Advertising, whether through television, print media, or social media, are vital in pushing the demands of the consumer across various commodities. It is considered as one of the most effective means of communication with a broad audience reach. Advertising serves as a communicational tool that informs the public about company’s current as well as upcoming future products and services. A remarkable growth has been witnessed in recent years in advertising techniques, such as influencer marketing. Actors, stars, sportspersons, and content creators having a huge fan following on social media networks are engaging in paid partnerships to support brands in their marketing campaigns. Section 2(1) of The Consumer Protection Act, 2019 provides a definition of the term “Advertisement” means any audio or visual publicity, representation, endorsement or pronouncement made by means of light, sound, smoke, gas, print, electronic media, internet or website and includes any notice, circular, label, wrapper, invoice or such other documents. While Advertisements can be highly beneficial to businesses, generating significant profits, it is also crucial that it remains ethical and are not in violation of the consumer rights. This article delves into the impact of misleading & deceptive advertising on consumer’s minds and examines the associated legal issues. It also discusses the implementation of the Consumer Protection Act, 2019 and other legislations and regulations.
Understanding Misleading Advertisement
An advertisement comes under the ambit of ‘Misleading’ when it delivers factually erroneous or false information about a product. It can be misleading if they contain false statements of fact, conceal or omit crucial details, or include or imply a promise to do something without intending to do so, it generates a false impression even if everything stated is correct. Despite its illegality in most countries, businesses and companies seize every opportunity to mislead customers and earn profits. In today’s world, marketing strategies often prioritise growing sales over providing genuine product information. As per section 2(28) of the Consumer Protection Act, 2019, ‘misleading advertisement’ is defined as in relation to any product or service, means an advertisement which
- falsely describes such product or service or
- gives a false guarantee to, the quantity or quality of such product or service; or
- conveys an express or implied representation which, if made would constitute an unfair trade practice; or deliberately conceals important information;
Legal Framework for Deceptive Advertising: Indian Perspective
As competitiveness increased, some advertisements began to mislead viewers in order to boost product popularity and sales. Various legislations such as the Drugs and Magic Remedies Objectionable Advertisements Act of 1954, were enacted to provide regulations towards deceptive advertisements. However, this act became outdated and did not address misleading ads or other related issues. This law did not include substantial penalties or imprisonment in the course of its violation.
Under the Monopolies and Restrictive Trade Practices Act of 1969 which highlights that disseminating false information about goods and services was considered ‘Unfair Trade Practices’. Another provision of The Consumer Protection Act of 1986 states, that inaccurate descriptions of goods and services can be considered unfair trade practices., The Cable Television Network Regulation Act and Rule, 1995 was insufficient in the establishment of an enforcement agency. The Food Safety and Standards Act, 2006 defines misleading advertisements but excludes corrective advertisements. Despite the aforementioned legislation, there is no regulation on fines or deterrents for companies that create or promote misleading advertisements for consumers. Hence, the enactment of The Consumer Protection Act, 2019 became essential. This newly enacted act provides reassurance to customers and replaces a nearly 30-year-old consumer act of 1986. In Addition to the Consumer Protection Act, the Advertising Standards Council of India (ASCI) and the Ministry of Information and Broadcasting are such other regulatory bodies that issue guidelines for the regulation of advertisements in India. The Competition Commission of India (CCI) has been vested with the authority to investigate and punish companies engaging in unfair or deceptive advertising practices. The Bureau of Indian Standards (Certification) Regulations, 1988 under rules 7(1) (1), (g) & (h) entails, deceptive advertisements related to BIS certification are prohibited.
Establishment Of Central Consumer Protection Authority (CCPA)
Section 2(47) of the CPA, 2019 defines ‘unfair trade practice’ as any trade method or deceptive practice used to promote the sale, use, or supply of goods or services. This includes making false claims about the quality, standard, or benefits of goods or services; misrepresenting sponsorship or approval; falsely advertising the need or usefulness of goods or services; and advertising goods or services at bargain prices without the intention to supply them in reasonable quantities and time, considering market and business nature.
