Unfair Trade Practices in India: What\'s Illegal Under Consumer Protection Act 2019

Legal Definition: What is an Unfair Trade Practice?

Section 2(47) of Consumer Protection Act 2019

The Consumer Protection Act 2019 defines "unfair trade practice" under Section 2(47) as a practice that, for the purpose of promoting sale, use, or supply of any goods or services, adopts any unfair method or deceptive practice.

Key Elements:

• •Conducted in relation to trade or commerce
• •Involves promotion, sale, or supply of goods/services
• •Uses unfair, deceptive, or misleading methods
• •Can harm consumer interests
• •May occur at any stage of transaction

Evolution from CPA 1986

The Consumer Protection Act 2019 expanded and modernized the definition of unfair trade practices from the 1986 Act:

Major Changes:

• •Broader Scope: Now covers e-commerce, digital services, and online advertising
• •Product Liability: Added manufacturer liability for defective products
• •Stricter Penalties: Increased fines and added imprisonment provisions
• •CCPA Powers: Created Central Consumer Protection Authority for enforcement
• •Technology Inclusion: Addresses misleading advertisements on digital platforms

The modernized definition reflects how business practices have evolved with technology while maintaining protections against traditional deceptive practices.

The 14 Types of Unfair Trade Practices Under Indian Law

Indian consumer protection law recognizes multiple categories of unfair trade practices. Understanding these categories helps identify when companies cross legal boundaries.

1. False Representation

Definition: Making false or misleading statements about goods or services

Illegal Practices:

• •Claiming product has characteristics it doesn't possess
• •Falsely stating product is of a particular standard or quality
• •Misrepresenting product composition or ingredients
• •False claims about product testing or approval
• •Misleading statements about product origin ("Made in India" when imported)

Indian Example:

A Mumbai-based electronics retailer advertised smartphones as "100% original" when they were refurbished units. The Maharashtra State Consumer Commission imposed a ₹5 lakh penalty and ordered compensation to affected consumers.

2. False or Misleading Facts

Definition: Knowingly providing incorrect information to deceive consumers

Illegal Practices:

• •Providing false information about product features
• •Misleading consumers about product performance
• •Concealing material facts about the product
• •Making unsubstantiated claims
• •Providing false documentation

Real Case:

In 2022, CCPA took action against a weight loss supplement company making false claims about "guaranteed 10 kg weight loss in 30 days." The company was fined ₹8 lakh and ordered to issue public corrections.

3. Misleading Advertisements

Definition: Advertising that deceives or is likely to deceive consumers

Illegal Practices:

• •Using doctored before/after images
• •Making exaggerated performance claims
• •Hiding important terms and conditions in fine print
• •Celebrity endorsements of products without disclosure
• •Comparative advertising with false information

ASCI Role:

The Advertising Standards Council of India (ASCI) monitors misleading advertisements and refers serious violations to CCPA for legal action. In 2023, ASCI processed over 4,000 complaints about misleading ads.

Notable Example:

A popular fairness cream brand was penalized ₹3 lakh for advertisements suggesting skin color determines success, violating both consumer protection and dignity standards.

4. Bait and Switch Tactics

Definition: Advertising products at attractive prices but then refusing to sell them

Illegal Practices:

• •Advertising products the seller has no intention of selling
• •Showing one product but delivering inferior substitute
• •Advertising limited stock just to attract customers
• •Refusing to show advertised items
• •Pressuring customers to buy expensive alternatives

E-commerce Example:

An online marketplace advertised smartphones at ₹5,999 during a sale but had only 10 units available for a customer base of millions. Consumer forums ruled this was bait advertising designed to increase site traffic.

5. False Warranties and Guarantees

Definition: Making false or misleading statements about warranties

Illegal Practices:

• •Claiming products have warranties they don't have
• •Misrepresenting warranty terms and coverage
• •Refusing to honor stated warranty commitments
• •Adding undisclosed conditions to warranties
• •False claims about warranty transferability

Consumer Forum Case:

A Delhi car dealer advertised "5-year comprehensive warranty" but the actual warranty excluded major components. The District Consumer Forum ordered a ₹2 lakh refund plus ₹50,000 compensation.

