What is Unfair Trade Practice ?

An unfair trade practice means a trade practice, which, for the purpose of promoting
any sale, use or supply of any goods or services, adopts unfair method, or unfair or
deceptive practice.
The term "Unfair Trade Practice" does not have a universal standard definition.
However, the term Unfair Trade Practice broadly refers to any fraudulent, deceptive or
dishonest trade practice; or business misrepresentation of the products or services that are
being sold; which is prohibited by a statute or has been recognised as actionable under law
by a judgement of the court. However, the Indian statute dealing with the term is Consumer
Protection Act, 1986.
General unfair trade practices may include unfairly refusing a transaction,
discriminating against a transacting party, unfairly excluding competitors, unfairly soliciting
customers, unfairly coercing customers, trading with a transacting party by unfairly taking
advantage of one's bargaining position, trading under terms and conditions which unfairly
restrict business activities of a transacting party, disrupting business activities of another
enterprise, and unfair provision of capital, assets, manpower, etc (Unfair assistance).

Unfair practices may be categorized as under:

1.False Representation
The practice of making any oral or written statement or representation which:
 Falsely suggests that the goods are of a particular standard quality, quantity, grade,

composition, style or model;

 Falsely suggests that the services are of a particular standard, quantity or grade;

 Falsely suggests any re-built, second-hand renovated, reconditioned or old goods as

new goods;
 Represents that the goods or services have sponsorship, approval, performance,

characteristics, accessories, uses or benefits which they do not have;

 Represents that the seller or the supplier has a sponsorship or approval or affiliation

which he does not have;

 Makes a false or misleading representation concerning the need for, or the usefulness

of, any goods or services;

 Gives any warranty or guarantee of the performance, efficacy or length of life of the

goods, that is not based on an adequate or proper test;

 Makes to the public a representation in the form that purports to be-
 a. a warranty or guarantee of the goods or services,
b. a promise to replace, maintain or repair the goods until it has achieved a specified
result, if such representation is materially misleading or there is no reasonable
prospect that such warranty, guarantee or promise will be fulfilled
 Materially misleads about the prices at which such goods or services are available in

the market; or
 Gives false or misleading facts disparaging the goods, services or trade of another

person.
2. False Offer of Bargain Price
Where an advertisement is published in a newspaper or otherwise, whereby goods or
services are offered at a bargain price when in fact there is no intention that the same may be
offered at that price, for a reasonable period or reasonable quantity, it shall amount to an
unfair trade practice.
The ‘bargain price’, for this purpose means-
a. the price stated in the advertisement in such manner as suggests that it is lesser than the
ordinary price, or
b. the price which any person coming across the advertisement would believe to be better
than the price at which such goods are ordinarily sold.
Free Gifts Offer and Prize Schemes
The unfair trade practices under this category are:
 Offering any gifts, prizes or other items along with the goods when the real intention is

different, or
 Creating impression that something is being offered free along with the goods, when in

fact the price is wholly or partly covered by the price of the article sold, or
 Offering some prizes to the buyers by the conduct of any contest, lottery or game of

chance or skill, with real intention to promote sales or business.

4. Non-Compliance of Prescribed Standards
Any sale or supply of goods, for use by consumers, knowing or having reason to
believe that the goods do not comply with the standards prescribed by some competent
authority, in relation to their performance, composition, contents, design, construction,
finishing or packing, as are necessary to prevent or reduce the risk of injury to the person
using such goods, shall amount to an unfair trade practice.
5. Hoarding, Destruction, Etc.
Any practice that permits the hoarding or destruction of goods, or refusal to sell the
goods or provide any services, with an intention to raise the cost of those or other similar
goods or services, shall be an unfair trade practice.

Prevention Act for Unfair Trade Practices in India

In India, till 2002, the Monopolies and Restrictive Trade Practices Act (MRTP),
which was enacted to prevent monopolies and restrictive trade practices, was the foremost
legislation to deal with unfair trade practices in the country. The MRTP Act was repealed
giving way to the Competition Act, 2002, thus transferring all the pending cases in the
MRTPC to Competition Commission of India (CCI) for adjudication from the stages they
were in. However, no provision to deal with unfair trade practice was incorporated in the
Competition Act and thus this was, instead, given effect under Consumer Protection Act,
1986 (COPRA) which was already dealing with unfair trade practices. Section 2(1)(r) of
COPRA defines unfair trade practice as: "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,
namely:—
1. making any statement, whether orally or in writing or by visible representation which:
i. falsely represents that the goods are of a particular standard, quality, quantity, grade,
composition, style or model;
ii. falsely represents that the services are of a particular standard, quality or grade;
iii. falsely represents any re-built, second-hand, renovated, reconditioned or old goods as
new goods;
iv. represents that the goods or services have sponsorship, approval, performance,
characteristics, accessories, uses or benefits which such goods or services do not have;
v. represents that the seller or the supplier has a sponsorship or approval or affiliation
which such seller or supplier does not have;
vi. makes a false or misleading representation concerning the need for, or the usefulness
of, any goods or services;
vii. gives to the public any warranty or guarantee of the performance, efficacy or length of
life of a product or of any goods that is not based on an adequate or proper test
thereof.
Examples of Unfair Trade Practices in India
The leading real estate firm Unitech Ltd. has been held guilty of resorting to "unfair
trade practice" by a consumer forum and directed to pay a customer Six Hundred Sixty
Thousand Indian Rupees for making "illegal demands" from him after he booked a flat with
it and paid the booking amount. The District Consumer Disputes Redressal Forum, in its
order, observed that the firm and its agent made "unjustified" demands from the customer
and also threatened to forefeit his deposited money.
Another case dealt with SpiceJet being directed by a consumer forum to pay One
Hundred Thousand Indian Rupees to a passenger for not allowing all members of his family
to board the plane despite having confirmed tickets and making them travel on two different
flights while returning to Delhi from Goa. The East District Consumer Disputes Redressal
Forum noted that it was "cruelty" on the part of SpiceJet to split the family into two groups
especially when they had children with them and held it guilty of unfair trade practice.

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