Critical Analysis on Misleading Advertisement and its Impact on the Consumer in India: Kotta Naga Anjaneya Chaitanya

Critical Analysis on Misleading Advertisement and its Impact on the Consumer in India

Author: Kotta Naga Anjaneya Chaitanya

ISSN: 2582-3655

Abstract:

In the current society the media plays an important role, in selection of products, by the consumers. To encash the same, many of the manufacturers are investing more amount of their capital on advertisements. As a result the price of product is increasing and also the consumer is in a position, where he is not able to figure out the real and mis-leading advertisements. So under various laws the judiciary is trying to protect the right of consumer from this mis-leading advertisements. Moreover the terms and the conditions of the product will be in small letters, which a prudent person cannot able figure out exact terms and conditions. And also in  markets, a large number of duplicate items were began for the trade with low prices, as a result, the consumer fells into the dilemma, to figure out the actual product. This makes the life of manufacturer more easier to earn profits by selling duplicate goods to the consumer. 

So this paper explains the definition of mis-leading advertisement, Economic Analysis, legislations that prohibits mis-leading advertisements, the role of Indian Judiciary, International perspective on Mis-leading Advertisements, few issues of advertisement and suggestions to cope-up this issues.

Keywords: Advertisements, Consumer, Economics, Products, Society, International. 

Introduction:

In this current world every manufacturer is focusing on profit making, so they are more focusing on the advertisements, which can easily cover a huge part of society. Meanwhile the companies which are financially well off is making other companies, which are not financially well off to move away from the market, by using the advertisement. Even if a  company is manufacturing a small product, it is reaching to every nook and corner because advertisements. This brought the problem of mis-leading advertisements, where the consumers are induced to buy an inefficient product.

Definition of Mis-leading Advertisement:

Section-2(28) of Consumer Protection Act,2019 states that “misleading advertisement” in relation to any product or service, means an advertisement, which—

(i) falsely describes such product or service; or

 (ii) gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or

(iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or

 (iv) deliberately conceals important information[1]

As per the Ministry of Consumer Affairs, “Any advertisement or promotion through Television, Radio, or any other electronic media, Newspapers, Banners, Posters, Handbills, wall-writing etc. to misrepresent the nature, characteristics, qualities or geographic origin of goods, services or commercial activities so as to mislead the consumer could be broadly defined as a misleading advertisement”[2].

Economic Analysis of Advertisements:

The  concept of advertisements in the economics can be explained through the concept of Rent Seeking, which is nothing but an entity seeks to increase their own wealth without creating any benefits  or wealth to the society. It aims to obtain financial gains and benefits through the manipulation of the distribution of economic resources. This practice reduces the economic efficiency through  the inefficient allocation of resources. And also it commonly leads to rise in income inequality and decrease in competition[3].

According to this theory, the manufactures will put aside some of the resources to attract the consumers. These resources are used for advertising. Instead of using those resources for advertising, and uses for the production, the cost of product will reduce, so that most of the consumer can afford the product, instead of one class affording it

L.egislations that prohibits the  Advertisements in India:

  1. The Drugs and Cosmetics Act,1940, section-29 states that whoever uses any test report made by central government for the purpose of advertising, shall be punishable with a fine[4].
  2. The Drugs and Magical Remedies (Objectionable Advertisements) Act, 1954:

Section-4 prohibits the mis-leading advertisements relating to drugs. It states that no person shall take part in the publication of any advertisement if they contains:

a) directly or indirectly gives a false impression regarding the true character of the drug;

b) makes a false claim for the drug; or

c) is otherwise false or misleading in any material particular[5]

  •  The Transplantation of Human Organ Act,1994; Section-19 states that whoever publishes any advertisement, inviting persons to supply for payment of any human organ; or offering to supply any human organ for payment; shall be punished with imprisonment and fine.[6]
  • The Prenatal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994, section-4 prohibits the advertisement relating to pre-natal determination of sex[7].
  • Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, Section-36A(1) states that falsely representing the goods or services or sponsorship or making any mis-leading representation or not giving adequate warranty and guarantee to the goods and services can be considered as the unfair trade practice. It may in oral or written form. 

