The Central Consumer Protection Authority (CCPA) has imposed a penalty of Rs 2 lakh on Digital Age Retail, a private limited company that operates the popular Indian e-commerce platform FirstCry.com.
The ecommerce firm was slapped with a penalty due to the misleading advertisement and unfair trade practices, according to an official statement. The order has been passed under Sections 10, 20 and 21 of the Consumer Protection Act, 2019.
What is the matter?
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. This created a misleading impression of higher discounts and misled consumers about the final payable amount.
The investigation, supported by data from the National Consumer Helpline (NCH), showed that the practice of advertising discounts on the MRP but separately charging GST on the discounted price significantly reduced the benefit to consumers.
For example, products advertised with a 27 per cent discount were effectively sold at only an 18.2 per cent discount after GST was applied. Such representations were found 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.
Following CCPA’s intervention, the company has rectified its platform to provide more transparency in the display of prices across the company’s website and mobile application. Also, a prominent display of the disclaimer ‘price inclusive of all taxes’ is put across all pages of the Website and mobile application of the Company. 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 the final price of the product, inclusive of all taxes.
Meanwhile, shares of Brainbees Solutions, the parent company of FirstCry closed at Rs 362.7 each, down 4.1 per cent on BSE today, September 26.
Last month, the GST department sent three orders to Eternal, the parent company of food delivery app Zomato. The GST authority imposed a total tax demand of more than Rs 40 crore, including interest and penalties, according to a stock market disclosure. Read more
Before that, beauty and wellness brands VLCC and Kaya penalised Rs 3 lakh each for allegedly misleading consumers with their campaigns. Read more
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