6. Misleading Pricing Practices

Definition: False or deceptive pricing strategies

Illegal Practices:

• •False "original price" to show fake discounts
• •Hidden charges revealed only at checkout
• •Misleading "compare at" prices
• •False claims about price reductions
• •Deceptive "free" offers with hidden costs

E-commerce Investigation:

In 2023, CCPA investigated major e-commerce platforms for inflating "MRP" to show misleading discounts. Several platforms were ordered to clearly display actual selling price history.

7. Pyramid and Ponzi Schemes

Definition: Business models that depend on recruiting rather than actual sales

Illegal Practices:

• •Multi-level marketing with emphasis on recruitment over sales
• •Promising high returns for minimal investment
• •Requiring upfront payments for "business opportunities"
• •Chain letter or chain email schemes
• •Investment schemes with no legitimate business activity

Major Enforcement:

The 2021 crackdown on several MLM companies in Kerala and Tamil Nadu resulted in arrests and recovery of over ₹500 crore from illegal pyramid schemes disguised as network marketing.

8. Hoarding and Black Marketing

Definition: Artificially creating scarcity to raise prices

Illegal Practices:

• •Hoarding essential commodities
• •Refusing to sell at declared prices
• •Creating artificial shortages
• •Black marketing during shortages
• •Price manipulation through hoarding

COVID-19 Example:

During the pandemic, numerous cases were filed against chemists and traders hoarding medical oxygen, sanitizers, and medicines. CCPA took swift action with heavy penalties.

9. Defective Products

Definition: Selling products with known defects without disclosure

Illegal Practices:

• •Selling defective goods as new
• •Concealing manufacturing defects
• •Refusing to replace defective products
• •Providing inadequate product information
• •Selling products that don't meet safety standards

Product Liability:

Under Section 82-87 of CPA 2019, manufacturers, service providers, and sellers can all be held liable for defective products causing harm to consumers.

10. Spurious Goods

Definition: Selling counterfeit or imitation products as genuine

Illegal Practices:

• •Selling fake branded products
• •Passing off imitations as originals
• •Using similar brand names to deceive
• •Selling expired products with altered dates
• •Counterfeit electronics and medicines

Dangerous Example:

A 2022 case in Uttar Pradesh involved counterfeit baby formula being sold as a major brand. The manufacturer faced criminal prosecution, and victims received compensation exceeding ₹25 lakh collectively.

11. Misleading Contest and Prizes

Definition: Deceptive practices related to contests, lotteries, or prizes

Illegal Practices:

• •Announcing contests with no real prizes
• •Making prize claims conditional on purchases
• •Misleading odds of winning
• •Fake "you've won" notifications
• •Requiring payments to claim prizes

Telecom Example:

Consumer forums regularly handle cases where consumers are told they've won prizes but must pay "processing fees" or purchase products to claim them—a clear violation.

12. Professional Misconduct

Definition: Service providers engaging in deceptive practices

Illegal Practices:

• •Recommending unnecessary services
• •Overcharging for services
• •Using inferior materials while charging for premium
• •Failing to provide promised services
• •Misrepresenting professional qualifications

Healthcare Example:

Medical professionals recommending unnecessary tests or procedures face action under both consumer protection law and medical ethics regulations.

13. Unfair Contract Terms

Definition: Including one-sided or oppressive terms in agreements

Illegal Practices:

• •Contracts heavily favoring the seller
• •Unreasonable cancellation clauses
• •Waiving consumer rights through fine print
• •Automatic renewals without clear disclosure
• •Limiting company liability unfairly

Gym Membership Case:

Many consumer complaints involve gym contracts with no refund clauses even for medical reasons. Consumer forums have consistently ruled such terms unfair and unenforceable.

14. Misleading Product Comparisons

Definition: False or unfair comparisons with competitor products

Illegal Practices:

• •Comparing products based on cherry-picked features
• •Using misleading test methodologies
• •Implying competitor products are dangerous
• •False superiority claims
• •Unfair disparagement of competitor brands

ASCI Guidelines:

ASCI's Code specifically addresses comparative advertising, requiring that comparisons be factual, verifiable, and not misleading.

