting unfair trade practices, and businesses can be banned from continuing such practices.

Types of Unfair Trade Practices under the Consumer Protection Act

False or Misleading Advertising

• This includes any form of advertising that makes false claims about a product's quality, origin, benefits, or safety, which misleads the consumer into purchasing it.

Deceptive Goods or Services

• Selling goods that are falsely advertised as genuine or original when they are counterfeit, or providing services that are substandard.

Price Gouging

• Charging exorbitantly high prices during emergencies or taking advantage of a consumer’s lack of knowledge about fair pricing.

Failure to Honour Warranty or Guarantees

• A seller who does not honour the warranties or guarantees provided with a product is engaging in unfair trade practices.

Legal Protections and Consumer Actions

Consumer Rights Awareness

• Consumers must be aware of their rights to protect themselves from unfair trade practices. They are entitled to products that are safe, meet quality standards, and are accurately represented by the seller.

Complaint Process

• Consumers who face unfair trade practices can lodge complaints with the Consumer Protection Authority, local consumer forums, or national bodies. A formal complaint can lead to investigation, fines, and product recalls.

Document Evidence

• If a consumer experiences unfair trade practices, they should gather evidence such as receipts, advertisements, photographs, or testimonies that prove the deceptive nature of the business practice.

Public Awareness Campaigns

• Many consumer rights organizations conduct campaigns to raise awareness about unfair trade practices and encourage consumers to report incidents to authorities.

Consumer Safety Tips

• Always check the product labels for authenticity, especially with high-value items like electronics, pharmaceuticals, and food.
• Be cautious of deals that seem too good to be true, especially online. Look for reviews and ratings from credible sources.
• Avoid making impulse purchases based on misleading advertisements, and research the product thoroughly.
• Keep all receipts and warranties to safeguard your consumer rights.
• Report any unfair trade practices to the Consumer Protection Authority or consumer forums to prevent others from falling victim.

Example

Scenario

Suppose a consumer, Mr. C, purchases a smartphone from an online retailer that advertises the phone as having 128GB of storage. However, after receiving the phone, Mr. C discovers that the phone only has 64GB of storage and the retailer is unwilling to provide a refund or replacement.

Steps Mr. C should take

• Contact the Seller: Mr. C should first contact the seller and ask for a refund or replacement, citing the misrepresentation in the advertisement.
• File a Complaint: If the seller refuses to resolve the issue, Mr. C can file a complaint with the District Consumer Forum, claiming that the seller engaged in an unfair trade practice by making false advertising claims.
• Compensation: The consumer forum may order the retailer to refund the amount paid for the phone or provide a replacement, along with compensation for the trouble caused.