MISLEADING ADVERTISEMENT
What are the remedies available under the Consumer law against misleading advertisements?
• Introduction
Advertising is a medium used to communicate information about a product or service. The purpose of advertising is to promote a product or service by bringing it to the market or by introducing a new product or service. Advertising plays an important role in the development of consumerism in the modern corporate world. Advertising is nothing more than a way to communicate information about the seller’s product, service or idea to the general public. It is a way for the seller to encourage the buyer or the public to buy their product or service.
Advertising is a method used by manufacturers or sellers to communicate the quality, characteristics, and features of a particular product or service offered by them on the market. However, advertisements often act as a form of disinformation by deceiving the consumer about the products, services, or ideas offered.
• False or Misleading Advertisement
Under the pressure of competition and in a race to succeed, advertising has just become the method of capturing the attention of consumers with the aim of increasing the supply and annual turnover of the companies of today. Such pressure is so high that there is no room for thinking about what is right and what is wrong. There is no room for considering what is good and what is bad for the customer. At this stage, the manufacturer, the seller, or the service provider will go to any lengths to sell their product to the customers. Even a bad product can be sold to the customers as a good product. This is done by advertising which manipulates the consumers with fantastic images rather than the reality of the production process of such products.
When does an advertisement become false or misleading?
The purpose or purpose of advertising is to communicate all the details about a specific product that is available in the market or that has just been released in the market.
An advertisement is considered to be misleading if it deceives the consumer by falsely advertising its products or services and making false claims about them.
For example:
If a shampoo company tells you that their products will prevent hair fall and dandruff with just one wash, then that is a lie and misleading.
If a product is a soft drink that tells you that you will get energy after drinking it, that you can face any kind of danger, even jumping from a height, and survive, then that is also a lie and misleading!
If a facial cream tells you that if you apply it to your face, you will have fair skin within 365 days, then that is another lie and misleading advertisement.
Does Misleading Advertisement Amount to an Offence?
Since the purpose of advertising is to convey information about a product, service, or idea, misleading advertisements can cause harm to consumers who are influenced by them and consume them. Misleading advertisements are offensive because the seller is only interested in making money, which can harm the consumer’s right to information and sometimes even their right to live. Misleading advertisements violate several consumer rights, such as the right to information, the right to make a choice, the right to protection from unsafe goods or services, and unfair trade practices.
Furthermore, misleading advertisements can also be found to be unlawful in court. To protect consumers from false statements and to prohibit misleading advertisements, there are many laws and regulations in place. One of these laws is the Consumer Protection Act (CPA), which was enacted in 1986 and was recently amended in 2019.
Laws to curb misleading advertisements:
Over time, as competition intensified, companies began to create misleading and misdirected advertisements in order to increase acceptance and sales of their products. Various laws were passed to control this type of misleading advertisements, such as the Drugs and Magic Remedy (Objectionable Ads) Act, 1954, which was quite outdated and did not address the issue of misleading advertisements or other issues that were facing the country, and did not recommend any severe penalties or imprisonment.
Other laws that have been passed in the past include the Monopolies and Restricted Trade Practices Act of 1969, which stated that providing false information about goods and services was included in unfair trade practices, the Consumer Protection Act of 1986, which stated that false representation of goods and services would be considered as unfair trade practices; the Cable Television Network Regulation Law and Rule, 1995, which did not have an enforcing agency; and the food safety and standards Act of 2006, which did mention misleading advertisements, but did not mention corrective advertisements.
However, none of these laws mentioned any deterrents or penalties that would be imposed on the makers or promoters of such misleading advertisements.
As a result, there was an urgent need to enact The Consumer Protection Bill, 2019, which repeals The Consumer Protection Law, 1986 which penalizes the manufacturers and the endorsers of misleading advertisements. Some provisions such as the definition of misleading advertisements were notified on July 15, 2020, and entered into force on July 20, 2020. Others such as the Central consumer protection authority and the penalties in Chapter III were notified on July 23, 2020, and went into effect on July 24, 2020.