CCPA: The Enforcement Authority

Central Consumer Protection Authority (CCPA)

Established under Section 10 of the Consumer Protection Act 2019, CCPA is the primary enforcement body for unfair trade practices in India.

CCPA Powers:

• •Investigation: Can investigate violations suo moto or on complaints
• •Recall Orders: Can order product recalls for safety issues
• •Penalties: Can impose penalties up to ₹10 lakh
• •Prosecution: Can initiate criminal proceedings
• •Interim Orders: Can pass urgent protective orders

CCPA Enforcement Actions (2022-2024)

By the Numbers:

• •Over 200 notices issued to companies
• •₹35+ crore in penalties imposed
• •15+ product recalls ordered
• •100+ misleading advertisements stopped
• •50+ cases referred for criminal prosecution

Notable Actions:

1. E-commerce Flash Sales (2023)

CCPA issued guidelines against fake flash sales and drip pricing, ordering platforms to ensure actual product availability during advertised sales.

2. Dark Patterns (2023)

Guidelines issued against manipulative digital interfaces that trick consumers into unwanted subscriptions or purchases.

3. Misleading Surcharge (2024)

Action against restaurants adding undisclosed service charges, clarifying that such charges must be optional and clearly disclosed.

4. Green Washing (2023)

Penalties against companies making false environmental claims without substantiation.

5. Weight Loss Claims (2022-2024)

Continuous crackdown on health supplement companies making unsubstantiated weight loss claims.

ASCI: Self-Regulation in Advertising

Advertising Standards Council of India

ASCI is a self-regulatory body for advertising content in India, working alongside CCPA.

ASCI Code of Ethics:

• 1
  Advertisements must be truthful and not misleading
• 2
  Claims must be substantiated
• 3
  Advertisements must not be offensive
• 4
  Advertisements must comply with laws
• 5
  Special care for vulnerable audiences (children)

ASCI Process:

• 1
  Complaint received (consumers, competitors, or suo moto)
• 2
  Advertiser given opportunity to respond
• 3
  Consumer Complaints Council (CCC) reviews
• 4
  Decision issued (uphold or reject complaint)
• 5
  Advertiser must withdraw/modify ad
• 6
  Non-compliance referred to CCPA

2023 Statistics:

• •4,200+ complaints processed
• •85% compliance rate
• •600+ cases referred to CCPA for non-compliance
• •Digital advertising now 55% of all complaints

Recent Focus Areas:

• •Cryptocurrency and investment apps
• •Online gaming and gambling
• •Health supplements and wellness products
• •Influencer marketing disclosures
• •Children's advertising

Penalties and Consequences

Financial Penalties Under CPA 2019

Manufacturer/Service Provider:

• •First offense: Up to ₹10 lakh
• •Subsequent offenses: Up to ₹50 lakh

Endorser (Celebrity/Influencer):

• •First offense: Up to ₹10 lakh
• •Subsequent offenses: Up to ₹50 lakh
• •Contract ban: Up to 1 year (first offense), 3 years (subsequent)

Advertisement Publisher:

• •Penalties for knowingly publishing misleading ads
• •Suspension of advertising license possible

Criminal Penalties

Section 89 of CPA 2019:

• •Imprisonment up to 2 years
• •Plus fine as determined by court
• •Applies to repeat offenders
• •Non-bailable in serious cases

Civil Remedies

Consumer Forums Can Order:

• •Refund of amounts paid
• •Compensation for losses
• •Removal of defects
• •Replacement of products
• •Discontinuation of unfair practice
• •Punitive damages (up to 10 times product cost)
• •Litigation costs

Interest on Delayed Payments:

Consumer forums regularly award 9-12% annual interest from the date of complaint filing.

Real Indian Examples: Case Studies

Case 1: False Discount Claims (2023)

Facts:

A major fashion e-commerce platform displayed "70% off" sales but investigation revealed the "original prices" were inflated specifically for the sale period.

Consumer Forum Finding:

The practice violated multiple provisions—false representation, misleading pricing, and deceptive advertising.

