INTRODUCTION
The fast-growing internet has significantly changed the way customers participate in markets. The change from a physical and time-constrained activity to an online shopping ecosystem that is on-demand and operates 24/7 has taken place. E-commerce platforms have become essential to the consumer who is now modern and demanding, as they provide easy access to products, wide selection, and good prices.
Nonetheless, the digital world has not only provided customers with advantages but it has also presented them with numerous problems and new vulnerabilities. Data-collection practices that invade privacy, advertising that is misleading, one-sided and non-negotiable terms and conditions, defective or misrepresented goods, hidden charges etc. To counter these emerging complexities, India took the initiative to reform its legislation drastically. The Consumer Protection Act, 2019 was enacted after the Consumer Protection Act, 1986 was repealed, with the aim to support consumer rights through globalization and digital trading. The law was greatly impacted by the addition of the consumer who uses the Internet, teleshopping, direct selling, and multi-level marketing in the definition according to Section 2(7) of the CPA, 2019.
Being aware of the digital markets’ unique characteristics, the Central Government have enacted Consumer Protection (E-Commerce) Rules, 2020, which are intended to regulate e-commerce transactions. E-Commerce transactions include rules for all businesses regardless of their category and apply to the sale of physical and digital goods and services over the Internet. The aim is to give consumers in online transactions the same level of protection as those in offline trade and, at the same time, to combat unfair practices, reduce the imbalance of information and deal with the challenges posed by the digital environment.
LEGAL PROVISIONS REGARDING PRICE AND INFORMATION TRANSPARENCY IN INDIA
A. Provisions Under Consumer Protection Act, 2019
The Consumer’s Right to be Informed
According to Section 2(9) of the Consumer Protection Act, 2019, consumers have the Right to be Informed, which includes not only a product’s or service’s quality, quantity, potency, purity, standard but also the most importantly price. This right is all the more important in the digital marketplace where customers usually don’t get physical access of the products before they rely completely on the text, images, and specifications provided by the platform. Thus, Clear, accurate, and timely information becomes the only way for the consumers to make their purchasing decisions and protect themselves against the traders’ deceptive or unfair practices.
The implementation of the Right to be Informed in online transactions would not mean just a price statement, but it demands a clear breakdown about base price, taxes, shipping and handling, mandatory fees and understandable, accessible explanations of return, refund and exchange policies. Nevertheless, this ideal is blocked by a number of practical obstacles. The use of dense legal jargon in the terms and conditions, the intentional hiding of disclosures, the inconsistency of presentations among different platforms, and the use of dynamic pricing strategies all lead to a reduction in the effectiveness of disclosure even when platforms claim to be complying. Consequently, the formal entitlement that Section 2(9) creates often does not become real, usable information at the time of decision-making thus, consumers are left to face hidden charges and information imbalance.
Unfair Trade Practices related to Pricing
The CPA, 2019 categorizes an unfair trade practice any trade practice that using dishonest methods or misleading strategies for the sale, use or supply of goods or services. Actual pricing-related practices that are quite often encountered in daily life have occupied the forefront of this prohibition. Impostor pricing such as doing the opposite of the actual price, when the price of an item is stated, the price is not mentioned but the price is implied or it is indicated that the price is that of an “ordinary” or commonly prevailing market price without clearly stating the actual price is expressly mentioned as unfair. Likewise, the statue regards deceptive false or misleading advertisements concerning “bargain prices” particularly where vendors sell products or services supposedly at the reduced or attractive price without any real intention of offering them at that rate, or for a long time or in large quantities. The Act also classifies refusal to give invoices, cash memos or receipts for sales as an unfair trade practice, since it is assumed that lack of proof of purchase throws up a barrier to the consumer’s right to seek redress and does not help the transparency of the process. In total, these rules have the effect of not letting one mislead by using unfair pricing practices, tricks of technology, or other means and making it very difficult for both the dealer and the consumer to cheat and thus, the accountability is set up in both the physical and virtual marketplaces.