Section-36 D, gives the power to enquire into an unfair trade practice , which affects the public interest, by advertising the false information[8].

  • The Food Safety and Standards Act,2006, section-24 states that Restrictions of advertisement and prohibition as to unfair trade practices. It also states that, No advertisement shall be made of any food which is misleading or deceiving or contravenes the provisions of this Act, the rules and regulations made there under[9].
  • Consumer Protection Act, 2019: Section-21 defines the Power of Central Authority to issue directions and penalties against false or misleading advertisement. Where it states that When the Central Authority is satisfied after investigation that any advertisement is false or misleading and is prejudicial to the interest of any consumer or is in contravention of consumer rights, it may, by order, issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such advertisement or to modify the same in such manner and within such time as may be specified in that order[10].

Section-16 defines powers of district collector, where it states that, The District Collector  may, on a complaint or on a reference made to him by the Central Authority or the Commissioner of a regional office, inquire into or investigate complaints regarding violation of rights of consumers as a class, on matters relating to violations of consumer rights, unfair trade practices and false or misleading advertisements, within his jurisdiction and submit his report to the Central Authority or to the Commissioner of a regional office, as the case may be[11].

And also Section-17 states that, A complaint relating to violation of consumer rights or unfair trade practices or false or misleading advertisements which are prejudicial to the interests of consumers as a class, may be forwarded either in writing or in electronic mode, to any one of the authorities, namely, the District Collector or the Commissioner of regional office or the Central Authority[12].

Some of the Regulatory Agencies:

  1. Insurance Regulatory Development Authority(IRDA): The Insurance Regulatory Development Authority(Insurance Advertisement and Disclosure ) Regulations,2000,  lays down certain rules and regulations, which should be followed by the insurer with respect to the content of the advertisement, and also they are bound to follow the same[13].
  2. Advertising Standard Council of India: This is self regulatory body, established  with a view to promote fair advertising practices. These are similar to self imposed rules, which to be followed by specific industry, but the rule-7(9) of Cable Television Networks (Amendment) rules,2006, makes it mandatory to follow the rules laid down by Advertising Standard Council of India, while advertising in cable services[14].
  3. Telecom Regulatory Authority of India(TRAI): TRAI had  came up with the Direction on Preventing Misleading Tariff Advertisement, 2012. Under this Direction, the telecom access service providers have been directed that advertisements published by them – are transparent and non-misleading and unambiguous; disclose all material information in unambiguous manner; contain the website address and customer care number of the telecom access service provider; and the advertisements issued in vernacular languages contain all the mandatory disclosures in the same vernacular language[15]
  4. Securities and Exchange Board of India (SEBI):  SEBI under Chapter-IX of Disclosure and Investor Protection Guidelines,2000 provides few guidelines stating what and all have to include while issuing an advertisement and what should not be included in an advertisement had been specifically explained[16].
  5. Reserve Bank of India(RBI): RBI regulates the financial system of India. The section-45(J) of RBI Act, gives the power to the to regulate and prohibit issuance of advertisement or prospectus soliciting deposits of money.  It lays down certain guidelines which have to be followed by all the financial institutions, which are registered under this Act[17].
  6. Medical Council of India: It had laid down the Code of Ethics Regulations,2002. Chapter-6 deals with the Unethical acts, which includes publishing an advertisement, it states that, Soliciting of patients directly or indirectly, by a physician, by a group of physicians or by institutions or organizations is unethical[18].
  7. Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003: The section-5 clearly lays down the rule, prohibiting the advertisement on the tobacco products[19].
  8. The Infant Milk Substitute, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992: Section-3 states that No person shall— (a) advertise, or take part in the publication of any advertisement, for the distribution, sale or supply of infant milk substitutes, feeding bottles or infant foods,  or (b) give an impression or create a belief in any manner that feeding of infant milk substitutes and infant foods are equivalent to, or better than, mother’s milk; or (c) take part in the promotion of infant milk substitutes, feeding bottles or infant foods[20].

