This has to rate at the very top of all the unethical practices found in fish keeping. There simply is no excuse for anyone involved in this practice right from the people doing the dyeing down to the end purchaser. To put it simply Corals and Anemones are being dyed with lurid pinks, blues, and red dye in an effort to boost sales.
Corals rely on symbiotic Algae, which lives in their tissue for their food. The relationship between the two is, - the coral gets fed from the Algae's photosynthesis which produces starches and sugars and the Algae gets protection. Neither can live without the other. When the creature is dyed the light, which is essential for photosynthesis, is blocked out by the dye, which in turn means that both Algae and therefore Coral will starve slowly. And that is done knowingly to try to boost sales. These beautiful and delicate creatures are being killed to improve sales. Any retailer who deals in Corals and Anemones needs to have a high level of knowledge to care for his stock whilst it is in his care. Because of this it is almost impossible for any retailer to sell these things unwittingly. Experienced hobbyist will know what to look for and to avoid them, simply because once they have been dyed they are almost certainly doomed and therefore a complete waste of money to buy. The people most likely to buy them are unwitting novices which means the dealers who sell them are deliberately taking advantage of novice fish keeper this in itself is an awful practice and is inexcusable.
What can we do?
If we don't act to deal with these things ourselves, others will act in our place and we will face more and more restrictions in the hobby.