Misleading Advertising: Violation of Consumer Rights and Legal Remedies Available

The Consumer Protection Act gives the consumer the right to seek redress against false and misleading advertisements, including compensation for any loss or injury caused as a result of such advertisements.

A market-directed economy depends for its basic efficiency upon the success with which markets perform their economic functions of bringing buyers and sellers together. Full and complete knowledge of what the market has to offer to buyers and sellers is a fundamental requirement of effective markets. Advertising today is giving rise to negative attributes like creating class consciousness, materialism, conspicuous consumption and other values which are not universally accepted. Though illegal in its most blatant forms, deceptive advertising can occur in subtle ways that are difficult to establish as outright deception. Thus consumer deception from misleading advertisements and strategies to counteract it are important issues in today’s marketplace.

The IRDA (Insurance Advertisements and Disclosure) Regulations, 2000 defines “unfair or misleading advertisement” as any advertisement-
  1. that fails to clearly identify the product as insurance;
  2. makes claims beyond the ability of the policy to deliver or beyond the reasonable expectation of performance;
  3. describes benefits that do not match the policy provisions;
  4. uses words or phrases in a way which hides or minimizes the costs of the hazard insured against or the risks inherent in the policy;
  5. omits to disclose or discloses insufficiently, important exclusions, limitations and conditions of the contract;
  6. gives information in a misleading way; illustrates future benefits on assumptions which are not realistic nor realisable in the light of the insurer’s current performance;
  7. where the benefits are not guaranteed, does not explicitly say so as prominently as the benefits are stated or says so in a manner or form that it could remain unnoticed;
  8. implies a group or other relationship like sponsorship, affiliation or approval, that does not exist; makes unfair or incomplete comparisons with products which are not comparable or disparages competitors.
Misleading Advertising include:-
  • Exaggerating and overstating
  • Expressing unrealistic attributes of the product
  • Use of professional concepts for more effect
  • Fake license
  • False warranties
  • Use of cinematic tricks and misleading images
  • Discounts and gifts
Steps  taken  by  the  Department  of  Consumer  Affairs  to  tackle  the  menace  of  misleading advertisements:-
  • The Indian Government has set up an Inter-Ministerial Monitoring Committee on Misleading Advertisements vide OM dated 21.02.2014 having members drawn from different Ministries and authorities. Advertisement standards Council of India is also represented in the said Committee.
  • A web portal, which would enable consumers to lodge online complaints against misleading advertisements, has been implemented by the Government.
  • Counter  Campaign  strategies  are  being  worked  out  with  FSSAI  and  other  authorities  like RBI, NPPA, etc.
  • Industry  body  has  been  asked  to  bring  out  a  document  titled  Corporate  Consumer  responsibility  which  would  contain  code  of  business  ethics  on  unfair  trade  practises  including misleading advertisements.
How to register an online complaint?
  • An online complaint can be registered through the web portal of the Department of Consumer Affairs at http://gama.gov.in to bring it to the notice of the Government along with a copy / video / audio of such advertisement.
  • A onetime registration is required for lodging a complaint on the web portal. Click on the login link and register yourself.
  • Verify through your email ID or mobile number and create a user ID and password. 
  • Using this user ID and password, enter into the portal and fill in required details attaching necessary audio / video / paper clip / photograph (if available).
There  are  a  number  of existing legislations  that  have  provisions  to  deal  with  misleading  claims and advertisements made by companies regarding their products which include, inter alia,
  • The Drugs and Cosmetics Act, 1940 (Department of Health and Family Welfare)
  • The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1955 (Department of Health and Family Welfare)
  • Food Safety and Standards Act, 2006 (Department of Health and Family Welfare)
  • The  Cigarettes  and  other  Tobacco  Products  (Prohibition  of  Advertisement  and  Regulation  of  Trade  and  Commerce,  Production,  Supply  and  Distribution)  Act,  2003 (Department of Health and Family Welfare).
  • The Bureau of Indian Standards (Certification) Regulations, 1988 as under its Rule 7 (1) (l), (g) and (h) prohibits misleading advertisements pertaining to BIS certification.
  • Over  and  above,  the  Advertisements  aired  on  private  satellite  TV  channels  are  regulated  under  the  Advertising  Code  prescribed  in  rules  framed  under  Cable  Television  Network  (Regulation)  Acts  1995.  The  misleading  Advertisements  in  print  media,  which  are  violative  of  ‘Norms  of  Journalistic  Conducts”  are  being  adjudicated  by  the  Press  council  of  India  under  Section  14  of  the  Press  council Act 1978. The Food Safety and Standards Authority also provides for penal action against misleading advertisement pertaining to food products.
Consumer Protection Act, 2019:

Consumer Protection Act, 1986 was replaced by the Consumer Protection Act, 2019. While all above mentioned laws were implemented to curb false and misleading advertisements, the Consumer Protection Act is the only law that gives the consumer, the right to seek redress against such advertisements, including compensation for any loss or injury caused as a result of such advertisements. The law provides for redress against unfair trade practices and a false or misleading advertisement becomes an unfair trade practice under the provisions of the law.

Section 2 (1) (r) of the Consumer Protection Act gives a comprehensive definition of unfair trade practice and Section 14 deals with the directions that the court can give to deal with such practices and this includes directions to the advertiser to discontinue such advertisements and not to repeat it. They can also award compensation for any loss or suffering caused on account of such unfair trade practice. They can also award punitive damages and costs of litigation. But most important, they can direct the advertiser to issue corrective advertisement.

Section 14 h (c) of the Act, describing the powers of the court, says that the court can order “corrective advertisement to neutralize the effect of misleading advertisement at the cost of the opposite party responsible for issuing such misleading advertisement”. In so far as misleading advertisements are concerned, this is the most important provision and can really prove to be a deterrent. Unfortunately, this provision is not being used to effectively curb misleading advertisements.

Legal Remedies for Misleading Advertising:
  • Injunctive Relief: Injunctive relief is granted by the courts upon the satisfaction of two requirements. First, a plaintiff must demonstrate a "likelihood of deception or confusion on the part of the buying public caused by a product's false or misleading description or advertising" (Alpo). Second, a plaintiff must demonstrate that an "irreparable harm" has been inflicted, even if such harm is a decrease in sales that cannot be completely attributed to a defendant's false advertising.
  • Corrective Advertising Corrective advertising can be ruled in two different ways. First, and most commonly, the court can require a defendant to launch a corrective advertising campaign and to make an affirmative, correcting statement in that campaign. Second, the courts can award a plaintiff monetary damages so that the plaintiff can conduct a corrective advertising campaign to counter the defendant's false advertisements.
 
National Consumer Disputes Redressal Commission and Misleading Advertisements:

M.R. Ramesh v. Prakash Moped House: The National Consumer Disputes Redressal Commission (NCDRC) in this case held that hiding crucial information in small print is an unfair trade practice. By awarding a substantial compensation to the consumer who was misled by false advertisement, the NCDRC made it clear that it would not take such violations of consumers’ right to information lightly. NCDRC in this case held that the advertisements by manufacturers and service providers should not mislead and should give a clear picture of the quality of the goods sold.

Buddhist Mission Dental College and Hospital v. Bhupesh Khurana: National Commission held the Dental College guilty of unfair trade practice as its advertisement created a false impression that it was affiliated to a University and was recognized by the Dental Council of India. Both were however false. Since the college was not recognized, no examination was held at the end of the academic year, forcing students to file a class action suit before the consumer court. Subsequently, the Supreme Court in the following case observed that the Institute had played with the career of the students and virtually ruined it, resulting in the loss of two academic years, the Supreme Court directed the institute to pay an additional compensation of INR 1 lakh to each of the students (complainants) and also pay cost of litigation quantified at INR 1 lakh to each of them.

Conclusion:

The objective in the regulation of advertising should be informative disclosure regarding all advertised products. This is what is already required by the special laws dealing with wool products, furs, and textile fibers. The use of established technical standards, where available and applicable, and the development of quality grade labels would enable buyers to respond to advertising appeals with an intelligent examination and comparison of products. The general extension of the procedures of these special acts with the use of informative grades or standards, perhaps as a new function of the Federal Trade Commission, would do much to increase the efficiency of the entire economy and to establish reasonable equality of competitive conditions in most markets, even in some markets characterized by monopolistic conditions.