An unfair trade practice is the consumer law's catalogue of commercial dishonesty: the false claim, the bait advertisement, the second-hand goods sold as new, the prize scheme with no prize, the refusal to take back a defective article. Section 2(47) of the Consumer Protection Act, 2019 gathers these practices into a single, expansive definition and makes them actionable before the Consumer Disputes Redressal Commissions and, since 2019, before the Central Consumer Protection Authority. This article unpacks every limb of the definition, traces the case law from the MRTP era through to the 2024 Supreme Court rulings, and shows how the concept dovetails with deficiency in service, misleading advertisement and product liability. For the statutory scheme as a whole, see our Consumer Protection Act hub.
The concept and its place in the 2019 scheme
The Consumer Protection Act, 2019 protects the consumer against three distinct categories of commercial wrong: a defect in goods, a deficiency in service, and an unfair (or restrictive) trade practice. The first two presuppose that the consumer has actually received something substandard; the third targets the manner of inducement — the way the trader promotes, prices, packages and disposes of goods or services. A consumer may therefore complain of an unfair trade practice even where the goods themselves are sound, because the wrong lies in the deception or the unfair method used to make the sale.
Section 2(47) defines the expression, while Section 2(46) defines "restrictive trade practice" and Section 2(28) defines "misleading advertisement". The three interlock: a misleading advertisement that, if made by the seller, would amount to an unfair trade practice is expressly drawn into the net by the very definition of misleading advertisement. The right "to seek redressal against unfair trade practices or unscrupulous exploitation of consumers" is one of the six consumer rights guaranteed by Section 2(9), and the whole apparatus of definitions in Section 2 must be read together to give the concept its operative reach.
Section 2(47): the statutory definition
Section 2(47) opens with a chapeau and then enumerates specific practices. The chapeau reads: "unfair trade practice" means 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 practices thereafter enumerated. Two features of the chapeau matter for exams. First, the words "including any of the following practices" make the enumerated list illustrative, not exhaustive — a novel form of commercial deception can still be caught by the opening words "any unfair method or unfair or deceptive practice". Second, the practice must be "for the purpose of promoting the sale, use or supply" of goods or services; a purely private act unconnected with promotion falls outside.
A significant structural inheritance is worth noting: the language of Section 2(47) is descended almost verbatim from Section 36-A of the Monopolies and Restrictive Trade Practices Act, 1969 (and from Section 2(1)(r) of the repealed Consumer Protection Act, 1986). MRTP-era precedents on the meaning of "false representation" therefore continue to inform the construction of the 2019 provision, a point developed in the case-law sections below.
False representation about goods and services [clause (i)]
The first and most frequently invoked limb covers a statement, made orally, in writing or by visible representation including by electronic record, which falsely represents that goods are of a particular standard, quality, quantity, grade, composition, style or model; or that services are of a particular standard, quality or grade; or that any rebuilt, second-hand, renovated, reconditioned or old goods are new goods. It further reaches representations that goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which they do not have, and false claims about the need for, or usefulness of, any goods or services.
The leading authority on what makes a representation "false" is Lakhanpal National Ltd. v. MRTP Commission, (1989) 3 SCC 251, AIR 1989 SC 1692. The company manufactured "Novino" batteries in technical collaboration with Matsushita Electric of Japan but advertised an association with "National Panasonic". The Supreme Court laid down the test that a representation is an unfair trade practice only where it contains a false statement and is misleading, and that the meaning conveyed to a reasonable person, taken as a whole, must be assessed — an advertisement is not to be dissected sentence by sentence. On the facts the Court found no falsity because Matsushita did market its products under the Panasonic and National brands, and the appeal was allowed. The decision remains the touchstone for the "reasonable person" and "read as a whole" approach to false-representation claims under the present definitions.
Misleading and comparative advertising
Advertising is the natural habitat of the unfair trade practice. The 2019 Act tackles it on two fronts: through clause (i) of Section 2(47) where the advertisement falsely represents quality or benefits, and through the freestanding definition of "misleading advertisement" in Section 2(28), which expressly includes any advertisement that conveys a representation which, if made by the manufacturer or seller, would constitute an unfair trade practice. The two concepts are deliberately welded together.