To regulate these activities of product manufacturers Section 10, CPA provides for the establishment of a central consumer protection authority (CCPA), it is the central authority to regulate matters relating to the violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and also to promote & protect the rights of consumers as a class. Under the new act of 2019 the central authority has an investigation unit to inquire and investigate the matters relating to the violations of consumer rights, with the ADR mechanism which will facilitate faster and easier dispute resolutions. One of the stringent provisions under the CPA, 2019 which directly deals with the punishment and deterrence regarding the practice of misleading advertisement, which was lacking in preceding legislation is Section 21 stating that if the central authority finds an advertisement to be false, misleading, or harmful to consumer interests or rights, it can order the advertiser or publisher to immediately discontinue or modify the advertisement. Additionally, the authority can impose a fine of up to 10 lakh rupees if deemed necessary. Moreover, Under Section 89 such manufacturer shall be liable for punishment with imprisonment for a term extending to 2 years and fine extending to 10 lakh rupees, for every subsequent offence, imprisonment extending to 5 years with fine extending to 50 lakh rupees.
Latest Guidelines for Prevention of Misleading Advertisement
On 09.06.2022, the Central Consumer Protection Authority (CCPA) issued the guidelines for preventing misleading advertisement and endorsements. These guidelines aim to avoid false and deceptive advertisements. The guidelines various aspects such as prohibitions, responsibilities of advertisers and endorsers, due diligence, disclosures, and material connection requirements.
Key provisions under the guidelines
- Condition for non-misleading and valid advertisement
For an advertisement to deem valid and compliant with law, (i) it must contain truthful and honest representations, (ii) not mislead consumers by exaggerating the products qualities, (iii) must be in compliance of laws established.
- Conditions for bait advertisement
It provides that the advertisement should not lure consumers to purchase product without a reasonable prospect of selling goods at offered price. Advertisers must ensure that they have enough stock to meet the expected demand from their advertisement.
- Prohibition on surrogate advertisement
The guidelines define surrogate advertisement as advertising prohibited products by presenting the ads as if it is for other legal goods or services. This involve items like alcohol, tobacco, and drugs for which ads are prohibited by law. To regulate this, the guidelines ban advertisement of any product whose ad is illegal or which use branding elements associated with prohibited goods.
- Regulations on free claims and children target advertisements
It restricts free claim advertisement that require consumers to pay extra beyond the response cost, or describe any package element as free when it is already included in the product price. The guidelines also restrict advertisement that negatively affect children’s body image, promotes unhealthy food habits, create unrealistic expectations, exploits the innocence and susceptibility of children, or blur the line between reality & fantasy for children.
Landmark Cases on Deceptive Advertising Practices
- Careathers v. Red Bull North Am., Inc., 2015 U.S. Dist. LEXIS 97533 (S.D.N.Y. May 12, 2015): This case revolved around the slogan “Red bull gives you wings”, a class-action law suit claiming that Red bull’s slogan was misleading, as the drink did not provide the advertised physical or mental enhancements. The company agreed to settle the lawsuit to avoid cost and distraction of litigation. They agreed to pay $13 million to the affected consumers without admitting any wrong doing. The settlement offered eligible consumers, who had purchased the product from 2002 to 2014. The case strengthened the significance of accurate advertising and prompted Red Bull to revise its marketing practices to prevent future misinterpretation.
- Reckitt Benckiser (India) Ltd. vs. Hindustan Lever Limited (07.07.2008 – DELHC) MANU/DE/0967/2008: Largely known as the case of Dettol vs Lifebuoy in which Reckitt Benckiser Ltd. filed a case against Hindustan Unilever Ltd. in Delhi High Court, claiming that its marketing for Lifebuoy soap made false and deceptive claims regarding its efficacy when compared to Reckitt Benckiser’s Dettol soap. Badar Durrez Ahmed, J. Held defendant cannot be restrained from bringing out comparative advertisements, but some loss is indicated on part of plaintiff and that plaintiffs’ consumers have shifted to defendant’s product which has been advertised disparaging advertisement was a deliberate act on part of defendant aimed at reducing sales of plaintiff’s product and thereby increasing its own sale – Therefore there shall be a decree of injunction in favor of plaintiff and restraining defendant from telecasting impugned advertisement or disparaging goodwill and reputation of plaintiff and its product sold under trade mark DETTOL, also a decree of punitive damages in favor of plaintiff against defendant was given.
