By - King Stubb & Kasiva on June 14, 2023
Misleading advertisement, as the name suggests, refers to the process of transmission, display, or publication of information that contains falsified data, claims, or statements intended to promote the sale of products.
The main aim of misleading advertisements is to promote the sale of the goods or services of the company by showcasing features that are either not true or are made with the intent to defraud the consumers. The practice of misleading advertisements is not only in violation of the law but also hinders consumer choice and leads to unfair competition in the market.
Section 2(1)(r) of the Consumer Protection Act, 1986 covers the ambit of “unfair trade practice” which includes any practice undertaken by the seller in order to increase their sale by exercising any unfair or deceptive method such as hoarding goods, misleading advertisements, incorrect representations, etc.
The Insurance Advertisement and Disclosure Regulations (IRDA) 2000 have made an attempt to define unfair and misleading advertisements by specifying the following types:
Many other practices like giving false warranties, showcasing false licenses, tricks, or images, giving discounts and gifts, exaggerating the attributes of the product, etc., are covered under the ambit of misleading advertisements.
In 2014, the Department of Consumer Affairs, in collaboration with the Government of India, established an inter-ministerial monitoring committee to serve as a vigilance body, which includes the Advertisements Standards Council. Additionally, the government launched an online web portal for consumers to lodge complaints against misleading advertisements. Several agencies like FSSAI, RBI, NPPA, and others have initiated counter-advertisement and campaigning programs. Moreover, large industrial organizations and multinational companies operating in India have been directed to allocate a portion of their corporate social responsibility (CSR) funds to address the issue of misleading and false advertisements.
In 2022, the Central Consumer Protection Authority (CCPA) issued the "Guidelines for Prevention of Misleading Advertisements and Endorsing for Misleading Advertisements 2022" through a notification dated June 9, 2022. These guidelines aim to define the essential elements of a valid advertisement and differentiate misleading advertisements from valid ones, while also identifying the key aspects of advertisements that impact different groups of people.
Considering the vulnerability and sensitivity of children, the guidelines instruct that advertisements should not make claims about the health or nutritional benefits of the product or service. Additionally, they should not make children feel disadvantaged, inferior, or left out if they are unable to purchase the product. Moreover, advertisements should not promote qualities or attributes in a product that are scientifically unattainable.
The guidelines adopt a strict stance against surrogate advertisements, and bait advertisements, and restrict the use of free claims advertisements under specific circumstances.
The issue of misleading advertisements, which originated from the Monopolies and Restrictive Trade Practices Act, has posed a significant challenge in the Indian economic market. The current guidelines regarding misleading advertisements have taken a firm stance against those in violation of the law and have established clear distinctions between valid and misleading advertisements.
However, it cannot be claimed that the problem of misleading advertisements has been entirely eradicated. The government and relevant authorities must take stringent actions, including implementing robust penalties and provisions, to make the law more effective in addressing this issue.
According to Section 89 of the law, any manufacturer or service provider who causes a false or misleading advertisement to be made that is detrimental to consumers' interests can be punished with imprisonment for up to two years and fined.
Misleading or deceptive advertising refers to when a business makes claims or representations that are likely to create a false impression among consumers regarding the price, value, or quality of the goods or services being offered.
The strongest defense against potential claims of false advertising is substantiation. It is crucial to obtain substantiation before making any potentially false advertising claims. As stated by the Third Circuit, marketing "is not deceptive, for no one would rely on its exaggerated claims.