CCPA Penalises FirstCry For Misleading Ads & Unfair Trade Practices

The Central Consumer Protection Authority (CCPA) has imposed a penalty of INR 2 Lakh on FirstCry subsidiary Digital Age Retail Pvt Ltd for “false and misleading price representations”.

In a statement today, the CCPA said that the penalty was imposed following 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 practice, known as “drip pricing”, reduced actual discounts for consumers, resulting in deceptive pricing. For instance, a product shown as having a 27% discount was effectively sold at only an 18.2% discount after the GST was applied. 

“By representing the price as tax-inclusive and then levying GST at checkout, the company engaged in “drip pricing,” a dark pattern under the Guidelines for Prevention and Regulation of Dark Patterns, 2023, which misled consumers about the final payable amount and undermined informed decision-making,” the agency’s statement read.

This practice violates Rule 7(1)(e) of the Consumer Protection (E-Commerce) Rules, 2020, which requires ecommerce companies to clearly and prominently display the total price of goods or services offered for sale to users. Further, this is also breached Guidelines for Prevention and Regulation of Dark Patterns, 2023, which prohibit hidden fees that mislead consumers.

Accordingly, the regulatory body directed FirstCry to ensure that both original and discounted prices are always shown as inclusive of all taxes, with any extra charges such as shipping or convenience fees prominently disclosed. CCPA also warned the company to refrain from such misleading pricing strategies in future.

In response, FirstCry has now updated its website and mobile application to provide clearer and more transparent price information, with a disclaimer stating ‘price inclusive of all taxes’ displayed across all product pages. 

The action against FirsCry comes almost a year after the CCPA said that it plans to take action against ecommerce players who were engaging in dark patterns. In 2023, the Centre had released a draft which notified 13 types of guidelines addressing the regulation of dark patterns to curb the deceptive behaviour of ecommerce companies.

With the increase in popularity of ecommerce platforms and other ride hailing services and online food delivery offerings, users have been flagging dark patterns followed by such companies which include hidden charges as part of their final check out bill. 

Earlier this year, users have also flagged dark patterns over quick commerce platforms like Zepto, Swiggy Instamart and Blinkit. 

FirstCry’s shares closed 4.12% lower at INR 362.6 apiece on the BSE today.