Advertisement Claims; Advertisement Standards Council of India; Consumer Protection Act, 2019

Introduction

Any business with ambitions to grow must advertise their product or service. The definition of an advertisement is "the promotion of a product , brand or service to a viewership in order to attract consumers and increase sales". Advertisement is a means of communicating a product to the public so as to induce consumers to purchase it. As much as advertisements are beneficial for increasing awareness and public reach as a means of increasing sales, there is a risk that advertisements are presented in a manner that includes false claims as to products/services and misleads consumers as to the nature or quality of the products.

For instance , the multinational Johnson & Johnson claimed “50 Years Doctor’s Trust" and voice-over claim, “Pachchaas saaloon se doctoron ka bharosa”. This claim  was found to be inadequately substantiated and misleading by the Advertising Standard Council of India (ASCI).

In India, the primary body regulating advertisements is the ASCI, which is a self-regulatory organization. Established in the year 1985, ASCI works to promote self-regulation in advertising industry and protect the interests of consumers. ASCI ensures that advertisements adhere to its code for self-regulation, which is aimed at promoting honest and decent advertising and fair competition in the industry. The ASCI code obligates advertisers to ensure the Truthfulness and Honesty of representations and claims made by advertisements and to safeguard against misleading advertisements[1].

The ASCI has a grievance redress mechanism wherein consumers can make complaints regarding misleading and false claims in advertisements[2]. ASCI even takes up cases Suo motu or on intra-industry complaints. The ASCI code was given a binding effect in 2006 when a gazette notification made it obligatory for TV advertisements to abide by the ASCI code[3].

The provision with respect to advertisement claims has been made in the first principle of the ASCI code. As per ASCI guidelines, the claims made in advertisement must conform to the following:

1. Advertisements must be truthful. All descriptions, claims and comparisons which relate to matters of objectively ascertainable fact should be capable of substantiation.
2. Where advertising claims are expressly stated to be based on or supported by independent research or assessment, the source and date of this should be indicated in the advertisement.
3. Advertisements shall not, without permission from the person, firm or institution under reference, contain any reference to such person, firm or institution which confers an unjustified advantage on the product advertised or tends to bring the person, firm or institution into ridicule or disrepute.
4. Advertisements shall neither distort facts nor mislead the consumer by means of implications or omissions. Advertisements shall not contain statements or visual presentation which directly or by implication or by omission or by ambiguity or by exaggeration are likely to mislead the consumer about the product advertised or the advertiser or about any other product or advertiser.
5. Advertisements shall not be so framed as to abuse the trust of consumers or exploit their lack of experience or knowledge. No advertisement shall be permitted to contain any claim so exaggerated as to lead to grave or widespread disappointment in the minds of consumers.

Consumer Protection Act

The new Consumer Protection Act of 2019, has taken cognizance of the threat of misleading advertisements and statutory provisions have now been made under the Act to deal with these. Under this Act, the Central Consumer Protection Authority (CCPA) has been established w.e.f 24.07.2020 to regulate matters, inter alia, relating to false or misleading advertisements which are prejudicial to the interests of public and consumers as a class.

Section 2(28) of the Act describes Misleading Advertisement in relation to a product or service as an advertisement which:

 “ i. falsely describes such product or service;

1. 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

1. 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
2. deliberately conceals important information;”

The CCPA has been given wide powers which include, inter alia,  issuing directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such misleading advertisement or to modify the same[4]. The CCPA can impose penalties up to Rs 10,00,000/- [5] on a manufacturer or endorser or publisher who is found responsible for a false or misleading advertisement. A competent Court can also sentence a violator to imprisonment extending up to 2 years[6].

The Delhi High Court in the case of Horlicks Ltd. v Zydus Wellness Products[7] has discussed the law on misleading advertisements. Horlicks Limited (“Horlicks”) approached the Delhi High Court, seeking a permanent injunction restraining Zydus Wellness Products (“Zydus”) from telecasting its advertisement, which showed that one glass of Complan (a Zydus Product) is equivalent to two glasses of Horlicks. Zydus, on the other hand contended that the advertisement was not misleading as the information provided was accurate and was subject to the recommended serving size of both the drinks. The High Court, while relying on the abovementioned cases, held that the impugned advertisement was misleading and disparaging, even though the disclaimer was provided in the advertisement, the same was not clear and the advertisement created an impression that one cup of Complan was equal to two cups of Horlicks, without considering the serving size.

Interplay between ASCI and the Consumer Protection Act, 2019

Up until 2020, there was no concrete statutory code to regulate false and misleading advertisements and ASCI was the sole self-regulatory body. With the coming of the Consumer Protection act in 2019 and setting up of the CCPA, statutory regulatory provisions have been put in place to regulate misleading advertisement claims and penalties have been stipulated. The scope of the CCA is much wider, as the ASCI does not have the power to impose fines, and imprisonment can also be awarded by the Court under this Act. Thus, ASCI and CCA must now act in tandem to ensure that misleading claims in advertisements are prevented from causing consumer harm.

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[1] https://asci.social/about

[2] https://ascionline.in/index.php/how-to-complaint.html

[3] Gazette of India, Extraordinary (Part II- section 3(i)) dated August 2, 2006 issued by the Government of India.

[4] Section 21, Consumer Protection Act, 2019

[5] Ibid.

[6][6] Section 89, Consumer Protection Act, 2019.

[7] CS (Comm) 464 of 2019, decided on 20-5-2020.