Consumer Protection Act, 2019 provisions on misleading advertisements:
Section 2(28): defines misleading advertisements as any advertisement in relation to any product or service which:
• Falsely describes such product or services or
• It gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or services or
• It conveys an express or implied representation which, if made by the manufacturer or seller or services provider thereof, would constitute an unfair trade practice or
• Deliberately conceals important information.
Section 10- Setting up of a Central Consumer Protection Authority (the Central Authority) to regulate matters related to consumer rights violations, unfair commercial practices and false and misleading advertisements which affect the interests of the public and consumers.
Section 16- Power of the District Collector (whatever its name) to investigate or investigate complaints relating to consumer rights violations and unfair commercial practices or false and misleading advertisements within the jurisdiction of the District Collector on the basis of a complaint or a reference made to the District Collector by the Central Authority (or the Commissioner of a Regional Office) and to submit a report on the matter.
Complaints about violations of consumer rights, unfair trade practices, and false or misleading advertisements that affect the interests of consumers as a whole may be submitted either in writing or electronically to any of the authorities listed in Section 17, such as the District Collector, the Commissioner of a Regional Office, or the Central Authority, as appropriate.
In Section 18(1), the Central Authority has the power to ensure that no advertisements containing false or misleading information are made for any goods or services that are contrary to the provisions of this Law or the rules and regulations made pursuant to it. The Central Authority also has the power to prevent any person from taking part in publishing any advertisements that are false or misleading.
Under section 19(1), the Central Authority may refer a matter for investigation to the District-General or other Regulator upon receipt of information or complaints or directions issued by the Central Government, or on the basis of its own action, conduct or causes to be conducted, for a preliminary inquiry to determine whether there is a prima-facie case of consumer violation or any unfair commercial practices or false and misleading advertisement by any person which is detrimental to the general interest or interests of consumers. If the Central Authority is satisfied that a prima facie case exists, it shall order investigation to be conducted by the District.
Section 21: The Central Authority has the power to issue orders to the trader, manufacturer, endorser, advertiser, or publisher if it finds that any advertisement is false or misleading, is detrimental to the interests of any consumer, or is in violation of consumer rights. The order may be issued to the trader or manufacturer to stop the advertisement or to make changes to it within a specified period of time. The Central Authority may also impose a penalty of up to 10 lakh rupees for any subsequent contravention of the order.
Without prejudice to the provisions of sub-section (1), if the Central Authority finds that it is necessary to do so, it may issue an order to the endorser prohibiting them from making endorsements of false or misleading advertisements for a period of one year, unless, for each subsequent violation, the Central Authority orders that the endorser be prohibited from making endorsements for a period of three years. If the Central Authority finds after investigation that the endorser is found to have published, or was a party to, a false advertisement, they may impose a fine of up to 10 lakh rupees on the endorser. The endorser shall not be liable to any penalties under sub-section (2) or (3) provided that he has taken reasonable steps to verify the accuracy of the claims in the advertisement concerning the product/service he is endorsing.
If a person can prove that they published or conspired to publish the advertisement in the normal course of their business, they will not be subject to such a penalty, unless they had prior knowledge that the order to withdraw or modify the advertisement was passed by the central authority.
When determining the amount of the fine under this Section, the following factors should be taken into account:
• The population and area affected or affected by the offence
• The duration and frequency of the offense
• The class of people likely to be affected by it
• The gross revenue generated by the sale of the advertisement
• The central authority shall provide the person with an opportunity to be heard before the order is passed under this Section.
The findings of the District Commission under Section 39(1) are to: Issue corrective advertisements to reduce the impact of misleading advertisements at the expense of the other party that issued them;
• Provide appropriate compensation to the parties involved;
• Prohibit the issuing of any misleading advertisement; and
• Prohibit the issuance of any misleading advertisement for a period of time.
Under Section 89, a manufacturer or a service provider who creates false or misleading advertisements that are detrimental to the interests of consumers will be subject to imprisonment for a period of two years and a fine of up to 10 lakh rupees. For each subsequent offence, the manufacturer or the service provider will be subject to a term of five years and the fine of up to 50 lakh rupees.
