Consumer Rights and Unfair Trading Practices: a legal prospective

By Adv Rishabh Kumar

Published on: November 01, 2023 at 00:05 IST

The correlation of consumer rights and unfair trading practices is unmistakable. When businesses engage in unfair trade practices, they infringe upon consumers’ rights to make informed decisions, receive quality products and services, and seek redressal when wronged. Consumer rights and unfair trading go hand in hand, to put it simply unfair trading is a breach of consumer rights and consumer rights curtail unfair trading by entities. In this article, we explore the rights of a consumer and how it corelates with unfair trade practices.

What are Consumer rights?

Consumer rights are of great significance because they promote fair and ethical business practices, protect the safety and interests of consumers, and empower individuals to make informed choices. They contribute to economic growth and ensure a more equitable and accountable marketplace. Consumer rights help strike a balance between the interests of businesses and the welfare of consumers, creating a more just and reliable economic environment.

some of the consumer Rights are as following:

• Right to be Protected:

This right protects consumers against products, goods, or services that may pose a threat to their property, health, or life. It is essential to ensure that the items consumers purchase are of guaranteed quality and safety. Manufacturers and sellers must provide goods that meet specific standards, and consumers should choose products with relevant certifications like AGMARK or ISI.

• Right to be Informed

Consumers have the right to be informed about various aspects of the products they are purchasing, including quantity, quality, standard, purity, potency, and price. This information enables consumers to make informed decisions and protects them from unfair trade practices. Manufacturers must provide all necessary details on product labels and packaging.

• Right to Choose

This right allows consumers to access a variety of products, goods, and services at competitive prices. It ensures that consumers are not forced to buy specific brands and can make choices based on their preferences. The right to choose promotes fair pricing and quality in the case of monopolies and includes access to basic services and goods.

• Right to be Heard

This right ensures that consumers’ interests are considered and heard in relevant forums. Consumers have the means to raise their concerns and complaints in these forums, especially in cases of unfair trade practices. Appropriate channels, including consumer organizations, are available to help consumers enforce this right.

• Right to Redressal

Consumers have the right to seek redressal when they encounter restrictive trade practices, unfair trade practices, or exploitation. This right includes seeking a fair resolution for grievances. Consumers can file complaints when they have legitimate concerns and may receive compensation in the form of money, repairs to defective goods, or replacements, depending on the issue.

• Right to Consumer Education

Under this right, consumers have the right to be educated about their rights and how to avoid exploitation. Consumer education includes gaining the necessary skills and knowledge to make informed choices. The government has introduced consumer education in schools and universities to raise awareness and empower consumers.

Consumer Courts in India

Consumer courts in India, established under the Consumer Protection Act, 2019, have significant powers in redressing cases and grievances of consumers. These courts are designed to provide an accessible and efficient mechanism for consumers to seek redressal and compensation when they face issues with products or services.

One of the objectives of consumer courts is to dispose of cases in a timely and efficient manner. They are encouraged to make decisions expeditiously to ensure consumers receive timely redressal.

Read More at Notable Cases: When Consumer Courts Awarded Extraordinary Damages

Unfair Trade Practices

Unfair trading practices, as defined in Indian law, refer to various deceptive, unethical, or fraudulent tactics employed by businesses to gain an advantage over consumers. The Consumer Protection Act, 2019, addresses unfair trade practices and provides provisions to protect consumers from such activities. Some key provisions related to unfair trading practices under the Consumer Protection Act, 2019, include:

Section 2(47) of the Consumer Protection Act defines “unfair trade practice” and provides that a trade practice is unfair if it involves false representation, misleading advertisements, or other deceptive means to promote the sale, use, or supply of goods or services.

Following are some of the types of Unfair trade practices that businesses can indulge into:

1. False Advertising: This involves promoting a product or service with deceptive or misleading information. Advertisements may make false claims about product features, benefits, or performance.
2. Price Manipulation: Businesses engage in price manipulation when they change prices in a deceptive manner to take advantage of consumers. This can include inflating original prices to make discounts seem more significant.
3. Product Misrepresentation: Misrepresenting the characteristics, quality, or ingredients of a product to mislead consumers. This can include false labeling, hiding product defects, or making inaccurate claims about a product’s attributes.
4. Bait-and-Switch: This practice lures consumers with a low-priced item and then encourages them to buy a more expensive alternative when they express interest in the initial offer.
5. Hidden Fees: Concealing additional fees or charges until after a purchase is made, leading consumers to pay more than they initially expected.
6. Deceptive Packaging: Using packaging that misrepresents the quantity or quality of the product. This may involve making the packaging appear larger than the actual product.
7. Phantom Discounts: Falsely inflating the original price of a product to make a discount or sale price appear more appealing.
8. Unsolicited Goods and Services: Sending unsolicited goods or providing services to consumers without their request, followed by demands for payment.
9. Misleading Warranty Claims: Making false or exaggerated claims about the extent and duration of product warranties, creating false expectations for consumers.
10. Pyramid Schemes and Multi-Level Marketing: These schemes promise high earnings based on recruiting new members rather than selling actual products or services, often leading to financial losses for participants.
11. Unfair Contract Terms: Including complex or hidden terms and conditions in contracts that disproportionately favor the business and disadvantage consumers.
12. Data Privacy Violations: Collecting and using consumer data without proper consent, violating privacy laws, or selling personal information to third parties without disclosure.
13. Counterfeit or Knockoff Products: Selling counterfeit or imitation products as genuine brands, often of inferior quality.
14. Product Safety Violations: Manufacturing or selling products that do not meet safety standards, potentially endangering consumers without adequate warnings.
15. Price Gouging: Raising prices significantly during times of high demand or emergencies, taking advantage of consumers’ immediate needs.
16. False Reviews and Testimonials: Creating fake positive reviews or testimonials to deceive consumers into believing a product or service is highly rated by previous customers.