International perspective:

  1. United States of America: In U.S, the Federal Trade Commission consists of divisions of bureau of consumer protection, in which one of the divisional bureau will regulate the frauds and mis-advertisement. If an advertisement is presumed to be mis-leading then an investigation is conducted on the basis of advertisement, and then founded to be guilty, then the company is liable. The goal of the commission is prevention and not the punishment[21].  

One of the example for working of Federal Trade Commission(FTC) is, in 2012 FTC released a press notice stating that all the consumers who brought the Sketcher’s toning shoe would be eligible for refund, because Sketchers published an deceptive advertisement stating toner’s shoe will help in losing weight, which is not true. So the company paid $40 million as the damage cost[22].

  • Canada: Mis-leading advertisements in Canada are controlled by the CompetitionBureau of Canada. This bureau prohibits the false material facts or misleading representation. And also prohibits the good without minimum guarantee and warranty, released into the market without proper tests, non-disclosure of fixed prices. With respect to the advertisement of pharmaceutical  drugs, the Bureau follows strict standards. Before publishing an advertisement on pharmaceutical drugs, the bureau needs to approve the advertisement, then it will be published. The bureau will consider the content of the advertisement and then allows for publication[23].
  • United Kingdom:  In U.K the advertisements were controlled by the Consumer Protection from Unfair Trading Regulation,2008. The regulation lays down four tests for determining an advertisement as mis-leading or not. Those are:
  • Contrary to the requirements of professional diligence
  • False or deceptive practice in relation to a specific list of key factors
  • Omission of material information (unclear or untimely information)
  • Aggressive practice by harassment, coercion or undue influence[24]

However there are different standards of authorities which differs from each country.

Judicial Approach with respect to Misleading Advertisement:

