Unfair trade practice

Introduction
Unfair trade practice is a core doctrine at the intersection of consumer protection, market regulation and commercial litigation in India. It captures deceptive or exploitative conduct by traders or service providers that induces consumers to buy or use goods and services under false or misleading pretences. For lawyers, public authorities and in-house counsel, analysing an allegation of unfair trade practice requires both statutory literacy and a pragmatic appreciation of evidence, remedies and regulatory overlap (consumer fora, the Central Consumer Protection Authority, the Competition Commission, sectoral regulators and courts).

Core Legal Framework
– Consumer Protection Act, 2019
– Definition: Section 2(47) of the Consumer Protection Act, 2019 defines “unfair trade practice”. The definition is purposefully wide and directed at promotional activities which are false, misleading or unjust. (Practitioners should quote the provision in pleadings and apply its language in framing issues.)
– Central Consumer Protection Authority (CCPA): The 2019 Act creates a regulatory enforcement machinery (the CCPA) to tackle systemic unfair trade practices and misleading advertisements; the Act also empowers consumer fora (District, State and National Commissions) to award remedies to affected consumers.
– Consumer Protection Act, 1986
– Legacy definition: The earlier Act contained a similar definition (Section 2(n)) and an extensive body of case-law under the 1986 Act remains relevant where not superseded by the 2019 statute.
– Competition Act, 2002
– Sections 3 and 4 address anti‑competitive agreements and abuse of dominance. Behaviour that is “unfair” insofar as it distorts competition—predatory pricing, tying, refusal to deal, or misleading comparative claims aimed at excluding rivals—can attract parallel scrutiny under competition law.
– Sectoral laws and regulation
– Food Safety & Standards Act, Drugs & Cosmetics Act, Standards by BIS and FSSAI, Telecom, Financial Sector regulators: many sectoral regulators enforce standards and labelling norms; non‑compliance can be strong evidence of an unfair trade practice.
– Self‑regulation and advertising codes
– Advertising Standards Council of India (ASCI) Code and other industry self‑regulation frameworks often form part of the evidentiary and normative background in disputes over promotional claims.
– E‑commerce and other rules
– Consumer Protection (E‑Commerce) Rules, 2020 require e‑commerce entities to display seller identity, price, stock, and grievance redressal mechanisms and expressly prohibit misleading practices in online trade.

Practical Application and Nuances
How to think about an unfair trade practice claim in practice
– The legal core: At the heart of every unfair trade practice claim are three connected elements:
1. A representation (explicit or implicit) made to consumers — e.g., advertisements, product labels, web content, packaging, sales pitches, endorsements.
2. The representation is false, misleading, deceptive or unconscionable when judged against an objective standard (reasonable consumer test, expert standards, prescribed lab norms).
3. Causation and loss — the consumer relied on the representation, suffered loss, or was put at risk of harm.
– Common fact patterns
– False claims as to ingredients, composition, efficacy or performance (e.g., health or safety claims).
– Misleading pricing or discounts (bait-and-switch, hidden charges, false claims of limited-time offers).
– Misrepresentation of warranty/guarantee, after‑sales support, or refund policies.
– Fake endorsements, celebrity testimonials, or “study” claims without basis.
– Counterfeit, imitation or deceptive packaging implying association with a well-known brand.
– Online marketplace issues: non-delivery, false product descriptions, fake reviews, undisclosed sponsored content.

Evidence and proof strategies
– Documentary evidence (primary):
– Copies/screenshots of advertisements, website pages, product labels, invoices, order confirmations, packaging photographs, marketing collateral and social media posts (preserve metadata, use browser print/PDF with timestamps).
– Lab test reports, expert reports and certificates from accredited agencies.
– Complaints, emails, chat transcripts, call recordings showing representations and reliance.
– Promotional agreements, influencer contracts and media-buy schedules (to establish intent and sponsorship).
– Witness evidence:
– Affidavits from purchasers, store managers, technical experts and retail staff.
– Forensic preservation:
– Seek preservation orders quickly (interim injunctions, ex‑parte disclosure under consumer forum rules or writ proceedings) to prevent destruction or modification of digital ads and campaign records.
– Causation and quantification:
– Demonstrate nexus between representation and purchase — e.g., consumer testimony that a particular claim induced purchase, contemporaneous searches, or marketing targeting evidence.
– Quantify loss (refunds, repair costs, medical expenses) and claim compensation for mental agony or punitive damages where appropriate.
– Interaction with regulatory compliance:
– Compliance with a statutory norm or label does not automatically immunise a trader if additional representations were false or if statutory standards themselves were misrepresented.

How cases are pleaded and argued before fora
– Framing the issue: identify the precise misrepresentation and the law relied upon (Consumer Protection Act and relevant sections of sectoral statutes or rules).
– Reliefs to seek:
– Refund/price difference, replacement, repair, compensation for loss and mental agony.
– Directions for corrective advertisements, product recall or withdrawal from the market.
– Directions for injunctive relief to stop the conduct and production of documents.
– Where systemic/unlawful practices are alleged, seek CCPA intervention or public interest directions.
– Interim relief:
– In high‑risk products (food, pharmaceuticals, toys), seek immediate interim stay of distribution and recall; courts and CCPA are receptive to public-safety grounds pending trial or enquiry.

