The Central Consumer Protection Authority ( CCPA) on Friday imposed a penalty of Rs 2 lakh crore on baby-products brand FirstCry for false and misleading price representations.
The order on M/s Digital Age Retail Pvt. Ltd. (FirstCry) has been passed under Sections 10, 20 and 21 of the Consumer Protection Act, 2019.
CCPA accused FirsCry of publishing misleading advertisements and engaging in unfair trade practices on its e-commerce platform (www.firstcry.com). It said that the company is engaged in 'drip pricing'.
"The matter arose from a consumer complaint that FirstCry displayed products with the representation “MRP inclusive of all taxes,” while at the checkout stage, an additional GST was levied on the discounted price," Ministry of Consumer Affairs, Food & Public Distribution said in a statement. This move created a misleading impression of higher discounts and misled consumers about the final payable amount.
The investigation revealed that the company is advertising discounts on the MRP but separately charging GST on the discounted price significantly reduced the benefit to consumers.
The ministry found representations to amount to deceptive pricing, misleading advertisements under Section 2(28), and unfair trade practices under Section 2(47) of the Consumer Protection Act, 2019. It observed that disclaimers such as “additional charges may apply” or “GST and Add’l charges may apply on discounted price” did not override the statutory requirement that the MRP must be inclusive of all taxes.
What is 'drip pricing'?
Under the Guidelines for Prevention and Regulation of Dark Patterns, 2023, 'Drip Pricing' is a dark pattern which misleads consumers about the final payable amount and undermined informed decision-making.
Such practice also contravenes Rule 7(1)(e) of the Consumer Protection (E-Commerce) Rules, 2020, which requires the total price, inclusive of all charges and taxes, to be displayed upfront.
Under the penalty, the authority has directed the company to rectify this practice and ensure that both original and discounted prices are shown as inclusive of all taxes, with any additional charges clearly disclosed.
"In view of the company’s extensive operations and its stature as one of the largest online retailers for maternity, baby, and children’s products in India and Asia, the impugned practice was observed to have a significant and widespread impact on consumers," the ministry said.
CCPA has directed FirstCry to ensure that both original and discounted prices are always shown as inclusive of all taxes. Further, the company must prominently disclose any additional charges such as shipping or convenience fees. The authority also directed the company to never adopt the same misleading practice.
What's next?
As per ministry's statement, FirstCry has rectified its platform to provide more transparency in the display of prices across the company’s website and mobile application.
A prominent display of the disclaimer ‘price inclusive of all taxes’ is put across all pages of the Website and mobile application of FirstCry.
"The changes are live on the Company's platform and clearly reflect that no GST will be charged on the discounted price and the price displayed after discount across all pages is final price of the product inclusive of all the taxes," the ministry said.
The order on M/s Digital Age Retail Pvt. Ltd. (FirstCry) has been passed under Sections 10, 20 and 21 of the Consumer Protection Act, 2019.
CCPA accused FirsCry of publishing misleading advertisements and engaging in unfair trade practices on its e-commerce platform (www.firstcry.com). It said that the company is engaged in 'drip pricing'.
"The matter arose from a consumer complaint that FirstCry displayed products with the representation “MRP inclusive of all taxes,” while at the checkout stage, an additional GST was levied on the discounted price," Ministry of Consumer Affairs, Food & Public Distribution said in a statement. This move created a misleading impression of higher discounts and misled consumers about the final payable amount.
The investigation revealed that the company is advertising discounts on the MRP but separately charging GST on the discounted price significantly reduced the benefit to consumers.
The ministry found representations to amount to deceptive pricing, misleading advertisements under Section 2(28), and unfair trade practices under Section 2(47) of the Consumer Protection Act, 2019. It observed that disclaimers such as “additional charges may apply” or “GST and Add’l charges may apply on discounted price” did not override the statutory requirement that the MRP must be inclusive of all taxes.
What is 'drip pricing'?
Under the Guidelines for Prevention and Regulation of Dark Patterns, 2023, 'Drip Pricing' is a dark pattern which misleads consumers about the final payable amount and undermined informed decision-making.
Such practice also contravenes Rule 7(1)(e) of the Consumer Protection (E-Commerce) Rules, 2020, which requires the total price, inclusive of all charges and taxes, to be displayed upfront.
Under the penalty, the authority has directed the company to rectify this practice and ensure that both original and discounted prices are shown as inclusive of all taxes, with any additional charges clearly disclosed.
"In view of the company’s extensive operations and its stature as one of the largest online retailers for maternity, baby, and children’s products in India and Asia, the impugned practice was observed to have a significant and widespread impact on consumers," the ministry said.
CCPA has directed FirstCry to ensure that both original and discounted prices are always shown as inclusive of all taxes. Further, the company must prominently disclose any additional charges such as shipping or convenience fees. The authority also directed the company to never adopt the same misleading practice.
What's next?
As per ministry's statement, FirstCry has rectified its platform to provide more transparency in the display of prices across the company’s website and mobile application.
A prominent display of the disclaimer ‘price inclusive of all taxes’ is put across all pages of the Website and mobile application of FirstCry.
"The changes are live on the Company's platform and clearly reflect that no GST will be charged on the discounted price and the price displayed after discount across all pages is final price of the product inclusive of all the taxes," the ministry said.
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