Unfair Contract Terms and Hidden Fees
The CPA, 2019 not only regulates but also protects consumers’ rights against unfair contract terms through Section 2(46). An unfair term is described in the provision as one that, in a contract between a producer or seller and a consumer, significantly alters or reduces the rights or the legitimate interests of the consumer. This definition, particularly in the context of hidden or undisclosed charges, is very relevant because any term that imposes unreasonable costs, obligations or conditions especially those that are not clearly disclosed at the time of purchase will be considered unfair.
The Act allows the State Consumer Commission and the National Consumer Disputes Redressal Commission to look into the fairness of terms in contracts and to rule that any term found to be unfair is null and void.
B. Compliance Mandates under E-Commerce Rules, 2020
The Consumer Protection (E-Commerce) Rules, 2020, which were enforced under the Consumer Protection Act, 2019, are applicable to all the stakeholders in online commerce and assign them express and enforceable obligations to make the pricing clear and to eliminate hidden fees. The rules, apply to every model of e-commerce, whether it is a marketplace or an inventory model. The most basic requirement of these Rules to the e-commerce entities is to make the key corporate and contact information clearly visible to the users like legal name, the main place of business and branch addresses, website identity and customer-care contact details that are easy to access and at the same time, to prohibit using unfair trade practices in any way or form.
Besides, Rule 4(11) disallow manipulative pricing practices, like imposing unjustified or opportunistic price hikes that do not have a reasonable connection to the current market conditions, the intrinsic character of the product or service, or exceptional situations, also restricting unfair discrimination between consumers. To bring about price transparency, the Rules have prescribed model-specific obligations: marketplace platforms are to inform users about the different payment options available, the security features of those payment methods, any fees or charges users might incur, the process for cancelling recurring payments, available charge-back mechanisms and the contact details for payment service providers; sellers using such platforms are to provide the platform with a single-figure total price for each offering, plus a clear itemized breakup of all mandatory and optional components.
DRIP PRICING: A DARK PATTERN AND ENFORCEMENT CHALLENGE
The Central Consumer Protection Authority (CCPA) issued the Guidelines for Prevention and Regulation of Dark Patterns, 2023. These guidelines, issued under the powers conferred by Section 18 of the CPA, 2019, apply to all platforms, advertisers, and sellers systematically offering goods or services in India. The guidelines explicitly prohibit any person or platform from engaging in any dark pattern.
Dark patterns
Dark patterns are the traits of design that purposely manipulated the user experience or interface of a platform to betray, mislead, or persuade users to take actions that were not their true intention. The manipulative techniques used were behavioral biases, lack of information, and complexity of the interface.
Drip pricing
It is one of the dark patterns, which has been banned specifically. Drip pricing is when the user is not told the full price of the product or service right away, and the user is gradually informed of the additional costs during the transaction. Not revealing the essential price components until later in a user’s journey, showing a lower initial price with mandatory fees being disclosed only after the consumer has gone through many steps, or calling a product “free” when the consumer has to pay for the in-app purchases to continue using it, are some examples. It may also happen that a customer who has already paid for a service cannot get it unless he/she pays again. All these tactics create a situation where the consumer is not given the right price and lacks information, thus making people who are buying online suffer from not being able to make informed choices.
The use of dark patterns that are considered illegal and unethical and that are very closely connected with pricing practices, the consumer’s freedom of choice is greatly affected and the opacity of online transactions is compromised.
Related Dark Patterns Affecting Pricing
Basket sneaking– It is a practice where, without the user’s knowledge, online retailers add unasked products, services, or even donations to the cart of the user, thus raising the total payable by the consumer – to a sum higher than the one that the consumer had intended to pay excluding the ordinary charges like taxes and delivery that have been already disclosed.
False urgency– It is the act of creating the illusion of scarcity or pressure of time artificially, for example by showing the false messages that “Only a few items left” or “Many users are viewing this now,” thus leading to hastened and possibly more expensive decisions for the consumers.
