The matter arose from a consumer complaint that FirstCry displayed products with the representation ‘MRP inclusive of all taxes,’ while an additional GST was levied on the discounted price at checkout
The Central Consumer Protection Authority (CCPA) has imposed a Rs 2 lakh penalty on Mahindra-backed Digital Age Retail (FirstCry) for allegedly engaging in misleading advertisements and unfair trade practices. The order was issued under Sections 10, 20, and 21 of the Consumer Protection Act, 2019.
The action followed a consumer complaint that products on FirstCry were displayed as “MRP inclusive of all taxes,” but additional GST was levied at checkout on discounted prices. This practice created the impression of higher discounts while significantly reducing the actual benefit to consumers. An investigation, aided by data from the National Consumer Helpline (NCH), found that a product advertised with a 27 per cent discount was effectively sold at only 18.2 per cent discount after GST was applied.
“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 Ministry of Consumer Affairs, Food and Public Distribution said.
The CCPA classified the practice as ‘drip pricing,’ a dark pattern under the Guidelines for Prevention and Regulation of Dark Patterns, 2023, which misleads consumers about the final payable amount and undermines informed decision-making. It also contravened Rule 7(1)(e) of the Consumer Protection (Ecommerce) Rules, 2020, which requires the total price, inclusive of all charges and taxes, to be displayed upfront.
The authority noted that disclaimers such as ‘additional charges may apply’ or ‘GST and Additional charges may apply on discounted price’ do not absolve the statutory requirement for MRP to be tax-inclusive. “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 added.
Following the CCPA order, FirstCry updated its platform to provide greater transparency. Prices on its website and mobile application now display the final amount inclusive of all taxes, with a prominent disclaimer confirming that no GST will be charged on discounted prices.
Shares of Brainbees Solutions, FirstCry’s parent company, fell 4.1 per cent and closed at Rs 362.7 on a bearish note, down Rs 15.85 from the previous close of Rs 378.70 on the BSE on the day of announcement.
