Unfair Trade Practices (Section 2(47))**

Definition and Scope

An **Unfair Trade Practice** is a central concept in consumer protection law, representing a wide array of unethical, deceptive, or fraudulent methods employed by businesses in their dealings with consumers. The Consumer Protection Act, 2019, provides a comprehensive definition of what constitutes an unfair trade practice, empowering consumers and regulatory bodies to take action against them.

According to **Section 2(47)** of the Consumer Protection Act, 2019, unfair trade practice means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices:

Deceptive practices

The definition broadly covers any **unfair method or unfair or deceptive practice**. This signifies that the concept is not limited only to the specific examples listed in the section, but also includes any other practice that is misleading or designed to deceive the consumer. The focus is on whether the practice is likely to mislead a reasonable consumer to their detriment. Deceptive practices exploit information asymmetry and the consumer's trust.

This broad scope allows consumer forums and the Central Consumer Protection Authority (CCPA) to address new and evolving unfair tactics that may not have been specifically foreseen when the law was drafted.

False representations

Making **false or misleading representations** about goods or services is a specific type of unfair trade practice listed under Section 2(47)(i). This covers instances where a business makes untrue claims about the product's nature or qualities to induce a consumer to purchase it. The section lists various forms of false representation, including:

Falsely stating that goods are of a particular **standard, quality, quantity, grade, composition, style, or model**.
Falsely stating that services are of a particular **standard, quality, or grade**.
Falsely representing that second-hand, renovated, reconditioned, or old goods are new goods.
Representing that goods or services have **sponsorship, approval, performance characteristics, accessories, uses or benefits** which they do not have.
Representing that the seller or service provider has a **sponsorship or approval** which they do not have.
Making a false or misleading representation concerning the **need for, or the usefulness of, any goods or services**.
Giving to the public any **false or misleading representation concerning the price** at which a product or service is, or has been, or is likely to be, sold or provided.

These provisions target businesses that try to gain an unfair advantage by providing consumers with factually incorrect information about what they are buying.

Misleading advertisements

A significant addition and focus area under the 2019 Act is the emphasis on **misleading advertisements**. While false representations cover statements made in any manner, Section 2(47)(i)(a) to (h) specifically address various forms of false or misleading representations made through advertisements.

A **misleading advertisement** is defined in **Section 2(28)** as an advertisement which:

Falsely represents any product or service.
Constitutes an unfair trade practice.
Purposely conceals important information.
Is likely to mislead the consumer about the express or implied claim made therein.

This includes advertisements that make false claims about quality, standard, quantity, benefits, price, or create a misleading impression about the product or service. The CCPA has specific powers under Section 20 and 21 to issue directions, impose penalties on manufacturers, service providers, and endorsers, and order discontinuation or modification of misleading advertisements.

False guarantee

Providing a **false warranty or guarantee** is also specifically listed as an unfair trade practice in Section 2(47)(i)(ii) and (iv). This occurs when a business offers a warranty or guarantee that is not based on proper tests or is misleading.

Making a false or misleading representation concerning the **efficacy or length of the utility** of any product or service.
Giving a **false warranty or guarantee** of the performance, capability or length of the service life of a product or any goods that is not based on an adequate or proper test thereof. This includes:
- A warranty or guarantee which is **misleading** or for which there is **no reasonable prospect of carrying it out**.
- Representations that the goods are guaranteed for a specific period or number of useages, if such guarantee is not based on sufficient information.
- Representations that the services are guaranteed for a specific result, if such guarantee is not based on sufficient information.

This protects consumers from being swayed by guarantees that are hollow or cannot be realistically fulfilled.

Spurious goods

Manufacturing or selling **spurious goods** is explicitly listed as an unfair trade practice under Section 2(47)(xv). **Section 2(43)** defines spurious goods as such goods which are **falsely claimed to be genuine goods**. This covers counterfeit products or goods passed off as original when they are not.

For example, selling fake branded watches as genuine, duplicate electronic items presented as originals, or counterfeit medicines are instances of dealing in spurious goods. This practice not only deceives the consumer about the origin and quality but can also pose significant risks, especially in the case of pharmaceuticals or electronics.

Bait advertising

Sections 2(47)(ii) and (iii) deal with practices that lure consumers with attractive offers without the genuine intention or capacity to fulfil them. This is commonly referred to as **Bait Advertising**.

**Section 2(47)(ii):** Offering gifts, prizes, or other items with the intention of not providing them as offered, or with the intention of not having them for the purpose of attracting consumers.
**Section 2(47)(iii):** Conducting any contest, lottery, game of chance or skill, for the purpose of promoting sales, if arranged otherwise than in accordance with rules prescribed by the Central Government.

This prevents businesses from using misleading offers of freebies or prizes merely to attract footfall or attention, without fulfilling the promise made to the consumer. For example, advertising a limited-time offer of a free gift with purchase, but then claiming the stock is exhausted when the consumer tries to redeem it, could be considered bait advertising.