Penalty:

• •₹10 lakh fine to CCPA
• •₹5 lakh compensation distributed to affected consumers
• •Mandatory price history display for all discounted products

Impact:

Led to industry-wide changes in how e-commerce platforms display discounts and price histories.

Case 2: Turmeric Adulteration (2022)

Facts:

A popular spice brand's turmeric powder was found to contain non-permitted coloring agents that could pose health risks.

Action Taken:

• •CCPA ordered immediate product recall
• •Company penalized ₹20 lakh
• •Criminal case filed under Food Safety Act
• •₹15 lakh compensation fund for consumers

Outcome:

Company recalled 2 lakh+ packets, issued public apology, and implemented enhanced quality controls.

Case 3: Real Estate Misleading Advertisement (2023)

Facts:

A Bangalore builder advertised apartments with "swimming pool, gym, and 24/7 power backup" but failed to deliver these amenities even 2 years after possession.

Consumer Forum Order:

• •Builder to complete all promised amenities within 6 months
• •₹1 lakh compensation to each affected flat owner (80 flats)
• •12% annual interest on delayed possession
• •₹5 lakh penalty for unfair trade practice

Total Liability:

Over ₹1 crore in compensation plus amenity construction costs.

Case 4: Insurance Mis-selling (2023)

Facts:

An insurance company sold investment policies to senior citizens by falsely claiming they were "fixed deposit alternatives" without disclosing high charges and lock-in periods.

IRDAI and Consumer Forum Action:

• •Company penalized ₹50 lakh by IRDAI
• •Forced to refund premiums to 200+ customers
• •Consumer forum awarded ₹2 lakh compensation to lead petitioner
• •Company barred from selling similar products for 1 year

Case 5: Misleading Medical Device Claims (2024)

Facts:

A company sold "magnetic therapy bands" claiming they could cure diabetes, blood pressure, and arthritis—claims with no scientific basis.

CCPA Action:

• •₹15 lakh penalty
• •Mandatory product recall
• •Criminal complaint filed
• •Distributors also held liable
• •Ban on company's advertising for 2 years

How to Identify Unfair Trade Practices

Red Flags for Consumers

Pricing Red Flags:

• •Deals that seem too good to be true
• •Constantly changing "original prices"
• •Hidden charges appearing at checkout
• •Pressure to "buy now" due to artificial urgency
• •Unclear total cost breakdowns

Advertisement Red Flags:

• •Exaggerated or absolute claims ("100% cure," "guaranteed results")
• •Before/after photos that look manipulated
• •No substantiation for claims
• •Fine print contradicting main message
• •Celebrity endorsements without product knowledge

Sales Practice Red Flags:

• •High-pressure sales tactics
• •Reluctance to provide written agreements
• •Requiring immediate decisions
• •Refusing to allow product inspection
• •Making verbal promises not in writing

Online Shopping Red Flags:

• •Very limited stock for advertised deals
• •No clear return/refund policy
• •Website with no contact information
• •Unsolicited "you've won" messages
• •Requests for unnecessary personal information

Service Provider Red Flags:

• •Recommending expensive services immediately
• •No detailed estimate or quotation
• •Refusing to explain charges
• •Using scare tactics
• •No clear service agreement

How to Report Unfair Trade Practices

Step 1: Gather Evidence

Document Everything:

• •Screenshots of advertisements and websites
• •Email communications
• •SMS and WhatsApp messages
• •Bills, receipts, and invoices
• •Product packaging and labels
• •Warranty cards
• •Photographs of products/services
• •Audio/video recordings (where legal)

Create a Timeline:

• •Date of advertisement seen
• •Date of purchase
• •Dates of communication
• •Date defect/issue discovered
• •Dates of complaints made

Step 2: Direct Complaint to Company

Written Complaint:

• •Send via registered post or email
• •Clearly state the issue
• •Reference specific false claims
• •Mention relevant evidence
• •State desired resolution
• •Give reasonable time to respond (15-30 days)

Keep Records:

• •Postal receipts
• •Email read receipts
• •Response from company

Step 3: File Complaint with CCPA

Online Complaint:

Visit the official CCPA website and file complaint through the online portal.