- Ayush Ayurveda Case: Ayush Ayurveda Medicines claimed to cure Covid-19, which was trending in news. The Ministry of Ayush urged all states and the ASCI to take action against false advertisements for ayurvedic treatments to prevent and treat Covid-19.
- Freedom 251 (Smartphone Scam): In early 2016, a company named Ringing Bell launched the Freedom 251 smartphone, creating a sensation with its false promise of a fully functional smartphone at an extremely low price. The company’s marketing led to massive pre-bookings, but it failed to fulfil the orders. Doubts about its legitimacy surfaced revealing the prototype was a repackaged Chinese phone. Legal action was taken against the company and its director for fraud and misrepresentation. The Freedom 251 scam remains one of India’s biggest tech scams due to its deceptive advertising.
Patanjali Advertisement Controversy: A Wake-up Call?
This case is the most recent and renowned, due to which the Misleading Advertisement is in the news trends. The ‘Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954 is under the limelight due to this case. The Claims such as “However big the disease is, including diabetes and blood pressure, Patanjali Ayurveda has cure to all these health issues” by yoga Guru and Co-founder of Patanjali Ayurveda Swami Ramdev. Owing to these claims several complaints have been filed against these misleading and deceptive advertisements of Patanjali Ayurveda and is facing the wrath and condemnation of the Supreme Court of India and strong criticism from the healthcare bodies with accusations that these advertisements are against the allopathic medicines claiming that they have harmful effects on human health.
The Indian Medical Association (IMA) recently filed a petition in the Supreme Court citing Patanjali’s ongoing, systematic and unrelenting spread of misinformation and derogatory advertisements against allopathic medicines. The SC in November last year took up the matter and stated that the provisions of Sections 3 and 4 read with Rule 6 of the Drugs and Magic Remedies Act have been breached. Despite the company’s apology, the court questioned its genuineness and sincerity and threatened contempt proceedings. Patanjali faced criticism for airing commercials while agreeing not to so, which infuriated the Supreme Court and later ordered the company to issue a public apology in various newspapers. The divisional bench also summoned Swami Ramdev & Acharya Balkrishna the founders and ordered an immediate halt to these misleading advertisements and non-compliance of the same would attract a penalty of Rs. 1 Crore. However, the matter is still ongoing and highlights the significance of genuineness and accuracy in advertising. This ruling not only resulted in a ban on Patanjali’s marketing but also called for strict and firm regulations for false advertising claims in India.
- Supreme Court’s Directions Concerning Deceptive Advertisements
On May 7th, the apex court issued a crucial order to safeguard consumer rights. The court outlined the responsibility of endorsers such as public figures, and celebrities in endorsing any product and to act accordingly. The advertisements can only be aired after advertisers upload a self-declaration form, in accordance with the Cable Television Network Rules, 1941. The court ordered for creation of a separate portal for uploading self-declarations for press/print media within 4 weeks before issuing any advertisements.
Conclusion & Suggestions
In contemporary times, with the rise of digital media, firms devised new advertising methods to lure users to buy their products by, aggravating the issue. Despite numerous regulations, consumers are still duped. During the Covid-19 pandemic, manufacturers were constantly promoting deceptive marketing for the treatment of the disease. Advertising is a very crucial business in terms of responsibility and they should take into consideration the effect of any advertisement in society. We need stricter and more efficient use of laws, i.e. ASCI should be granted enhanced power to issue punishments and undertake investigations, rather than merely being a suggestive body. Legal policies from foreign countries can be implemented, i.e. Canadian Pharmaceutical Advertising Advisory Board approves the advertisement of the drugs and medicines before they are aired in public, a similar policy must be taken into consideration. Increasing awareness among stakeholders on how false commercials can downgrade the economy and society. Providing education to customers is crucial. Consumers must be aware and recognize that not all information via advertisement is legitimate and that these are merely strategies used by advertisers to deceive them.
Author: Namanveer Singh Sodhi, Associate
Co-Author: Sarthak Tiwari, Intern
