Section 36A of MRTP Act, 1984 defines unfair practices to mean any trade practice which, for the purpose of promoting the sale, use or supply of goods or for the provision of any services, adopts one or more of the practices thereby causing loss or injury to the consumer of such goods or services.
What constitutes unfair trade practices?
The following will constitute unfair trade practices:
Misleading advertisement and false representation
Bargain sale, bait and switch selling
offering gifts or prizes
safety sub-standard products
Hoarding or destruction of goods
1. Misleading advertisement and false representation
Advertisements are said to be misleading in the following circumstances:
1. Falsely representing the goods of a particular quality or nature when they are actually not so; falsely representing the services of a particular type.
2. Falsely representing that the rebuilt, second hand, renovated, reconditioned or old goods as new goods.
3. Falsely representing that goods and services have sponsorship which they do not have.
4. Making false representation for giving warranty or guarantee for the performance without adequate test.
5. Making a false promise to repair an article sold and also to repeat the services until it had achieved the specific result.
6. Making false representation to the public about the price of the product etc.
2. Bargain sale, bait and switch selling
Bargain sale, bait and switch selling include advertisements to supply commodities at a bargain price. But the intention is not to offer adequately reasonable quantities to cater the market, A bargain price is supposed to be less than the ordinary price. But when the advertisement misleads buyers to think that they can get the commodity at less price, it will be then regarded as an unfair practice.
3. Offering gifts or prizes
Gifts or price offer is creating an impression that it is being given free of charge. But the cost of the gift is covered by the price paid by the consumers.
4. Safety sub-standard products
Sub-standard products mean those commodities which do not conform to the standards prescribed by competent authority. Generally, standards are prescribed in relation to performance, composition, contents, construction etc. Safety sub-standard products may injure the person using it.
5. Hoarding or destruction of goods
Unfair trade practices include hoarding or destruction of goods or refusal to sell the goods to raise the price of those related goods.