Information Required:

• •Your personal details
• •Company details
• •Nature of unfair practice
• •Supporting documents
• •Desired relief

CCPA Will:

• •Review complaint
• •Decide if investigation warranted
• •Notify company
• •Conduct inquiry if needed
• •Pass orders with penalties

Step 4: Consumer Forum Complaint

Which Forum:

• •District Forum: Claims up to ₹1 crore
• •State Commission: ₹1 crore to ₹10 crore
• •National Commission: Above ₹10 crore

Filing Process:

• •Can file online or physically
• •Nominal court fees (₹100-₹5,000 typically)
• •Lawyer not mandatory but helpful
• •Attach all evidence documents

Timeline:

• •District Forum: 3-6 months typically
• •State Commission: 6-12 months
• •National Commission: 1-2 years

Step 5: Report to ASCI

For Misleading Advertisements:

• •File complaint on ASCI website
• •Provide ad details and evidence
• •ASCI will investigate
• •If upheld, advertiser must withdraw ad
• •Non-compliance reported to CCPA

Step 6: Social Media and Public Awareness

Legal Approach:

• •Share factual information
• •Tag official company accounts
• •Tag consumer protection bodies
• •Use relevant hashtags
• •Avoid defamatory statements

Impact:

Companies often respond faster to public complaints due to reputation concerns.

Prevention: Protecting Yourself

Before Making a Purchase

Research Thoroughly:

• •Check product reviews on multiple platforms
• •Look for consumer complaints online
• •Verify company registration and credentials
• •Check for past legal actions against company
• •Compare prices across platforms

Read Fine Print:

• •Complete terms and conditions
• •Warranty and guarantee terms
• •Return and refund policies
• •Hidden charges and fees
• •Cancellation clauses

Ask Questions:

• •Request written clarifications
• •Insist on product demonstrations
• •Ask about after-sales service
• •Verify celebrity endorsement authenticity
• •Check for substantiation of claims

During Purchase

Insist on Documentation:

• •Detailed invoice with all charges
• •Written warranty cards
• •Service agreements in writing
• •Product manual and certifications
• •Seller contact information

Digital Trail:

• •Take screenshots of online purchases
• •Save confirmation emails
• •Record payment details
• •Screenshot product descriptions

Inspect Before Acceptance:

• •Check product quality
• •Verify specifications match description
• •Ensure packaging is intact
• •Check expiry dates
• •Test functionality where possible

After Purchase

Preserve Evidence:

• •Keep all packaging and labels
• •Store bills and receipts
• •Save warranty documents
• •Maintain communication records
• •Document any defects immediately

Act Quickly:

• •Report issues within warranty period
• •Don't accept verbal assurances only
• •Follow up in writing
• •Escalate if not resolved
• •Don't delay legal action if needed

Your Rights as an Indian Consumer

Fundamental Consumer Rights (CPA 2019)

1. Right to Safety:

Protection against products and services hazardous to life and property.

2. Right to Information:

Access to complete information about quality, quantity, potency, purity, standard, and price.

3. Right to Choose:

Access to a variety of goods and services at competitive prices.

4. Right to Be Heard:

Representation in forums for consumer interests.

5. Right to Seek Redressal:

Fair settlement of genuine grievances.

6. Right to Consumer Education:

Knowledge to make informed choices.

Specific Protections Against Unfair Practices

Legal Remedies Available:

• •Refund of purchase price
• •Replacement of defective products
• •Removal of deficiencies in service
• •Compensation for losses
• •Punitive damages for willful negligence
• •Litigation costs

No Cost to Justice:

• •Consumer forums have minimal fees
• •No court fees for claims up to ₹5 lakh
• •Simple procedures without mandatory lawyers
• •Time-bound disposal (within 3 months typically)

Industry-Specific Unfair Practices

E-commerce Sector

Common Violations:

• •False flash sales
• •Drip pricing (hidden charges)
• •Dark patterns (manipulative UI)
• •Fake reviews and ratings
• •Preferential listing without disclosure
• •Non-delivery or delivery of different products

Protection Measures:

E-commerce Rules 2020 mandate transparent pricing, clear return policies, and grievance redressal mechanisms.