Bait and switch- It deceives customers by offering them a product or a price that is too good to be true and then replacing it in most cases with a less-desirable or more expensive one actually during the checkout. Moreover, interface interference changes the visual layout or design of the site to give priority to selective information, which is usually the low or promotional price headline, while camouflaging essential details like hidden charges, taxes, or compulsory add-ons.
All the aforementioned practices together shake the very foundation of informed choice, misinform consumers about the actual transaction price, and consequently, the pricing structure in the web becomes less reputable.
ROLE OF CCPA IN ENFORCEMENT OF PRICING RULES
The Central Consumer Protection Authority (CCPA) established under the Section 10 of the Consumer Protection Act, 2019, is a proactive regulator with powers to protect and enforce consumers’ rights. Moreover, systemic pricing that lacks transparency is also one of the areas where the Authority’s protection and enforcement of consumers’ rights will apply. The Authority is responsible for conducting inquiries and investigations either by receiving complaints or by its own motion. If the authority detects any unfair trade practices, it may issue orders that are legally binding to stop such practice or to give refunds and recalls as appropriate. The authority’s investigatory and remedial powers make it the CCPA a powerful instrument for combating the deceptive interface practices like drip pricing and other dark patterns that hide the real cost of a transaction. Additionally, the CCPA can also take action against false or misleading advertisements, direct compliance, and impose penalties; a violation of its directives may lead to criminal sanctions that include imprisonment of up to six months and fines of up to twenty lakh rupees.
COMPARATIVE LEGAL ANALYSIS OF PRICING TRANSPARENCY
A. China
China’s E-Commerce Law sets strict requirements for transparency and fairness for online platforms, especially in terms of how they present prices and contract terms to consumers. Platforms will have to show the process of a contract being formed, point out the main precautions and give downloading instructions, and provide service agreements and transaction rules that are easy to access. Furthermore, the platforms must allow users to identify and rectify input errors before order confirmation as a protection measure against unintentional acceptance of hidden charges. Besides this, the law also deals with algorithmic and interface-driven manipulation: customized search or recommendation results have to be shown with non-personalized alternatives, and bundled or tied offers must be clearly stated instead of being preselected by default which allows subtle design or ranking choices to inflate final prices (similar practices to drip-pricing or basket sneaking). At last, the law guarantees a large “right to choose” and mandates that transactions in the marketplaces be voluntary, fair, and competitive, thus forbidding platform operators from either taking advantage of their market power or imposing unreasonable restrictions, pricing controls, or surcharges through platform rules.
B. United Kingdom
The web of protection for consumers in the UK comprises the Consumer Rights Act 2015 and the Electronic Commerce (EC Directive) Regulations 2002, which together facilitate the conditions of fair contracting and transparent pricing in online purchases. The Consumer Rights Act’s Part 2 makes it mandatory for the contractual terms to be fair and clear, and at the same time restricts the clauses of statutory remedies for consumers to be scrutinized closely, which is a protection that renders such terms ineffective as those where hidden fees or exorbitant charges for cancellation are used. The EC Directive Regulations set the same terms for traders as the Consumer Rights Act does and require them to unveil all important information to the consumers prior to closing a deal, which, among others, includes the total price (with taxes) and any particular costs for delivery or handling, and such practices as excessive fees for certain payment types and pre-ticked boxes that imply consent are not allowed anymore. In these situations where the e-commerce seller does not comply with the rules of pre-contractual disclosure, consumers are given several remedy options, which may include treating the online agreement as voidable, thus, securing informed consent and price transparency in the digital market.
JUDICIAL ENFORCEMENT
Shaik Umar Farooq v. Flipkart Internet Pvt. Ltd. & Anr1
A consumer that filed a complaint after he/she bought two pouches of oil that were sold at ₹240 per pouch, which was hugely above the MRP of ₹170, and the MRP labels were deliberately removed. The NCDRC (National Consumer Disputes Redressal Commission) found Flipkart and the vendor equally and conclusively liable. The commission clearly rejected Flipkart’s contention of being just an intermediary. It said that the e-commerce platforms must take care of the pricing being transparent and prevent the MRP price plus a little more, sales though. This practice of selling at MRP and changing the label was considered as an unfair trade practice and a poor service.
