We are the ‘Law Offices of Kr. Vivek Tanwar Advocate and Associates’ specializing in providing consumer legal services under the Consumer Protection Act 2019. In today’s world, consumers rely on various services across different sectors, from healthcare to e-commerce. Our firm is dedicated to safeguarding the rights and interests of consumers, ensuring that they receive fair treatment and protection against any unfair trade practices or deficiencies in service. In this context, we are addressing the issue of unfair trade practices in consumer transactions, drawing insights from a recent case adjudicated by the District Consumer Disputes Redressal Commission-II in Hyderabad. This case highlights the importance of transparency and fairness in consumer dealings, and the legal remedies available to consumers when they encounter unjust practices.
Defining Unfair Trade Practices
Unfair trade practices encompass a wide range of deceptive, fraudulent, or unethical business activities employed by companies to gain an unfair advantage in the marketplace. These practices often undermine fair competition and harm consumers, competitors, or both. Unfair trade practices can take various forms, including false advertising, deceptive pricing, product misrepresentation, and more.
Types of Unfair Trade Practices
- False Advertising: This is one of the most common forms of unfair trade practice. False advertising involves making misleading or untrue claims about a product’s features, benefits, or characteristics. Such practices can deceive consumers into making purchase decisions based on false information.
- Deceptive Pricing: Deceptive pricing strategies involve manipulating prices to create a false perception of a discount or bargain. Examples include false reference pricing, where a higher “original” price is presented alongside a lower sale price, or bait-and-switch tactics, where a product advertised at a low price is substituted with a higher-priced alternative.
- Product Misrepresentation: This occurs when a company misrepresents the nature, quality, or origin of a product. For instance, labeling a product as “organic” when it does not meet the required standards for organic certification would be considered a form of product misrepresentation.
- Unfair Contract Terms: Some businesses may incorporate unfair terms or conditions into their contracts with consumers. These terms may be hidden in fine print or overly complex, making it difficult for consumers to fully understand their rights and obligations.
Consumer Protection Laws and Unfair Trade Practices
Consumer protection laws exist to safeguard the interests of consumers and ensure fair business practices. These laws provide legal remedies for consumers who fall victim to unfair trade practices. The specific provisions and regulations vary from one jurisdiction to another, but they typically address issues such as false advertising, product safety, pricing transparency, and contractual fairness.
Implications for Businesses
Businesses engaging in unfair trade practices can face significant legal and financial consequences. Penalties may include fines, cease-and-desist orders, and even criminal charges in severe cases. Moreover, unfair trade practices can tarnish a company’s reputation, leading to a loss of consumer trust and loyalty.
Landmark Judgment
In Baglekar Akash Kumar v. More Megastore Retail Ltd., (Consumer Case No. 310 of 2019, dated 19-2-2021)
The basis of the complaint was centered on the complainant’s acquisition of a product from More Megastore, accompanied by the issuance of a plastic carry bag. The establishment had imposed a fee of Rs 3 for this bag, which prominently featured the company’s name and logo. The complainant contended that this practice essentially transformed consumers into involuntary advertising agents for More Megastore, all at the consumer’s expense. The complainant asserted that this constituted an unfair trade practice as defined under Section 2(1)(r) of the Consumer Protection Act, 1986. The complainant referenced the Chandigarh Consumer Court’s ruling in Dinesh Prasad Raturi v. Bata (India) Ltd. (CC/64/2019), which concluded that “the Bata Company has used the Consumer as if he is the advertisement agent of the opposite party.”
In response, More Megastore refuted all allegations and contended that the complaint should be summarily dismissed. They argued that there was no coercion by More Megastore for the purchase of the carry bag, suggesting that the complaint was merely an attempt to harass More Megastore and exploit it as a means of financial gain.
Upon deliberation, the Commission determined that the primary dispute revolved around More Megastore’s use of consumers as advertising agents by selling carry bags featuring their logo without providing prior prominent notice or disclosing specifications and prices of these bags. The Commission deemed that failing to disclose the price of carry bags at the payment counter constituted an “unfair trade practice” under Section 2(1)(r) of the Consumer Protection Act, 1986 (equivalent to Section 2(47) of the Consumer Protection Act, 2019). The Commission emphasized that consumers have the right to be informed of any additional costs associated with carry bags and their specifications and prices before making their purchase decisions.
In summary, the Commission concluded that More Megastore’s sale of plastic bags featuring their company logo, which effectively employed customers as tools for their advertising, amounted to the adoption of unfair trade practices, in addition to deceptive service practices and objectionable spurious acts.
Conclusion
Unfair trade practices not only harm consumers but also undermine the principles of fair competition in the marketplace. Consumer protection laws play a crucial role in holding businesses accountable for such practices and ensuring that consumers are treated fairly and transparently. Businesses must operate ethically and with integrity to build trust and long-term success in today’s competitive landscape.
Written by : Adv. Anjali Bablani (D/3376/2016)