Examples of Unfair Trade Practices

Beyond the specific types detailed above, Section 2(47) of the Consumer Protection Act, 2019, lists various other practices that constitute unfair trade practices. Here are some examples:

Refusal to Sell or Provide Services:

Permitting the hoarding or destruction of goods, or refusing to sell the goods or provide services, so as to raise or tend to raise the cost of those goods or services to the consumers (Section 2(47)(viii)). This aims to prevent artificial scarcity and price manipulation.

Tie-in Sales:

Selling goods or services on the condition that the consumer shall also buy other goods or services (Section 2(47)(ix)). While sometimes linked to restrictive practices, requiring a bundled purchase can be unfair if the consumer is genuinely interested only in the primary product/service and the tie-in is not justified.

Non-compliance with Standards:

Manufacturing, selling, or distributing any goods or providing services which do not comply with the standards prescribed by the competent authority, or the standards declared by the seller (Section 2(47)(x)). This directly links violation of quality and safety standards to unfair trade practices.

Pyramid Scheme:

Promoting a pyramid scheme (Section 2(47)(xi)). A pyramid scheme involves a multi-layered network where participants primarily earn from recruiting new members rather than selling genuine products or services, and the model is unsustainable, leading to financial losses for participants at lower levels. This is deemed an unfair practice that exploits consumers who join such schemes.

Failure to Issue Bill/Receipt:

Not issuing a cash memo or receipt for the goods sold or services rendered in violation of any law for the time being in force (Section 2(47)(xiii)). This promotes transparency and accountability in transactions, preventing tax evasion and providing consumers with proof of purchase for seeking redressal.

Disclosure of Personal Information:

Failing to provide information regarding the steps a consumer shall take to seek redressal against unfair trade practices, or disclosing personal information given in confidence by a consumer, unless such disclosure is made in accordance with the provisions of any other law (Section 2(47)(xiv)). This protects consumer privacy and ensures awareness of grievance mechanisms.

Cancellation Charges:

Charging a penalty for cancellation of a service contract, in excess of the loss suffered by the opposite party (Section 2(47)(xii)). This prevents service providers from imposing exorbitant cancellation fees that are not commensurate with their actual loss.

This non-exhaustive list illustrates the wide range of activities that the Consumer Protection Act classifies as unfair trade practices, providing a strong legal basis for consumers to challenge deceptive and unfair commercial behaviour.

Restrictive Trade Practices**

Meaning of Restrictive Trade Practice (Section 2(40))

The concept of **Restrictive Trade Practice** under the Consumer Protection Act, 2019, focuses on business activities that tend to impede the proper functioning of the market in a way that harms consumers by imposing unjustified costs or restrictions. It is defined in **Section 2(40)** of the Act.

According to **Section 2(40)** of the Consumer Protection Act, 2019, restrictive trade practice means a trade practice which tends to obstruct the flow of capital or resources into the stream of production or which tends to bring about **manipulation of prices or conditions of delivery or to affect the flow of supplies** in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions.

Practices that restrict competition

While the term "restrictive trade practice" might intuitively suggest practices that limit competition (a focus of competition law), under the Consumer Protection Act, the definition is specifically tied to the **consequences for the consumer**. The practices described in the definition, such as manipulating prices or affecting the flow of supplies, *can* arise from anti-competitive behaviour, but the key element for a consumer complaint under this Act is that these practices **impose unjustified costs or restrictions on the consumers**.

Examples of practices that could be considered restrictive trade practices under the Consumer Protection Act based on their effect on consumers include:

**Price Manipulation:** Actions taken by a business or group of businesses to artificially inflate prices beyond what market forces would dictate, leading to unjustified costs for consumers.
**Affecting Flow of Supplies:** Creating artificial scarcity of goods or services by hoarding, limiting production, or controlling distribution channels, forcing consumers to either pay more or face restrictions in access.
**Tie-in Arrangements:** Although also listed as an Unfair Trade Practice in Section 2(47), requiring a consumer to buy unwanted goods or services as a condition of buying the desired product can be seen as a restrictive practice because it restricts the consumer's choice and imposes an unjustified cost (having to buy the tied product).
**Exclusive Dealing Arrangements (if they harm consumers):** Agreements that prevent distributors or retailers from selling competing products, thereby limiting consumer choice and potentially leading to higher prices or lack of availability.

The focus of this definition is thus on the market conduct that has a detrimental impact on the consumer's purse or access to goods/services.

Distinction from Unfair Trade Practices

Both Unfair Trade Practices (UTP) and Restrictive Trade Practices (RTP) are prohibited under the Consumer Protection Act, 2019, but they target different types of harmful business conduct. Understanding the distinction is important for classifying consumer grievances correctly.