Vijay Gopal vs. BookMyShow & PVR Cinemas2
The consumer called into question BookMyShow’s extra “internet handling charges” imposed for PVR theatre tickets. The hidden charge raised the base ticket price by 33%, virtually shifting payment gateway and convenience fees to the consumers directly. The District Consumer Disputes Redressal Commission of Hyderabad ruled that the imposition of undisclosed charges illumined as the unfair trade practice on account of the lack of transparency. The Commission ruled both BookMyShow and PVR Cinemas as responsible and directed compensation to the complainant. The decision formed a precedent that online businesses are obliged to disclose their prices clearly and not to impose arbitrary or excessive charges on customers.
Amazon Seller Services vs Surendra Anil Pawar And Anr3
The State Commission penalized Amazon heavily for tricking the customers regarding the high price and fake discount rates. The complainant ordered a book that was on sale with a 69% discount from its MRP, but the actual original price printed on the book was more than one thousand rupees different from the price listed on the website. The Commission held that Amazon could not escape responsibility by asserting that it was merely an intermediary when it had already taken part in the manipulation of prices. This decision further demonstrates that the consumer’s Right to Choose is being violated by the deceptive practices of pricing in the name of discounts.
SUGGESTIONS
1. Legally Mandate Clear, Simple, and Prominent Disclosure: It is absolutely necessary that a law come into existence that will make it mandatory for ecommerce sites to use plain language to present the essential information regarding pricing breakdowns in a very simple, clear and concise way. The key terms must be brought into the spotlight and pointed out consistently, especially those related to compulsory fees, cancellation penalties, and total price, before the customer puts the order. This will help in a way that if the consumers avoid reading the lengthy and complicated terms, they will still be informed about the key points of the legal agreement.
2. Strengthen Enforcement Against Drip Pricing and Dark Patterns: The CCPA should commit more resources in the area of investigations and also impose larger penalties on those platforms that do not comply with the Dark Patterns Guidelines, 2023, focusing mainly on the practices of Drip Pricing and Basket Sneaking. The enforcement action has to be taken in such a way that the final price charged at checkout corresponds with that of the final price displayed and any extra charges like insurance or delivery upgrades have to be accompanied by a very clear and positive consent from the customer, plus the use of pre-ticked boxes is not allowed.
3. Enhance Accountability for Redressal Failures on Pricing Issues: Since a certain percentage of consumers are being charged unnecessary fees even during the dispute resolution process, it is vital that the legal requirement on e-commerce companies to provide operable, timely, and transparent internal grievance mechanisms is made even stringent. Non-compliance with statutory time limits for dealing with pricing complaints should attract fines, similar to the collective responsibility approach to platform liability that is prevalent in China.
4. Regulate Algorithmic Pricing Transparency: Introduce specific amendments or detailed rules under the CPA, 2019, to explicitly regulate the use of algorithmic pricing tactics that cause discrimination among consumers. Rules should mandate transparency regarding how personalized pricing is determined and ensure that consumers can access non-personalized price alternatives, aligning with international best practices established in China’s ELC.
CONCLUSION
The paper concludes that online pricing transparency and the imposition of hidden charges practice, particularly through methods like Drip Pricing, still present a significant barrier to the legal system in India, notwithstanding its advancements. The Consumer Protection Act, 2019, and the E-Commerce Rules, 2020, create a clear legal barrier against such practices. The Rules compel the e-commerce companies to present the total price in a single figure along with a detailed breakdown of all the charges like delivery and taxes. Likewise, the CCPA Guidelines, 2023, specifically refer to Drip Pricing and Basket Sneaking as banned dark practices that confuse consumers and limit their selections. Courts have always held that the imposition of hidden fees or the provision of fake discounts are unfair trade practices, thus making the platforms equally accountable for offering transparent pricing.
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Footnotes
1. 2022 SCC OnLine NCDRC 519
2. CC/17/2019
3. A/21/427