Regulating Misleading Advertisements in India | 15 May 2024

Source: TH

Why in News?

In a move to safeguard consumers from misleading advertisements, the Supreme Court of India has issued directives for advertisers to submit self-declarations before promoting products in the media.

• In further development, the Union government has withdrawn an AYUSH Ministry letter, which "omitted" Rule 170 of the Drugs and Cosmetics Rules, 1945, with immediate effect.

What are the Key Directives from the Supreme Court?

• Submission of Self-Declarations:
  • Advertisers must submit self-declarations before promoting products in the media.
  • Advertisers are now obligated to declare that their advertisements do not deceive or make untrue statements about their products in order to prevent misleading consumers.
• Online Portal for Advertisers:
  • Advertisers intending to run TV ads must upload declarations on the 'Broadcast Seva' portal, which serves as a one-stop facility for stakeholders to request permissions, registrations, and licenses for broadcast-related activities from the Ministry of Information and Broadcasting.
    • A similar portal for print advertisers is to be established.
• Responsibility of Endorsers:
  • Social media influencers, celebrities, and public figures endorsing products must act responsibly.
    • Endorsers should possess adequate knowledge about the products they promote to avoid deceptive advertising.
• Ensuring Consumer Protection:
  • Establish a transparent process for consumers to report misleading advertisements and ensure they receive updates on complaint status and outcomes.

How Do Misleading Advertisements Violate Ethical Principles?

• Violation of Truthfulness: Honesty and truthfulness are essential ethical principles that should guide all business practices, including advertising.
  • These advertisements manipulate consumer perceptions and exploit vulnerabilities for commercial gain; they persuade individuals to make purchasing decisions based on false premises.
• Fairness and Justice: Misleading advertisements create an uneven playing field, giving an unfair advantage to companies that engage in deceptive practices over those that prioritize ethical advertising.
  • This violates the principle of fairness and justice in the marketplace, as it disadvantages honest competitors and undermines consumer trust.
  • Example: Companies making false environmental claims (greenwashing) to capitalize on the growing demand for sustainable products, while their competitors truthfully disclose their environmental impact.
• Consumer Harm: Misleading advertisements can lead to financial losses for consumers who purchase products or services based on false claims, resulting in dissatisfaction.
  • It can also harm consumers' physical or mental well-being if the advertised products or services are potentially harmful or ineffective.
• Erosion of Trust: Repeated exposure to misleading advertisements erodes trust in products, brands, and advertising, undermining the ethical principle of integrity in business and society.
  • When consumers feel deceived, they lose confidence in the market's integrity, as words and actions become inconsistent.

How Misleading Advertisements are Regulated in India?

• Definition of Misleading Advertisement:
  • A misleading advertisement is defined under Section 2 (28) of the Consumer Protection Act, 2019, as any advertisement that:
    • Provides a false description of a product or service;
    • Offers false guarantees that mislead consumers;
    • constitutes an unfair trade practice through express representation;
    • Deliberately omits essential information about the product.
• Central Consumer Protection Authority:
  • The Central Consumer Protection Authority (CCPA) operates under the Department of Consumer Affairs.
  • Established under section 10 of the Consumer Protection Act, 2019, it regulates matters related to consumer rights violations and unfair trade practices.
  • The act empowers the CCPA to prevent false or misleading advertisements and ensure consumer rights are protected.
  • Enforcement of Guidelines:
    • The CCPA enforces the ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’, which were issued per the powers conferred by the Consumer Protection Act, 2019.
    • Objective of the Guidelines:
      • The guidelines seek to ensure that consumers are not being fooled by unsubstantiated claims, exaggerated promises, misinformation and false claims.
      • Such advertisements violate various rights of consumers such as the right to be informed, the right to choose and the right to be safeguarded against potentially unsafe products and services.
    • Provisions of the Guidelines:
      • The guidelines define "bait advertising", "surrogate advertisement" and "free claim advertisements".
      • They also lay down provisions to protect children from exaggerated or unsubstantiated claims in advertisements.
        • Advertisements targeting children are prohibited from featuring personalities from sports, music, or cinema for products that require a health warning or cannot be purchased by children.
    • Disclaimers in advertisements should not hide material information or attempt to correct misleading claims.
    • The guidelines also outline the duties of manufacturers, service providers, advertisers, and advertising agencies to bring more transparency and clarity to advertisements.
      • This aims to help consumers make informed decisions based on facts.
    • Penalties for Violations:
      • CCPA can impose penalties of up to 10 lakh rupees on manufacturers, advertisers, and endorsers for misleading advertisements.
        • For subsequent violations, the penalty can be up to 50 lakh rupees.
    • The Authority can also prohibit the endorser of a misleading advertisement from making any endorsements for up to 1 year, and for subsequent violations, the prohibition can extend up to 3 years.
• Food Safety and Standards Authority of India (FSSAI):
  • Deceptive advertising falls under Section-53 of the Food Safety and Standards Act, 2006, making it punishable. FSSAI mandates advertisements to be truthful, unambiguous, and substantiated scientifically.
  • FSSAI uses the Food Safety and Standards (Advertisements & Claims) Regulations, 2018 which specifically deal with food (and related products) while CCPA’s regulations cover goods, products and services.
• Legislations Governing Advertising:
  • ASCI (Advertisement Standard Council of India):
    • It is a nonstatutory tribunal established as a self-regulated mechanism to introduce advertising ethics in India.
    • It judges advertisements based on its Code of Advertising Practice, also known as the ASCI code which applies to advertisements seen in India, even if they are from abroad and directed at Indian consumers.
  • Consumer Protection Act, 1986:
    • Grants consumers the right to be informed about goods and services' quality, quantity, and price.
      • Section 2(r) covers false advertisements under the definition of unfair trade practices.
    • Provides redressal against misleading advertisements.
  • Cable Television Network Act of 1995 and the Cable Television Amendment Act of 2006:
    • Prohibits transmission of advertisements that do not conform to the prescribed advertisement code.
    • Ensures advertisements do not offend morality, decency, or religious sensitivities.
  • Restrictions on Tobacco Advertisement:
    • Prohibits direct and indirect advertisement of tobacco products in all forms of media.
    • Enforced under the Cigarettes and Other Tobacco Products Act, 2003.
  • Drug and Magic Remedies Act, 1954 & Drugs and Cosmetics Act, 1940:
    • It regulates drug advertisements. Prohibits the use of test reports for advertising drugs.
      • Penalties for violations include fines and imprisonment.
  • Regulation of Prenatal Diagnostic Techniques:
    • Prohibits advertisement related to prenatal sex determination under the Prenatal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994.
    • Advertising harmful publications under the Young Persons (Harmful Publications) Act, 1956, is punishable.
  • Criminality of Advertisements under the Indian Penal Code (IPC):
    • IPC prohibits obscene, defamatory, or inciteful advertisements.
    • Offenses related to inciting violence, terrorism, or crime are illegal and punishable under IPC provisions.

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