Introduction

The Consumer Protection Act aims to protect consumers from dishonest and misleading business practices. Traders and service providers must deal with consumers in a fair and transparent manner.

When a trader uses misleading, deceptive, or dishonest methods to promote the sale of goods or services, it is treated as an unfair trade practice.

Meaning / Definition

An unfair trade practice means any trade practice that adopts unfair methods or deceptive practices for the purpose of promoting the sale, use, or supply of goods or services.

The Consumer Protection Act identifies several forms of unfair trade practices that mislead consumers or harm their interests.

Some of these practices were already covered under the Consumer Protection Act, 1986, while additional practices were introduced under the Consumer Protection Act, 2019.

Modes or Types

False Representation

False representation occurs when a trader makes false or misleading statements about goods or services.

This may include:

• claiming that goods are of a particular quality, quantity, grade, composition, style, or model when they are not
• claiming that services have a certain standard or quality when they do not
• presenting old, reconditioned, or second-hand goods as new goods
• falsely claiming approval, sponsorship, or affiliation
• giving misleading information about price or usefulness of goods or services
• providing false warranties or guarantees without proper testing
• making false statements that damage the reputation of another trader’s goods or services

Such misleading statements may appear on product labels, packaging, advertisements, or other promotional materials.

False Offer of Bargain Price

This occurs when a trader advertises goods or services at a very low or special price but does not genuinely intend to sell them at that price.

The advertisement may create the impression that the goods are available at a lower price than the normal market price, even though the trader does not intend to supply them in a reasonable quantity or time.

Free Gifts Offer and Prize Schemes

Some traders attract consumers by offering free gifts, prizes, or promotional schemes.

This becomes an unfair trade practice when:

• the real intention is only to increase sales
• the so-called free gift is actually included in the price of the product
• contests or lotteries are conducted mainly to promote business
• the results of prize schemes are not announced properly or within a reasonable time

Non-Compliance with Prescribed Standards

If a trader sells goods that do not meet the standards prescribed by a competent authority, it becomes an unfair trade practice.

These standards may relate to:

• performance
• composition
• design
• construction
• finishing
• packing

Such standards exist mainly to protect consumers from risk or injury.

Hoarding or Destruction of Goods

Hoarding means storing goods and refusing to sell them in order to create artificial shortage.

If a trader hoards, destroys, or refuses to sell goods with the intention of raising the price of goods or services, it is treated as an unfair trade practice.

Manufacturing or Selling Spurious Goods

According to the Consumer Protection Act, spurious goods are goods that are falsely claimed to be genuine or original.

Manufacturing or selling such goods, or using deceptive practices while providing services, amounts to an unfair trade practice.

Not Issuing Bill or Receipt

A trader must provide a bill, cash memo, or receipt for goods sold or services provided.

Failure to issue such proof of purchase in the prescribed manner is considered an unfair trade practice.

Refusing to Withdraw Defective Goods or Discontinue Deficient Service

Sometimes traders promise that they will:

• withdraw defective goods and refund the price, or
• stop providing deficient (poor quality) service and refund the amount.

If the trader refuses to do so within the agreed time, or within 30 days when no time is specified, it becomes an unfair trade practice.

Compromising Confidential Personal Information of Consumers

Traders often collect personal information of consumers for providing goods or services.

This information must be kept confidential (private and protected).

If the trader shares or discloses such information to another person without legal permission, it amounts to an unfair trade practice.

Distinction / Comparison

Practical Example

A company advertises a mobile phone stating that it has a battery life of 48 hours. In reality, the phone can operate only for 10 hours.

This false claim misleads consumers and may amount to an unfair trade practice.

Summary

• Unfair trade practice means using deceptive or dishonest methods to promote the sale of goods or services.
• It includes false representation, misleading advertisements, and fake bargain offers.
• Practices such as hoarding goods, selling spurious goods, or not issuing bills are also unfair trade practices.
• The Consumer Protection Act, 2019 added new categories such as refusal to withdraw defective goods and misuse of consumer personal information.
• The law aims to ensure fairness, transparency, and protection of consumer rights in the market.