Unfair Trade Practice under Section 2(47) of the Consumer Protection Act, 2019: Meaning and Types

Consumer law does not wait for goods to fail: it also polices how they are sold. The unfair trade practice is the Act's name for deception in the marketplace, false claims, phantom bargains, rigged contests, hoarded stock, and the 2019 Act enlarged the catalogue with three modern wrongs: no bill, no refund of defective goods within thirty days, and misuse of personal information. The definition matters triply: it is a ground of complaint (Section 2(6)(a)), the subject of the CCPA's regulatory powers, and the concept behind misleading advertisements. This note sets out the general definition and each statutory type.

1. The General Definition

Three points frame the definition. The practice must be adopted for promoting sale, use, supply or provision, it is a marketing wrong, judged by its tendency to draw custom. The governing idea is unfair method or deceptive practice, and the listed types are inclusive, not exhaustive: novel deceptions fall within the opening words. And falsity is judged by the impression on the ordinary consumer: in Lakhanpal National Ltd. v. MRTP Commission, (1989) 3 SCC 251, the Supreme Court held that a representation is judged by what it conveys to the common purchaser, and that literal truth is no defence if the net impression misleads.

2. The Statutory Types

2.1 False and misleading representations

The first and largest family covers falsely representing, orally, in writing or by visible representation, that: goods are of a particular standard, quality, quantity, grade, composition, style or model; re-built, second-hand, renovated or old goods are new; goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits they do not have; the seller has a sponsorship or affiliation he does not have; services are of a particular standard or grade; and making representations that falsely disparage another's goods, give any warranty or guarantee not based on adequate test, promise to replace or repair without intention or ability, or materially mislead about price. Classic instances: the institute claiming a university affiliation it lacked (Buddhist Mission Dental College v. Bhupesh Khurana, (2009) 4 SCC 484, admission on a false affiliation claim held unfair trade practice and deficiency, with refund and compensation); the '40 km per litre' and 'whitens in seven days' school of advertising; the warranty card promising what no test supports.

2.2 Bargain-price advertisements

Advertising goods or services at a bargain price when there is no intention to offer them at that price, for a reasonable period and in reasonable quantities, is unfair: the classic bait, the advertised television that is always 'just sold out', drawing customers to be switched to dearer stock.

2.3 Gifts, prizes and contests

This type covers offering gifts or prizes with the intention of not providing them as offered, or creating the impression that something is given free when its cost is wholly or partly covered in the price; conducting contests, lotteries and games of chance or skill to promote sales where the conduct does not match the offer; and withholding information about the final results of such schemes. The 'scratch and win' that never pays, and the free gift quietly priced into the product, are the statutory examples.

2.4 Non-compliance with product safety standards

Permitting the sale or supply of goods intended to be used by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by competent authority for their safe use, is itself an unfair trade practice, connecting the definition to BIS and sectoral safety standards and to the hazardous-goods ground of complaint.

2.5 Hoarding, destruction and refusal

Hoarding or destruction of goods, or refusal to sell goods or provide services, with intent to raise their price or the price of similar goods, treats artificial scarcity as consumer deception: the wrong lies in manipulating the market that consumers must buy from.

2.6 Manufacture and sale of spurious goods

Manufacturing spurious goods, goods falsely claimed to be genuine, or offering them for sale is an unfair trade practice, and simultaneously feeds the offences chapter, where spurious and adulterated products carry imprisonment and licence consequences.

2.7 The three 2019 additions

1. Not issuing a bill, cash memo or receipt for goods sold or services rendered: the paperless sale that defeats warranty, tax and proof alike is now itself unfair.
2. Refusing, after selling goods or rendering services, to take back or withdraw defective goods or deficient services and to refund the consideration within thirty days of the bill, where the contract or law so provides: the statutory backbone of return-and-refund, measured against the bill date.
3. Disclosing to any other person personal information given in confidence by the consumer, unless required by law or in the public interest: consumer privacy enters the definition, covering the sold customer database and the leaked medical or financial detail, alongside the data-protection regime.

3. Consequences of an Unfair Trade Practice

One wrong, three engines. Before the Commissions, an unfair trade practice is a ground of complaint; Section 39 empowers orders to discontinue the practice and not repeat it, to refund and compensate, and in advertising cases to issue corrective advertisement at the trader's cost. Before the CCPA, unfair trade practices are the core of the regulator's mandate: investigation through its Investigation Wing, orders of discontinuance, recall, refund, and penalties in the misleading-advertisement field, with class-wide effect no individual complaint could achieve. And in the offences chapter, the aggravated forms, false advertisements, adulterated and spurious goods, carry prosecution. The practice need not have succeeded: its adoption for promotion suffices, though loss matters to compensation.

4. Related Topics and Provisions

• Restrictive trade practice (Topic 17): the companion market wrong
• Misleading advertisement (Topic 19): the advertising face of this definition
• Complaint and its grounds (Topic 8): unfair trade practice as ground (a)
• The CCPA: the regulator built to fight these practices, in a later note
• Sections 88 to 93: the penal edge for false advertisement and spurious goods