India’s digital payments infrastructure has experienced unprecedented growth, as merchant-facing devices, QR-based acceptance, and UPI-enabled applications have become nearly ubiquitous. The quality of consent obtained from merchants at the point of onboarding ancillary payment devices, particularly soundboxes and similar hardware, has received relatively little scrutiny, despite the significant attention that has been given to questions of regulation, competition, and systemic risk.
A recurring factual matrix is revealed in recent merchant grievances: a field sales representative represents a device as “free,” “lifetime-waived,” or “non-chargeable for existing customers” in order to gain acceptance. The merchant’s hesitation is dispelled by repetitive assurances. Subsequently, fees are assessed. When the merchant contacts customer support, they are met with retention-oriented responses, including policy explanations, future schemes, and discounts, rather than an acknowledgment of misrepresentation. Permanent account restrictions are imposed on the merchant as residual consequences for opting out, even when monetary amounts are refunded.
This pattern raises fundamental concerns regarding institutional accountability, discriminatory trade practices, and contractual consent.
Misrepresentation and Consent in Contract Law
Consent must be freely given in order to be legally binding, as stipulated by the Indian Contract Act of 1872. The agreement is voidable at the discretion of the aggrieved party, as Section 14 explicitly states that assent obtained through misrepresentation is not free. The legitimacy of the transaction is undermined by assent that is vitiated at inception, regardless of subsequent conduct, as established by the Privy Council’s decision in Shrimati Chikkam Ammiraju v. Chikkam Seshamma (AIR 1917 PC 15).
The assurance that a device is “free” or “lifetime waived” is not a peripheral statement in the context of merchant-device enrollment; it is the decisive inducement. The contractual foundation is legally unstable once such representation is proven to be false. Defective consent cannot be retrospectively rectified through post-facto reliance on internal policy.
Unfair Trade Practices in the Context of Consumer Law
The question is expanded by the Consumer Protection Act of 2019 to include systemic fairness in addition to contractual validity. The definition of unjust trade practice includes false or misleading representations regarding price or benefit. It is crucial to note that consumer jurisprudence does not necessitate evidence of criminal intent. As the Supreme Court clarified in Lucknow Development Authority v. M.K. Gupta ((1994) 1 SCC 243), consumer protection law is not limited to intentional wrongdoing; it also targets structural practices that cause consumer harm as a result of informational asymmetry and institutional power.
This is particularly relevant in situations where the grievance management process is centralized, while the sales functions are decentralized. The architecture that emerges facilitates inducement without accountability, which is followed by retention scripting that prioritizes disengagement over rectification.
Legal Insufficiency of Refund as a Remedy?
The consumer’s grievance is extinguished by the refund of charges, which is a common defense in such cases. There is inadequate precedent to justify this assertion. The Supreme Court in Ghaziabad Development Authority v. Balbir Singh ((2004) 5 SCC 65) found that compensation and corrective directions may be appropriate even when monetary loss is addressed, provided that the consumer has been the victim of unjust conduct.
Consumer forums have consistently maintained that refunds do not negate unjust trade practices, particularly when non-monetary consequences continue to exist, such as loss of choice, coercive policy application, or reputational or operational disadvantage. The imposition of irreversible account restrictions in response to a consumer’s attempt to exit a mis-sold service raises precisely these concerns.
The Role of Consumer Fora and Regulatory Fragmentation
Digital payment platforms frequently identify themselves as technology facilitators for their associate banks, which places them in a regulatory gray area. Merchants who are in search of redress are often referred to ombudsman offices, grievance portals, and helplines, only to run into jurisdictional ambiguity. Consumer tribunals have become the most accessible forum for adjudicating mis-selling in this fragmented framework, without the need to invoke criminal law or sectoral regulators.
In fintech disputes involving small merchants and large platforms, the Supreme Court’s emphasis in National Seeds Corporation Ltd. v. M. Madhusudhan Reddy ((2012) 2 SCC 506) on interpreting consumer legislation in favor of consumers where ambiguity exists is particularly relevant.
Final Remarks
The matter at hand is not the legality of soundboxes or ancillary payment devices in particular, but rather the process by which assent is obtained and withdrawal is penalized. The transaction is no longer considered voluntary in a legal sense when the inducement is deceptive and the exit is restricted by policy.
The legitimacy of India’s digital payments ecosystem cannot be sustained solely on the basis of convenience and scope. Ethical onboarding, transparent pricing representations, and grievance redressal that authentically restores the consumer to their original position are not optional; they are legal imperatives. The current statutory framework is sufficient; however, it must be consistently applied to the emergence of fintech practices.