FirstCry fined Rs 2 lakh: Firm caught misrepresenting discounts and charging GST separately

Hyderabad: Digital Age Retail Pvt Ltd, more popularly known as FirstCry, has been fined Rs 2 lakh for misleading advertisements and unfair trade practices.

The Central Consumer Protection Authority (CCPA) imposed the penalty in an order under Sections 10, 20 and 21 of the Consumer Protection Act, 2019.

FirstCry was advertising discounts on MRP but charging GST separately

CCPA, in its order, stated that FirstCry was engaging in publishing misleading advertisements and unfair trade practices on its e-commerce platform (www.firstcry.com).

The issue came to light 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.

How charging GST separately on discounted price harms customers

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.

The dark pattern of drip pricing

It was 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.

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.

Such practice also contravened 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.

Company told to ensure transparency in displaying original and discounted prices

The CCPA therefore 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.

Accordingly, the CCPA has directed the company to ensure that both original and discounted prices are always shown as inclusive of all taxes, and that any additional charges, such as shipping or convenience fees, are prominently disclosed.

It has further directed that the misleading practice, though now discontinued, must never be adopted in the future.

The company said it has improved transparency in display of prices

Following the 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.