Comparative or disparaging advertising is governed by the principles in Hindustan Lever Ltd. v. Colgate Palmolive (I) Ltd., (1998) 1 SCC 720, AIR 1998 SC 526. Hindustan Lever advertised that its "New Pepsodent" was "102% better" than "the leading toothpaste", with imagery that the MRTP Commission and the Supreme Court read as identifying and denigrating Colgate. The Court treated the disparagement of a rival's product, dressed up as a superiority claim, as falling within the unfair-trade-practice provisions then in force. The case establishes that puffery shades into an unfair trade practice once it makes a false or misleading factual claim or denigrates an identifiable competitor's goods — a principle carried forward into Section 2(47) read with Section 2(28).
Bargain sales, bait advertising and gifts [clauses (ii)-(iii)]
Clause (ii) targets the bargain price that is not a bargain at all: advertising goods or services at a bargain price where there is no intention of offering them at that price, or of offering reasonable quantities having regard to the nature of the market and the advertiser's business — the classic "bait and switch". The clause defines a "bargain price" as a price stated in the advertisement to be a bargain price by reference to an ordinary price, or which a person reading the advertisement would reasonably understand to be a bargain price.
Clause (iii) addresses the lure of something for nothing. It treats as unfair the offer of gifts, prizes or other items with the intention of not providing them as offered, or creating the impression that something is being given free when it is in fact wholly or partly covered by the price; and the conduct of any contest, lottery or game of chance or skill for the purpose of promoting the sale, use or supply of a product or business interest. The "free gift" that has quietly been priced into the product, and the scratch-card scheme whose prizes never materialise, are the paradigm cases. Where such a scheme also fails the consumer who has paid, the practice frequently coincides with a deficiency in service.
Spurious goods, safety standards and performance claims [clauses (iv)-(vi)]
Clause (iv) makes it an unfair trade practice to permit the publication of an advertisement for the sale or supply of goods that the advertiser knows or has reason to believe are not the goods ordinarily offered, and to fail to maintain reasonable standards of conduct in relation to such advertisements. Clause (v) reaches the manufacture of spurious goods or the offering of such goods for sale, or the adoption of deceptive practices in the provision of services — a limb of particular importance given the 2019 Act's broader concern with spurious and adulterated goods, which also attracts the offence provisions in Chapter VII.
Clause (vi) deals with claims of performance, efficacy or length of life that are not based on an adequate or proper test, where such test would be necessary to support the claim. A trader who advertises that a product lasts twice as long, or cures a particular ailment, without a sound testing basis commits an unfair trade practice. This dovetails with the Central Consumer Protection Authority's mandate to call for and verify the substantiation of advertising claims, discussed below.
Warranties, cash memos and refusal to take back goods [clauses (vii)-(viii)]
Clause (vii) catches the false or misleading representation concerning the need for, or usefulness of, any goods or services, and the giving of a false or misleading guarantee or warranty, or a warranty not based on adequate testing. Clause (viii), one of the most practically useful limbs, makes it an unfair trade practice to refuse, after the sale of goods or rendering of services, to take back or withdraw defective goods or to discontinue or withdraw deficient services and to refund the consideration within the period stipulated in the bill, cash memo or receipt, or within thirty days where no period is stipulated.
The same clause requires the issue of a proper bill, cash memo or receipt; the disclosure to the consumer, on demand, of the full address and other particulars of the trader; and — a wholly new addition in the 2019 Act — prohibits the disclosure to any other person of personal information given by the consumer in confidence, unless such disclosure is made in accordance with law or in the public interest. This data-protection limb has no analogue in the 1986 Act and reflects the legislature's response to digital-age commerce; for the broader picture of what the 2019 statute added, see our introduction to the Act.
Unfair contracts and one-sided clauses
Although the "unfair contract" is separately defined in Section 2(46) of the 2019 Act and primarily empowers the State and National Commissions, the imposition of one-sided contractual terms is routinely characterised by the courts as an unfair trade practice. The decisive authority is IREO Grace Realtech (P) Ltd. v. Abhishek Khanna, (2021) 3 SCC 241, AIR 2021 SC 437. The Supreme Court examined an Apartment Buyer's Agreement that allowed the developer to forfeit earnest money and terminate on a single buyer default, while postponing and curtailing the buyer's reciprocal rights. The Court held that the incorporation of such one-sided and unreasonable clauses constitutes an unfair trade practice, and that a developer cannot compel apartment buyers to be bound by those terms.