Key Differences:

The primary difference lies in the **nature of the practice** and its **immediate impact**:

**Unfair Trade Practice (UTP):** These practices are generally **deceptive, misleading, or fraudulent**. They involve misrepresenting facts or making false claims to directly influence a consumer's decision to buy goods or services. UTPs are often unilateral actions by a seller or service provider in their direct interaction with the consumer. The harm is usually immediate deception or misrepresentation in a specific transaction. Examples: false advertising, selling goods not conforming to standards, charging excess prices, hiding information.
**Restrictive Trade Practice (RTP):** These practices relate to **market manipulation or control** that indirectly affect consumers by limiting supply, manipulating prices, or imposing undue conditions. RTPs often stem from agreements or actions that distort the market mechanism. The harm is typically the imposition of unjustified costs or restrictions on consumers as a result of these market distortions. Examples: hoarding to raise prices, tie-in sales, arrangements limiting distribution or production that restrict consumer access or choice.

Comparison Table:

Feature	Unfair Trade Practice (UTP)	Restrictive Trade Practice (RTP)
Nature of Practice	Deceptive, misleading, fraudulent methods directly in transaction.	Practices manipulating market conditions (supply, price, delivery).
Focus	Direct deception or unfairness in transaction with consumer.	Imposition of unjustified costs or restrictions on consumers due to market manipulation.
Effect	Consumer is directly misled or cheated in a specific purchase.	Consumer faces limited choice, higher prices, or restricted access due to market distortions.
Primary Actor	Usually seller/service provider acting unilaterally or directly.	Often results from agreements or concerted actions affecting market structure/flow.
Examples	False advertising, fake discounts, selling substandard goods, hiding information, charging excessive price.	Hoarding goods, price fixing (by affecting supply), tie-in sales (as restriction on choice), exclusive dealing limiting availability.

It's worth noting that some practices might have elements of both. For instance, a misleading advertisement (UTP) about limited stock might be used as part of a broader strategy to hoard goods (RTP) and drive up prices. However, the legal distinction in the Act helps categorise complaints based on the primary nature of the harmful conduct.

Jurisdiction of Competition Commission of India (CCI)

While the Consumer Protection Act, 2019, allows consumers to complain about restrictive trade practices that impose unjustified costs or restrictions on them, the primary authority in India for dealing with practices that **affect competition** in the market is the **Competition Commission of India (CCI)**, established under the Competition Act, 2002.

The Competition Act, 2002, aims to prevent anti-competitive agreements, prohibit abuse of dominant position, and regulate combinations (mergers and acquisitions) that cause or are likely to cause an appreciable adverse effect on competition within India. The focus of the Competition Act is on protecting the process of competition in the market, which indirectly benefits consumers through wider choices, better quality, and lower prices.

Role of CCI vs. Consumer Forums regarding RTPs:

**Consumer Forums (under Consumer Protection Act):** These forums (District, State, National) deal with complaints from **individual consumers** (or groups of consumers) who have suffered loss or damage, or have faced unjustified costs or restrictions, specifically due to a restrictive trade practice as defined in Section 2(40). The consumer must prove the link between the practice and the cost/restriction imposed on them. The remedy sought is typically compensation, removal of the restriction, or cessation of the practice *as it affects the complainant(s)*.
**Competition Commission of India (CCI):** The CCI investigates and passes orders regarding practices that violate the Competition Act, i.e., anti-competitive agreements (Section 3), abuse of dominant position (Section 4), and combinations (Section 6) that harm competition *in the relevant market*. Any person, consumer association, or the Central/State Government can file information with the CCI. The focus is on the adverse effect on competition itself, not just the harm to a single consumer. The CCI can impose penalties on businesses, issue cease and desist orders, modify agreements, or even order the division of a dominant enterprise.

There can be an overlap where a practice is both anti-competitive (actionable by CCI) and constitutes an RTP that imposes unjustified costs/restrictions on consumers (actionable in consumer forums). For instance, a cartel fixing prices would be an anti-competitive agreement under the Competition Act and could also be an RTP under the Consumer Protection Act as it imposes unjustified costs (higher prices) on consumers.

However, the jurisdictions are distinct: consumer forums focus on redressal for the harm suffered by the consumer from the RTP, while the CCI focuses on correcting the market distortion caused by the anti-competitive practice. The remedies and procedures are different. A finding by the CCI that a practice is anti-competitive could potentially be persuasive evidence in a consumer forum case, but the consumer forum still needs to determine if the practice, in the specific context of the consumer's complaint, constitutes an RTP under the Consumer Protection Act and has imposed unjustified costs or restrictions on that consumer.

In practice, while the definition of RTP in consumer law is distinct, many practices that qualify as RTPs from a consumer perspective might also be subject to scrutiny under the Competition Act if they significantly affect market competition. However, a consumer facing a specific grievance due to a restrictive practice imposing unjustified costs is most likely to find direct and accessible redressal through the consumer forums.