The Central Consumer Protection Authority (CCPA) has fined FirstCry Rs. 2 lakh for misleading consumers by adding Goods and Services Tax (GST) at checkout despite showing “MRP inclusive of all taxes”. The regulator said this practice amounts to drip pricing, a dark pattern under its 2023 guidelines, and violates Rule 7(1)(e) of the Consumer Protection (E-Commerce) Rules, 2020.
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The CCPA imposed the penalty on Digital Age Retail Pvt. Ltd., which operates FirstCry, under Sections 10, 20, and 21 of the Consumer Protection Act, 2019. A consumer complaint triggered the case after buyers reported that FirstCry displayed products with the claim “MRP inclusive of all taxes”, but added GST on the discounted price at checkout.
Investigators used data from the National Consumer Helpline and found that discounts advertised as 27% dropped to about 18.2% once GST was applied. The CCPA held that this practice amounted to deceptive pricing, misleading advertisements under Section 2(28), and unfair trade practices under Section 2(47) of the Act.
Moreover, the order noted 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 displaying prices as tax-inclusive but charging GST at the final stage, FirstCry misled consumers about the actual benefit of discounts.
Abhishek A Rastogi, Founder of Rastogi Chambers, said that the order is not just an isolated penalty but a message to the entire digital marketplace, including e-commerce and quick commerce outifts.
“By treating drip pricing as an unfair trade practice under Rule 7(1)(e) of the E-Commerce Rules and linking it with the Dark Patterns Guidelines, 2023, the regulator has reinforced that all displayed prices must be upfront and tax-inclusive,” Rastogi said.
“The practice of showing a lower base price and adding compulsory charges at checkout is unlikely to survive regulatory scrutiny, and disclaimers such as ‘additional charges may apply’ may no longer provide sufficient cover,” he further mentioned.
Legal Context
The Guidelines for Prevention and Regulation of Dark Patterns, notified in 2023, define drip pricing as concealing compulsory charges until checkout. According to the guidelines, such practices distort consumer choice and undermine transparency.
Additionally, Rule 7(1)(e) of the Consumer Protection (E-Commerce) Rules, 2020, requires platforms to display the total price of any good or service in a single figure. It also requires a breakup that shows all compulsory and voluntary charges, such as delivery charges, postage and handling charges, conveyance charges, and applicable taxes.
Importantly, the CCPA imposed the penalty against FirstCry under Sections 10, 20, and 21 of the Consumer Protection Act, 2019. To explain:
- Section 10 establishes the CCPA and empowers it to…
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