The same theme animates the real-estate jurisprudence of the National Commission, which has consistently treated unilateral, oppressive builder-buyer clauses as both an unfair trade practice and a foundation for relief before the Consumer Disputes Redressal Commissions. The lesson for the aspirant is that an unfair trade practice need not involve an advertisement at all — it can lurk in the printed terms of a standard-form contract.
Unfair trade practice in the education sector
Educational coaching and admission has produced a rich line of authority. In Buddhist Mission Dental College & Hospital v. Bhupesh Khurana, (2009) 4 SCC 473, the prospectus represented that the college was affiliated to Magadh University and recognised by the Dental Council of India when it was not. The Supreme Court held that imparting education for consideration is a "service", that the students were consumers, and that the misrepresentation about affiliation and recognition amounted to a total misrepresentation tantamounting to an unfair trade practice; the students were entitled to refund of fees and compensation.
On the related question of fee policy, in Sehgal School of Competition v. Dalbir Singh, III (2009) CPJ 33 (NC), the National Commission held that collecting a lump-sum fee for the entire duration of a coaching course and making it non-refundable when the student leaves part way amounts to an unfair trade practice; an institution may charge only for the period for which the service is actually availed. Together these decisions establish that misrepresentation of affiliation and oppressive, non-refundable fee structures are both squarely within Section 2(47). (Note that purely academic functions of statutory examination bodies — conducting examinations and evaluating answer scripts — have separately been held to fall outside "service", so the unfair-trade-practice route is not available against them.)
Real estate, double allotment and forfeiture
The most recent Supreme Court guidance comes from the real-estate sector. In Omkar Realtors and Developers (P) Ltd. v. Kushalraj Land Developers (P) Ltd., 2024 INSC 629 (judgment dated 23 August 2024), a flat in a Worli project was allotted to the complainant after a substantial booking amount had been paid, only for it to emerge that the same flat had already been booked by another person. The developer, instead of resolving the double allotment, denied the allotment and forfeited the amount paid. The Supreme Court held this to be both a deficiency in service and an unfair trade practice, and upheld the National Commission's order directing refund with interest.
The case is important for two reasons. It confirms that double allotment — selling the same unit to more than one buyer — is a recognised unfair trade practice, and it reiterates that unjustified forfeiture of money paid by a consumer, particularly where the fault lies with the trader, will not be countenanced. Read alongside IREO Grace Realtech, it shows the Court's settled hostility to oppressive builder conduct under the 2019 Act.
Enforcement: the Central Consumer Protection Authority
The 2019 Act's signal innovation is a public regulator with class-wide powers. The Central Consumer Protection Authority (CCPA), constituted under Section 10, is charged under Section 18 with protecting and enforcing the rights of consumers as a class and preventing unfair trade practices and false or misleading advertisements that prejudice the public or consumer interest.
Its teeth are in Section 21. Where the CCPA is satisfied, after investigation, that an advertisement is false or misleading and prejudicial to consumers as a class, it may direct the concerned trader, manufacturer, endorser, advertiser or publisher to discontinue the advertisement or modify it. It may impose a penalty extending to ten lakh rupees on a manufacturer or endorser, and up to fifty lakh rupees for every subsequent contravention; and it may prohibit an endorser of a false or misleading advertisement from making any endorsement for up to one year, extendable to three years for repeated breaches. An endorser escapes liability under Section 21(5) only by proving that due diligence was exercised to verify the claims endorsed. The contours of these powers are explored in our note on the powers and functions of the CCPA.
Remedies and adjudicatory forums
An aggrieved consumer pursues an individual remedy by filing a complaint before the District, State or National Commission depending on the pecuniary value involved. Section 39 empowers a District Commission, on finding an unfair trade practice established, to order the trader to discontinue the practice and not repeat it, to return the price or charges paid, to pay compensation for loss or injury including punitive damages in appropriate cases, to withdraw hazardous goods from sale, and to issue corrective advertisements to neutralise the effect of a misleading one.