Real Estate Sector

Common Violations:

• •Unregistered projects
• •False amenity promises
• •Delayed possession without penalty
• •Charging for undelivered amenities
• •Misleading project approvals
• •Hidden charges (preferential location charges)

RERA Protection:

Real Estate Regulatory Authority (RERA) provides additional protection specifically for real estate consumers.

Financial Services

Common Violations:

• •Mis-selling insurance products
• •Hidden charges in loans
• •Misleading investment schemes
• •Unauthorized charges and deductions
• •False promises of returns
• •Pyramid investment schemes

Regulatory Bodies:

• •RBI (banking)
• •SEBI (investments)
• •IRDAI (insurance)

Healthcare and Pharmaceuticals

Common Violations:

• •Spurious or adulterated medicines
• •Unnecessary procedures and tests
• •Overcharging
• •Misleading health supplement claims
• •Unqualified practitioners
• •False cure claims

Additional Protection:

Drugs and Cosmetics Act, Medical Council regulations, Clinical Establishments Act.

Education Sector

Common Violations:

• •False placement promises
• •Hidden fees and charges
• •Misleading course accreditation
• •Promised facilities not provided
• •Refund policy violations
• •False faculty credentials

UGC and AICTE:

Higher education institutions face action from regulators and consumer forums for unfair practices.

The Future of Consumer Protection in India

Technological Enforcement

AI-Based Monitoring:

CCPA is implementing AI tools to scan digital platforms for misleading advertisements and unfair practices in real-time.

Blockchain for Complaints:

Pilot projects for blockchain-based complaint tracking ensuring transparency and preventing manipulation.

Digital Evidence:

Enhanced acceptance of digital evidence including social media screenshots and app recordings.

Stricter Penalties

Proposed Amendments:

• •Higher financial penalties for repeat offenders
• •Mandatory community service for companies
• •Director liability in serious cases
• •Faster prosecution procedures

International Cooperation:

Agreements with other countries to take action against cross-border unfair practices, especially in e-commerce.

Enhanced Consumer Awareness

Government Initiatives:

• •National Consumer Helpline (1800-11-4000)
• •Consumer awareness programs in schools
• •Digital literacy campaigns
• •Easy-to-use complaint portals

Role of Technology:

• •Mobile apps for instant complaint filing
• •QR code scanning for product verification
• •AI chatbots for consumer guidance
• •Blockchain for supply chain transparency

Conclusion: Know Your Rights, Use Your Power

Unfair trade practices undermine the fundamental principle of fair commerce—that transactions should be based on trust, honesty, and mutual benefit. Indian law provides robust protections, but these protections only work when consumers are aware of their rights and willing to enforce them.

Key Takeaways:

• 1
  Unfair trade practices are illegal under the Consumer Protection Act 2019 and carry penalties up to ₹10 lakh and imprisonment.

• 2
  14 categories of violations cover everything from false advertising to pyramid schemes, with both civil and criminal consequences.

• 3
  Multiple enforcement agencies including CCPA, consumer forums, ASCI, and sector regulators work to protect consumers.

• 4
  You have powerful legal remedies including refunds, compensation, punitive damages, and the right to sue in consumer forums with minimal fees.

• 5
  Prevention is better than cure—research before buying, read fine print, document everything, and act quickly when issues arise.

• 6
  Your complaint matters—every report helps build a database of violations, protects other consumers, and forces companies to improve practices.

The Indian legal system has evolved significantly to address modern unfair trade practices, especially in digital commerce. With CCPA taking proactive action, ASCI monitoring advertisements, and consumer forums providing accessible justice, the framework for consumer protection is stronger than ever.

However, enforcement ultimately depends on consumer vigilance and willingness to take action. When you encounter unfair trade practices, you're not just fighting for your own rights—you're contributing to a fairer marketplace for all Indian consumers.

Don't tolerate deceptive business practices. Know the law, gather evidence, and take action. Indian consumer protection laws are on your side.

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