Misleading Ads: Everything You Need To Know

It is essential to demystify advertising in India and explore how it has transformed from conventional modes of advertising to digital likes, and how the laws ensure that it remains ethical, effective and in line with the persistent changes in the advertisement realm.

Early Days: Pre-regulation Era

Advertising in India has evolved over centuries, beginning with merchants using creative ways to attract customers in the ancient markets, wherein they used oral messages to promote goods. In 1780, the first advertisement to appear in the print media was in Hickey's Bengal Gazette, India's first weekly newspaper. In the 18^th century, the advertisements were primarily about announcing events like births, deaths, sale of household furniture etc.

The 20^th Century saw significant changes, the Swadeshi Movement encouraged local industries and installation of printing machine in Calcutta, which boosted the advertising industry in India. The Indian businessmen saw the potential of advertising. As a result, the first advertising agency, B. Dattaram & Co. and later Tata Publicity played a key role in the advancement of the advertisement sector in India. By the late 20^th Century, storytelling became a crucial aspect of advertising, thereby making advertisements more engaging. The brands experimented with visuals and storytelling techniques, creating gripping stories that connected with the hearts of the consumers.

This timeline showcases how advertising in India has evolved from simple market calls to a complex industry, shaped by technology and cultural changes.

The Winds of Change: Advertising Regulation Act, 1963

Advertising in India is not regulated by a single legislation rather it operates under a framework of laws and regulations which are designed to ensure that the advertisements are fair, honest and protect the interests of consumers. Key bodies such as Advertising Standards Council of India (ASCI) and the Ministry of Information and Broadcasting (MIB) play crucial roles in overseeing compliances with the regulations. The regulations aim to prevent misleading claims, promote responsible advertising and safeguard public interest. One such regulation is the Consumer Protection Act, 2019.

• Consumer Protection Act, 2019

The Consumer Protection Act, 2019 (CPA, 2019) defines “misleading advertisements” as an advertisement that:

(i) Falsely describes a product or service,

(ii) Gives false guarantees, mislead consumers about its nature, substance, quantity or quality

(iii) Deliberately conceals important information,

(iv) Conveys an express or implied representation, which if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice.

Section 10 of the CPA, 2019, establishes the Central Consumer Protection Authority (CCPA) to oversee issues likes misleading advertisements, with further investigation responsibilities vested with the District Collector under Section 16 of the CPA, 2019.

Penalties for misleading advertisements are outlined in Section 21 of the CPA, 2019, where the Central Authority can direct the modification or discontinuation of such advertisements and impose fines on manufacturers, endorsers or publishers. Section 89 of the Act prohibits false or misleading advertisements which are prejudicial to the interest of the consumer and penalizes the offender with fine and imprisonment.

For instance, in the case of Francis Vadakkan vs The Proprietor, A-One Medical & Ors., the Kerala District Commission ('Commission') addressed a complaint against a company producing hair growth cream. The company had advertised that its product would triple the length in just six weeks. The petitioner persuaded by this advertisement, purchased two bottles of the lotion from A-One Medical and used it for seven weeks but saw no hair growth. He then filed a claim with the district commission seeking Rs. 5,00,000 in damages for losses, pain and emotional distress.

The Commission held that the complainant was influenced by the advertisement to buy and use the cream as directed but did not experience the promised results. The commission directed the company to compensate the complainant for deficiency in services.

Similarly, in the case of Tata Motors vs Pradipta Kundu^[1], the complainant alleged that Tata Motors' advertisement claimed the TATA Indigo CS-Car, would achieve a mileage of 25km/l, promoting it as fuel-efficient. Based on this, the complainant purchased the car but subsequent test showed the mileage was lower than advertised, leading to a complaint of misleading advertisement.

The West Bengal State Consumer Dispute Redressal Commission, found that the complainant was enticed by the advertisement and confirmed that the car's mileage was below 25km/l in tests and ordered the company to pay damages amounting to Rs. 3.5 lakh for the misleading advertisements. The same decision was upheld by the National Consumer Dispute Redressal Commission.

These cases exemplify the robust legal framework in place to protect consumer rights and ensure truthfulness in advertising, reinforcing the importance of honesty and integrity in commercial practices. Undoubtedly, CPA acts as a shield for Indian consumers, protecting them from misleading advertisements and promoting responsible business practices.

• ASCI

The ASCI is a self-regulatory council established to uphold the integrity and credibility of advertising in India. ASCI plays a crucial role in ensuring that advertisements adhere to ethical standards and are truthful, honest and not misleading. The ASCI code, outlines the principles for ethical advertising in India:

A. Truthful & Honesty: Advertisements should be truthful, not misleading and must provide factual claims by valid evidence.

B. Decency & Public Sensitivity: Advertisements should maintain decency and not offend public sentiments or promote indecent representation.

C. Non-Exploitation: Advertisements should not incite people to commit crime or promote violence. It should not exploit the vulnerability of the children or other sections of the society.

D. Fair Competition: Advertisement should not discourage or unfairly attack the competitor products or services, promoting fair competition within the industry.

The aforementioned principles clearly signify how ASCI sets ethical guidelines and holds significant weight in its pronouncements. However, it is relevant to mention here that though ASCI guidelines act as a roadmap for advertisers/ advertising agencies as well as regulatory bodies, they lack the element of enforceability and have persuasive value only. In addition to the CPA, 2019 and ASCI Code, several other laws as delineated below, play a crucial role in governing advertising practices. These laws ensure that advertisements remain fair, truthful and protect the interest of consumers:

(i) Cigarettes and Other Tobacco Products Act, 2003: Section 5 of the Act prohibits direct and indirect advertising of tobacco products across all forms of media.