  1. In the case of  M.R.Ramesh vs M/S Prakash Moped House and Others[25], the plaintiff bought a new HeroHonda bike on the basis of an advertisement, which states that the bike will give a mileage of 80km/litre. After purchasing the bike gives only a 58km/litre of mileage. In this case the court warned that, the use of fine prints to hide the crucial information will be considered as misleading. The court ordered the company to compensate the plaintiff with Rs.25,000 and also advices the manufacturers that the advertisements should not mislead and should give a clear picture of the quality of goods sold.  
  2. In the case of Buddhist Mission Dental College and Hospital vs. Bhupesh Khurana and Ors[26], the said college published in an advertisement in Hindustan Times newspaper, where it states that the said college is under Magadh university and Dental Council of India and also claimed that there is no capitation fee for admissions. Eleven students of said college after joining college has filed a case in the NCDRC, stating that during the admission the college had collected Rs.1,00,000 as capitation fee and denied to provide the receipt for the same. on the demand of the receipt, the management threatened to cancel the admission. Moreover, the college was neither affiliated to the Magadh University nor it was recognized by the Dental Council of India. And also the college didn’t have the facilities like library, hostel which were as per advertisement. So the awarded the compensation with a 12% interest rate per annum and considered such an advertisement as mis-leading .
  3. In the Case of Smt.Divya Sood vs Gurdeep Kaur Bhuhi[27], the defendent published an advertisement in Times of India, with title ‘The Body Care’ which states that without dieting, the weight can be loosed. The complainant paid the amount and undergone the treatment but she didn’t loose her weight and filed the case in consumer court. The court found the advertisement as bogus and ordered the institution to pay a compensation of Rs.25,000 and also to refund the paid registration fee of Rs.10,500.
  4. In the case of Centre for Public Interest Litigation vs Union of India[28], the petition was preferred for constituting an independent committee to evaluate the harmful effects of soft drinks on human health, particularly on the health of the children. Petitioners has also sought for a direction to Respondent No. 1 to check and control the misleading advertising of soft drinks, particularly advertisements targeted at children, unwary uneducated and illiterate people. In this case the court directed directed the Food and Safety Standards Authority of India, to gear up their resources with their counterparts in all the States and Union Territories and conduct periodical inspections and monitoring of   major fruits and vegetable markets.
  5. In the case of Centre for Public Interest Litigation vs Union of India [29], the court lays down the true test to find out under what circumstances a party is entitle to an injunction order for mis-leading advertisement with five priciples, those are, as follows:
  6. A tradesman is entitled to declare his goods to be best in the world, even though the declaration is untrue.
  7. He can also say that his goods are better than his competitors’, even though such statement is untrue.
  8. For the purpose of saying that his goods are the best in the world or his goods are better than his competitors’ he can even compare the advantages of his goods over the goods of others.
  9. He however, cannot, while saying that his goods are better than his competitors’, say that his competitors’ goods are bad. If he says so, he really slanders the goods of his competitors. In other words he defames his competitors and their goods, which is not permissible.
  10. If there is no defamation to the goods or to the manufacturer of such goods no action lies, but if there is such defamation an action lies and if an action lies for recovery of damages for defamation, then the Court is also competent to grant an order of injunction restraining repetition of such defamation.
  • In the Case of Hamdard Dawakhana (Wakf) v. Union of India[30], where the apellants are running an institution named the Hamdard Dawkhana, which  is a dispensary an clinic for the treating the patients by ayurvedic medicines and also it manufactures the certain medicines based on ayurvedic and unnani systems.  The appellants also manufactures a medicated syrup called Sharbat Rooh Afza, based on natural ingredients. Because of passing of The Drugs and Magical Remedies (Objectionable Advertisements) Act, 1954, which prohibits the advertisements of certain drugs for the treatment of certain diseases and disorders, The appellants filed a case as this Act was violative of the Article-19 and 19(1)(f) of the constitution so requested the court to declare the Act as unconstitutional. Court held that, the legislation is valid and the object of said Act is to control the advertisement of drugs in certain cases, to prohibit the advertisement for certain purposes of remedies alleged to possess magic qualities and to provide for matters connected therewith.
  • In this case of Dr.M. Kumar Vs Vijay Kumar Srivastava[31], the complainant son is suffering from teeth problem, where the boy has two extra teeth’s adjoining the normal teeth. The complainant saw the advertisement of the doctor, which states he has degree in BDS. After consulting the doctor, the doctor removed four teeth’s instead of two and promised that the boy will get the new teeth within 3 weeks, which was not happened. So the father filed a case on the doctor stating that with a fake degree the doctor is treating the patients. On the investigation it is found that doctor has degree in Alternative medical system and not in allopathic system of medicine. So the court awarded Rs.50,000 and compensation and Rs.5000 for cost and ordered the doctor to change his designation from BDS to BDS(Alt.).

The Issues with respect of Advertisements:

  1. Misleading Prices: In general the advertisements shows the less price, but at the time of buying the price of good increases and it will differ from the price mentioned in the advertisement.
  2. Standards: The advertisements will show a good quality and more quantity of  the product, but when the consumer buys it the quantity and quality will reduce.
  3. Labeling: Generally, the weight label of the product will doesn’t match with the actual weight of the product.
  4. Surrogate Advertisements: When the state bans certain products like tobacco and cigarettes, which will affect the human body, then on the same name some other products will be introduced into the market, because the banned product name has the goodwill or very known to the public.
  5. Public Personalities: Most of the manufacturers use the public personalities for their advertisements, so the consumers blindly follows and buys the products, which were advertised by the public personality. 

Conclusion:

Mis-leading Advertisement is one of the techniques used by the manufacturers to defraud the consumers. Because of this activities the consumers are in a position, where they were unable to choose the right product from the wrong. The consumer protection Act, which aims to provide for protection for the interests of consumers, is trying to handle this issue in many ways. Both the Legislature and Judiciary is striving to protect the consumer from the Mis-leading Advertisements.

