In a recent decision (IV (2008) CPJ 1 (NC)), the National Consumer Commission has fined Kaun Banega Crorepati - 3 Rs. 1 Crore for unfair trade practice.
Kaun Banega Crorepati - 3 which ran on Star Plus TV from January 2007 to April 2007 under the anchor of Shah Rukh Khan, was running a contest called "Har Seat Hot Seat" in which TV viewers were invited to participate. The contest consisted of answering an objective type question with four possible answers. TV viewers who wanted to participate in the contest had to send their answers through SMS. Winners who were selected randomly from those who sent the correct answers were given a prize of Rs. 2 lakhs in each episode of KBC-3.
A consumer organization called Society of Catalysts filed a complaint before the National Commission alleging that Star Plus TV and the sponsor of the show, Bharti Airtel were guilty of unfair trade practice since they created an impression in the minds of the public that participation in the Har Seat Hot Seat contest was "free" and the prize money was being paid by the organizers. But in reality, the cost of organizing the contest as well as the prize money was built in the cost of SMS sent by the participants. Each SMS sent on Airtel by the contestants was charged Rs. 2.40 as compared to the normal charge of Re. 1 per SMS. In the 52 episodes of KBC-3, 58 million SMS were received and the organizers collected Rs. 14 crores. Only Rs. 1 crore were given out as prize money.
The National Commission agreed with this contention. According to Sec. 2(1)(r)(3)(a) of the Consumer Protection Act, a trade practice which "for the purpose of promoting the sale, use or supply of any goods or for the provision of any service" offers "gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole" is an unfair trade practice.
The National Commission said that the organisers earned a revenue of Rs. 14 crores for the 58 million SMS messages received at Rs. 2.40 per message. Since the normal cost of SMS is Re. 1, the Commission said that the gross profit was about Rs. 8 crores. Subtracting the Rs. 1 crore prize money given, the net profit was Rs. 7 crores. Of this Rs. 7 crores, the Commission ordered the organizers to deposit 14% or Rs. 1 crore in the Consumer Welfare Fund as a fine.
The compensation ordered, though large, seems incorrect on two counts. Firstly, the gross profit was Rs. 14 crores and not Rs. 8 crores since no one would have sent an SMS if there was no contest. So at 14% of the profit, the fine should have been nearly double. Secondly, the organizers should have been asked to surrender all the net profit and be fined additionally, since the profit was obtained illegally. Taking back only a part of the illegal gain defeats justice.