The two tracks are complementary rather than mutually exclusive: the CCPA pursues the practice in the public interest and can impose penalties and prohibitions, while the individual consumer pursues compensation and restitution before the Consumer Disputes Redressal Commissions. A single course of conduct — a misleading advertisement, say — can therefore attract both CCPA penalties under Section 21 and individual compensation under Section 39.
Pleading and proof of an unfair trade practice
Because an unfair trade practice turns on deception or unfair method, the complaint must plead the practice with particularity. Under the definition of "complaint" in Section 2(6), an allegation of unfair trade practice must be accompanied by an averment of the loss or damage suffered, distinguishing it from a deficiency-in-service complaint where the deficiency itself is the gravamen. The complainant bears the initial burden of establishing the false or deceptive character of the representation.
The standard of assessment, drawn from Lakhanpal National and applied across the case law, is objective: the meaning conveyed to an ordinary, reasonable consumer reading or viewing the material as a whole, not the most literal-minded or the most sophisticated reader. Where the practice is a refusal to refund within the stipulated period under clause (viii), or a one-sided contractual term as in IREO Grace Realtech, the unfairness is largely evident from the documents and the burden on the consumer is correspondingly lighter.
Frequently asked questions
What is an unfair trade practice under the Consumer Protection Act, 2019?
It is a trade practice that, to promote the sale, use or supply of goods or services, adopts any unfair method or unfair or deceptive practice, as defined in Section 2(47). The provision lists illustrative practices — false representation, bait advertising, sham gift and prize schemes, selling old goods as new, spurious goods, untested performance claims, refusal to take back defective goods within the stipulated period, and unauthorised disclosure of a consumer's personal information — but the opening words also catch any novel form of commercial deception.
What is the difference between unfair trade practice and deficiency in service?
Deficiency in service concerns a fault, imperfection or inadequacy in the quality or manner of a service actually rendered. An unfair trade practice concerns the deceptive or unfair method of promoting or disposing of goods or services. A consumer can complain of an unfair trade practice even where the goods or services are not themselves defective, because the wrong lies in the inducement. In Omkar Realtors v. Kushalraj Land Developers, 2024 INSC 629, the same conduct was held to be both a deficiency in service and an unfair trade practice.
Are one-sided contractual clauses an unfair trade practice?
Yes. In IREO Grace Realtech (P) Ltd. v. Abhishek Khanna, (2021) 3 SCC 241, the Supreme Court held that incorporating one-sided and unreasonable clauses in an Apartment Buyer's Agreement — such as allowing the developer to forfeit money and terminate on a single buyer default while curtailing the buyer's reciprocal rights — constitutes an unfair trade practice, and a developer cannot compel buyers to be bound by such terms.
Can an educational institution be liable for an unfair trade practice?
Yes. In Buddhist Mission Dental College v. Bhupesh Khurana, (2009) 4 SCC 473, falsely representing that a college was affiliated and recognised was held to be a total misrepresentation amounting to an unfair trade practice, entitling students to a refund. In Sehgal School of Competition v. Dalbir Singh, III (2009) CPJ 33 (NC), collecting a non-refundable lump-sum fee for a whole course was likewise held unfair. Purely statutory examination functions, however, fall outside the definition of service.
How does the CCPA deal with misleading advertisements?
Under Section 21, the Central Consumer Protection Authority may, after investigation, direct the trader, manufacturer, endorser, advertiser or publisher to discontinue or modify a false or misleading advertisement; impose a penalty up to ten lakh rupees, rising to fifty lakh rupees for subsequent contraventions; and prohibit an endorser from making any endorsement for up to one year, extendable to three years for repeated breaches. An endorser is protected only on proof of due diligence in verifying the claims endorsed.
What remedies can a consumer obtain for an unfair trade practice?
Under Section 39 the Commission may order the trader to discontinue the practice and not repeat it, return the price or charges paid, pay compensation including punitive damages for loss or injury, withdraw hazardous goods, and issue corrective advertisements to neutralise a misleading one. These individual remedies run in parallel with the CCPA's class-wide penalties and prohibitions under Section 21.