Suggestions:

  1. Many of the laws were outdated and were unable to deal with the current issues.
  2. Most of the legislation impose imprisonment or fines or both in case of misleading advertisements, instead if they prescribe heavy financial penalty, they it will as an example to other companies as well.
  3. In Canada if any advertisement on drugs should get the approval from the Canadian Pharmaceutical Advertising Advisory Board before publishing it to the public. This may help the consumers not to select the wrong drug. It is one of the best idea which India can try to implement it.
  4.  Many of advertisements will show the terms and conditions in small letter, the judiciary needs to order the advertisers that they have to maintain certain fixed font size for advertisements.
  5. Consumers must be aware of their rights and duties.

[1] Consumer Protection Act,2019

[2] Meaning of Mis-leading Advertisement, https://consumeraffairs.nic.in/more/misleading-advertisements

[3] Jeffrey L. Harrison, Law and Economics In a Nut Shell 158 (5th ed., 2011)

[4] The Drugs and Cosmetics Act, 1940

[5] The Drugs and Magical Remedies (Objectionable Advertisements) Act, 1954

[6] The Transplantation of Human Organ Act, 1994

[7] The Prenatal Diagnostic Techniques (Regulation and Prevention of Misuse) Act,1994

[8] The Monopolies and Restrictive Trade Practices (MRTP) Act,  1969

[9] The Food Safety and Standards Act, 2006

[10] The consumer Protection Act,2019

[11] Id at  S.16

[12] Supra note 10.

[13] The Insurance Regulatory Development Authority(Insurance Advertisement and Disclosure ) Regulations,2000.  https://www.irdai.gov.in/ADMINCMS/cms/frmGeneral_Layout.aspx?page=PageNo61&flag=1

[14] Cable Television Networks (Amendment) rules, 2006, https://mib.gov.in/sites/default/files/cabl1.pdf

[15] Direction on Preventing Misleading Tariff Advertisements,2012,

[16] Securities and Exchange Board of India, Disclosure and Investor Protection Guidelines,2000,  https://www.sebi.gov.in/sebi_data/attachdocs/1290148750028.pdf

[17] Reserve Bank of India Act,  1934,  https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/RBIAM_230609.pdf

[18] Code of Ethics Regulation,2002

[19] Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act,2003,  http://legislative.gov.in/sites/default/files/A2003-34.pdf

[20] The Infant Milk Substitute, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act,1992, http://legislative.gov.in/sites/default/files/A1992-41.pdf

[21]  Federal Trade Commission, https://www.ftc.gov/about-ftc

[22]  Sketchers will pay $40 million to settle FTC charges that it deceived consumers with Ads for “Toning Shoes”, Federal Trade Commission, (May,16 , 2012), https://www.ftc.gov/news-events/press-releases/2012/05/skechers-will-pay-40-million-settle-ftc-charges-it-deceived

[23] Misleading Advertising and labelling, https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02776.html

[24]Consumer Protection From Unfair Trading Regulation, 2008, S.3

https://www.legislation.gov.uk/uksi/2008/1277/contents/made

[25]M.R.Ramesh vs M/S Prakash Moped House and Others,  https://www.lawyerservices.in/MR-Ramesh-Versus-MS-Prakash-Moped-House-and-Others-2003-05-02

[26] Buddhist Mission Dental College and Hospital vs. Bhupesh Khurana and Ors, MANU/SC/0204/2009(India).

[27] Smt. Divya Sood vs Gurdeep Kaur Bhuhi, MANU/CF/0365/2006(India).

[28] Centre for Public Interest Litigation vs Union of India, MANU/SC/1094/2014(India).

[29] Centre for Public Interest Litigation vs Union of India , MANU/ WB/0476/1998(India).

[30] Hamdard Dawakhana (Wakf) v. Union of India, MANU/SC/0025/1964, (India).

[31] Dr. M. Kumar Vs Vijay Kumar Srivastava, (2011) CPJ 113 (NC), (India). 

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