The Legal Framework

1. Consumer Protection Act, 2019: This Act is the primary legislation that addresses unfair trade practices and protects consumer rights in India. It defines and prohibits unfair trade practices, establishes Consumer Disputes Redressal Commissions at various levels, and provides a legal framework for consumers to seek redressal.
2. Indian Penal Code (IPC): The IPC contains provisions related to fraud, cheating, and other criminal offenses that may apply in cases of unfair trade practices, particularly when they involve fraudulent or deceptive activities.

Penalties for involvement in unfair trade practices:

Following are the authorities that have the power to investigate and penalize businesses that engage in unfair trading practices:

a. Consumer Disputes Redressal Commissions: These commissions, including the District, State, and National Commissions, have the authority to hear complaints related to unfair trade practices and impose penalties on businesses found guilty.

b. Competition Commission of India (CCI): The CCI is responsible for investigating anti-competitive practices and abuse of market dominance. It has the power to penalize businesses engaged in such practices.

c. Central and State Government Consumer Affairs Departments: These departments play a role in enforcing consumer protection laws and may investigate unfair trade practices and recommend actions.

d. Law Enforcement Agencies: Law enforcement agencies like the police may become involved in cases where unfair trade practices involve criminal offenses, such as fraud or cheating.

Penalties

Penalties for unfair trade practices can include fines, compensation to affected consumers, injunctions to stop the practices, and even imprisonment in cases involving criminal activities.

Any failure to comply with the directions of the Central Consumer Protection Authority under sections 20 and 21 shall result either in imprisonment extending to six months or a fine extending to twenty lakh rupees or both according to section 88.

Cognizance of offence under sections 88 and 89 shall be taken by a court only after receiving a complaint from CCPA or an officer authorized by it.

Penalties imposed for manufacturing, storing, selling, distributing, or importing adulterated or spurious products as laid down in sections 90(1) and 90(2) are-

• Fine up to one lakh with imprisonment up to six months if no injury is caused (applicable only in case of adulterated products)
• Fine up to three lakh with imprisonment up to three years if injury not resulting in grievous hurt is caused. Grievous hurt carries the same meaning as assigned under s.320 of the IPC.
• Fine up to five lakh with imprisonment up to seven years if grievous hurt is caused.
• Fine up to ten lakh with minimum imprisonment for seven years which may extend to imprisonment for life if death is caused.

The latter two offences are non-bailable and cognizable. For any of the offences included under section 90(1) or 90(2), the court is authorized to suspend any license issued to the convict under any currently operative law for up to two years and cancel the license in case of a subsequent conviction. Also, for any officer causing search or seizure without having any reasonable grounds to do so, the penalty shall be imprisonment up to one year or a fine up to ten thousand rupees or both.

Intersection of Consumer Rights and Unfair Trading Practices

The intersection of consumer rights and unfair trading practices is significant, as unfair practices directly violate the rights of consumers. Consumer rights, as protected by the Consumer Protection Act, include the right to be informed, right to choose, right to seek redressal, and right to be protected. When businesses engage in unfair trade practices, they infringe upon these rights.

Consumer rights are designed to empower individuals and protect them from deceptive, unsafe, or exploitative practices. Unfair trading practices undermine these rights by misleading consumers, providing substandard products, or engaging in fraudulent activities. When consumers are affected by such practices, they have the right to seek redressal through legal channels and obtain compensation for the harm caused.

Conclusion

Consumer rights serve as a cornerstone of modern economies, aiming to protect individuals from deceptive, unsafe, or exploitative practices while empowering them to make informed decisions. These rights not only safeguard consumers but also foster economic growth, trust, and fairness in the marketplace.

In summary, the legal framework establishes a balance between consumer rights and the prevention of unfair trade practices. It serves as a bulwark against deceptive and harmful business conduct, promoting consumer empowerment, fair competition, and the well-being of individuals within the marketplace. Through consumer rights and their enforcement, a more equitable and trustworthy economic environment is nurtured, benefiting both consumers and businesses.

References

Consumer Rights and Responsibilities in India

Consumer Rights

Consumer Rights and Responsibilities – Definition, Duties and Importance

Consumer Rights in India

consumer-protection/consumer-rights-responsibilities/

Home | Department of Consumer Affairs | Ministry of Consumer Affairs Food and Public Distribution | Government of India

OFFENCES AND PENALTIES UNDER THE CONSUMER PROTECTION ACT- AN OVERVIEW

Explainer – offences and penalties under the Consumer Protection Act, 2019