(ii) Cable Television Network (Regulation) Act, 1995 & Cable Television Network Rules, 1994: Section 6 of the Act read with rule 7^[2] ensures that the advertisement broadcasted do not offend public morality or religious sentiment of the people.

(iii) Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954: Regulates the advertisement for drugs and magic remedies. Section 3, 4 and 5 of the Act prohibits advertisement claiming magical properties or unproven benefits.

(iv) Drugs and Cosmetic Act, 1940: Section 29 of the Act penalizes using government test reports or analysis to promote medications without authorization, with fines and imprisonment for repeat offenders.

(v) Food Safety and Standards Act, 2006: Section 53 of the Act imposes penalties for fraudulent or misleading advertisements related to food quality, description etc. For more information refer to Food Safety and Standards Act, 2006.

(vi) Pre-Conception and Pre-Natal Diagnostic Techniques Act, 1994: Section 22 of the Act, prohibits advertisement promoting pre-natal sex determination services, aiming to prevent gender-based sex selection.

These laws collectively safeguard consumers, uphold ethical standards in advertising and regulate various aspects of advertisements in India.

Digital Era

In today's digital age, advertising has undergone revolutionary changes on account of unprecedented use of internet and social media. Brands use digital platforms like smartphones and the internet to connect with people. This helps them reach a larger audience. However, with these benefits, emerge concerns of augmented incidents of misleading advertisements. Some companies also use digital platforms to spread false advertisements to trick the consumers.

To tackle this ever-growing problem, the Ministry of Consumer Affairs, Food and Public Distribution issued Guidelines for Prevention of Misleading Advertisements and Endorsement for Misleading Advertisements, 2022 (“Guidelines”).

• The guidelines are path breaking since they protect the consumer interest while expressly outlining the advertiser/advertising agencies/ manufacturer duties etc.,
• The guidelines lays down the conditions for non-misleading and valid advertisement.
• The guidelines requires the endorsement of the product to be genuine and to reflect the honest opinion of the endorser.
• The advertisements should not promote practices that are unsafe or harmful to health. Claims related to health benefits must be backed by scientific evidences,
• The products not suitable for the children should not be advertised in a way that target them.

The guidelines aim to uphold the ethical standards in advertising, safeguard consumer rights and foster trust in digital marketing practice.

Despite the stringent guidelines aimed at curbing misleading advertisements, there has been a noticeable rise in such deceptive practices. Recently, the ASCI released the ASCI's Annual Complaints Report for 2023-24^[3] which provides a comprehensive overview of the state of advertising in India, highlighting the following key points:

• Volume and Sources of Complaints: The report indicates a significant increase in the number of complaints and advertisements processed, with a 12.75% rise over the previous year. Complaints originate from various sources, including the general public, intra-industry disputes, government interventions, and consumer organizations.
• Sector-wise Violations: The healthcare sector, personal care, and illegal betting ads are the most violative sectors. Healthcare ads often involve misleading claims about drugs and medicinal products, while personal care ads frequently violate influencer disclosure guidelines.
• Media-wise Distribution: Digital media accounts for 85% of the scrutinized advertisements, reflecting the growing influence of online platforms in advertising. Print and TV follow with significantly lower percentages.

The recent report issued by the ASCI underscores the persistent issue of misleading advertisements despite existing guidelines on misleading advertisements. As digital advertising continue to evolve, the guidelines will play a crucial role in maintaining fairness and transparency in marketplace.

Advertisement law regime in India- Post Patanjali case

Despite numerous laws regulating advertisements, misleading advertisements continue to be on the rise. The concept of misleading advertisement has gained significant attention following the recent Patanjali Case^[4]. The case has brought to the forefront the critical issue of consumer protection and ethical responsibilities of businesses in their advertising practices.

In the Patanjali case, the company faced accusations of making unsubstantiated claims about the benefits of their products. This incident has underscored the importance of accuracy and honesty in advertising, as false claims can mislead consumers and damage the credibility of businesses.

As, a result, the Supreme Court of India directed the implementation of a robust mechanism to ensure accountability of advertisers and advertising agencies, mandating filing of self-declaration certificate for all advertisements. In furtherance, the MIB developed 2 dedicated portals for filing SDCs.

The MIB issued an advisory^[5], wherein it clarified that SDC mandate is applicable only on advertisements related to Food and Health Products/Services.

These developments highlight the ongoing efforts to enhance transparency and truthfulness in advertising, thereby protecting consumer interest and maintaining market integrity.

Thus the journey of advertising in India from simple traditional methods to complex digital strategies showcases a dynamic interplay between innovation and regulation. The rigorous legal framework and regulatory bodies like ASCI & MIB play an essential role in maintaining ethical standards, ensuring that the advertisements remain ethical, promote fair competition and protect the interest of the consumer. While the ASCI plays a vital role in promoting ethical practices, the CPA provides much needed legal teeth to protect the consumers. The recent introduction of self-declaration mandate is a crucial step towards greater accountability, ensuring that the advertisements do not compromise the consumer interest and market integrity. By requiring advertisers to verify the accuracy of their claims before publishing, this system can act as a first line of defense against misleading information.

As we move forward, it is crucial to balance creativity and ethics in advertising. By embracing both technological advancement and robust mechanism, India can continue to build an advertising environment that is not only innovating and engaging but also responsible and trustworthy thereby creating a space that prioritizes transparency, ethics and consumer trust.

Authors: Vikrant Rana (Managing Partner) and Apalka Bareja (Senior Associate) At S.S. Rana & Co. Ritvik Kashyap, Intern at S.S. Rana & Co. has assisted in the research of this Article. Views are personal.