Interplay with other remedies and authorities
– CCPA enforcement: The Authority can suo motu investigate misleading advertisements, order discontinuance, order recall or impose directions against wrongdoers, and initiate penal action in egregious cases.
– Competition law: If the impugned practice is aimed at excluding competitors or constitutes abuse of dominance, parallel complaints to the Competition Commission may be warranted.
– Criminal overlap: In extreme situations, offences like cheating (IPC) or other sectoral criminal contraventions may be relevant; however criminal standards (mens rea) and proof are different and usually harder to establish.
– Product liability claims: Manufacturers and sellers may also face product liability actions under the Consumer Protection Act where a defective product causes harm.

Landmark Judgments
– Indian Medical Association v. V.P. Shantha & Ors., (1995) 6 SCC 651
– Principle: The Supreme Court held that medical services are included within the ambit of “service” under the Consumer Protection Act. The case is frequently cited to show how sectoral activities previously thought exempt fall squarely under consumer law; it underpins consumer fora’s jurisdiction over service‑related unfair practices (e.g., false claims by clinics or diagnostic centres).
– Nestlé India Ltd. & Food Safety Cases (Bombay High Court, 2015 — “Maggi” episode)
– Principle (illustrative): The Maggi controversy exemplifies how regulatory findings, lab reports and public perception interact with consumer claims. The case indicates courts’ readiness to scrutinise technical test results, lab sampling procedures and regulatory compliance when assessing whether product claims are misleading or unsafe for consumers. (Use of this episode: shows importance of lab standards, chain of custody and regulatory orders as evidence.)
Note: Complement jurisdictional precedent from High Courts and NCDRC orders on misleading ads and deceptive labelling; consumer forum decisions setting compensation and directing corrective advertisement are a rich source of practical guidance.

Strategic Considerations for Practitioners
Pursuing a claimant/client
– Early‑stage steps:
– Preserve evidence: seek immediate preservation orders for websites, advertisements and social‑media posts.
– Obtain lab tests from NABL‑accredited labs or obtain independent expert evidence to support technical claims.
– Issue pre‑litigation notices specifying representations complained of; sometimes regulatory notice to the sectoral regulator or CCPA prompts rapid voluntary corrective action.
– Forum selection:
– For individual consumer claims, District/State/National Consumer Commission as appropriate (value of claim matters).
– For systemic or public-interest issues, approach CCPA (suo motu investigations) or file writ petitions when constitutional or public law aspects arise.
– For urgent injunctive relief (recall, product withdrawal), consider writ jurisdiction or interim measures from consumer fora.
– Remedies and leverage:
– Combine compensatory claims (refund, repair) with non‑monetary remedies (recall, cease‑and‑desist, corrective advertising).
– Seek publication of the order or corrective advertisement as a deterrent and to restore client’s position.
– Use publicity (media, regulatory complaints) judiciously: it can pressure corporates to settle, but indiscriminate publicity can complicate damages quantification or provoke defamation counterclaims.
Defending a respondent
– Immediate containment: seek preservation of evidence, file rejoinder to public or regulatory allegations, disclose compliance documents and test results.
– Technical defences:
– Distinguish “puffery”/opinion from actionable false representation; show bona fide reliance on scientific studies or regulatory approvals.
– Attack sampling methodology, chain-of-custody and the credibility of lab reports.
– Prove absence of causal nexus between the representation and consumer loss.
– Settlement strategies:
– Consider corrective advertising, refund schemes and structured settlements where reputational risk is high; quickly implement voluntary recalls if safety risk exists.
Pitfalls to avoid
– For claimants: vague, omnibus allegations of “misleading” without specifying representation, time, medium and reliance; lack of contemporaneous evidence; delay in preserving electronic evidence.
– For respondents: tardy disclosure, ad-hoc remedial steps taken after the complaint which courts treat as afterthoughts, or insufficient documentary evidence showing compliance with standards.
– Procedural missteps: failure to use the CCPA for systemic issues, choosing an inappropriate forum, or pursuing parallel inconsistent remedies across fora without coordination.

Conclusion
Unfair trade practice litigation in India sits at the confluence of consumer law, regulatory enforcement and commercial strategy. The Consumer Protection Act, 2019 furnishes a capacious statutory definition and a modern enforcement architecture (CCPA and consumer fora) to tackle deceptive commercial conduct. Successful practice requires meticulous preservation and deployment of documentary and expert evidence, early engagement with regulators where public safety is implicated, and a pragmatic mix of legal remedies (compensation, injunctions, recalls, corrective advertising). For defendants, technical compliance, transparent disclosure and prompt remedial action often minimise reputational and financial exposure. For claimants, clear pleadings, reliable expert proof and speedy preservation orders are the keys to converting a statutory definition into concrete relief.