false and misleading advertisements

8/9/2019 False and Misleading Advertisements

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False and Misleading Advertisements

TITLE

“ Impact of False and Misleading Advertisement on Consumer and Its Solution”

DETAILS OF THE AUTHOR

Name: - Aaditya Vas

Institti!n: - Dam!daram San"ivayya Nati!nal La# University$ Visa%&a'atnam

Email ID: - (reneti)(!rla#*&!tmail+)!m

,!stal Address: - Dam!daram San"ivayya Nati!nal La# University$ ,l!t N!+ .$ Se)t!r-$MV, /!l!ny$ Visa%&a'atnam-01223+

/!nta)t Nm4er: - 56-633708887$ 56-826.16.26+

DETAILS OF /O-AUTHOR

Name: - S#at&i Srivastava+

Institti!n:- Dam!daram San"ivayya Nati!nal La# University$ Visa%&a'atnam+

E-mail ID: - s#at&i9'!tla71*gmail+)!m

,!stal Address:- Dam!daram San"ivayya Nati!nal La# University$ ,l!t N!+ .$ Se)t!r-$

MV, /!l!ny$ Visa%&a'atnam-01223+

/!nta)t Nm4er: - 56-836782+

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TITLE

“ Impact of False and Misleading advertisement on consumer and its solution”

A;STRA/T

Advertisement is one of the most important instrument of promoting any product or service. It

has potential to persuade people into a commercial transaction that they might avoid otherwise.

False or deceptive advertising is the use of wrong and misleading statements in advertisements to

show that their product is better and more sufficient than that of competitors. False

advertisements are illegal in most countries including India. Advertisers still find many ways to

deceive the consumers. By impact of such advertisements, consumers end up buying products at a

higher price or at lower quality than they had intended. This is very striking issues with regard to

consumer awareness.

This paper aims at the diverse aspects of false and misleading advertisement. It will examine the

various ways of this illegal practice. It will further deal with its solution and steps which should

be taken for protecting consumers right from such advertisement. !oreover it will also cover

Indian laws and many national and international cases for a broad concept of this issue. !ethod

adopted for this research will be doctrinal and the sources for reference will include A.I."s, law

#ournals, text books, websites and articles.


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&Consumers are the largest economic group, affecting and affected by almost every public and

private economic decision. Yet they are the only important group…whose views are often not

heard”1

' >!&n F


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around the world use regulations to control such advertisements. 4owever advertisers still find

various ways to befool consumers in ways that are legal or technically illegal but unenforceable.

ETHI/AL AND UNETHI/AL ADVERTISEMENTS

5nethical advertising methods use false statements to deceive the public whereas ethical

advertising uses true facts to deceive the public. In advertisements clear differentiation of true

and false is not possible. If advertisements changes personal attribute of consumers and affects

their desire or buying behavior by misguiding, misinforming, then advertisements are unethical.

6ut some manipulations, a bit of exaggerated claims and a pinch of puffery in advertisements are

permissible and it is not considered as unethical. *o products advertised as 6est, 7ftenly 5sed,

!ostly "ecommended, 8ong 8asting etc., are accepted and are ethical. *o small manipulations, a

bit of exaggerated claims, pinch of puffery etc are all lies but are accepted by the society because

the demarcation is based on relativity of ethics than ethical absolutism0.

I. Ethical Issues in Advertising:-

Advertising is a highly visible market activity and any lapse in ethical standards may be risky for

the company. *ome of the common examples of ethical issues in advertising are given below9$

•

:ulgarity used to gain consumers attention• !isleading information and deception

• ;uffery

• *tereotypes

• "acial issues

• %ontroversial products are


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a. ;ermission shall not be granted when ob#ects are completely or largely religious or

political in nature. Advertisements cannot be directed towards any religious or political

issue, or to gain mileage of any form.

b. Any goods or services that are advertised should not have any defect or deficiency of any

form as declared in the %onsumer ;rotection Act 2?>@.3

c. ;roducts should not be portrayed in a way that can mislead the public to infer that the

item has some special, miraculous or a super natural quality, which is anyways difficult to

prove.

d. ;icture and the audible matter of the advertisement should not be excessively loud.

e. Advertisement should not endanger the safety of children or produce any sort of interest

that prompts them to adopt or imitate unhealthy practices.

f. Any type of offensive, indecent, suggestive, vulgar, repulsive themes must be avoided

under every circumstance.

II. arious !eceptive Methods "f Advertisements#

a. Manipulation "f Measurement: -

;roducers may manipulate the standards of the product to mean something different than

the widely understood meaning. *uch illegal trade practices are often carried with food

items, standard of gold etc. %ompanies dealing in food items often use various types of

fillers which increase the legal weight of the product. These fillers cost very little to the

producer as compared to what consumer thinks that they are buying. *elling of

underweight milk pouch, failure to mention the purity or standard of the gold are often

encountered facts which are misleaded by advertisements.

4+ $idden Fees And Surcharges:-

To show that they are providing the products or services at lower cost than that of the

competitor, producers and service providers often nail on the fees and surcharges which

are not disclosed to the consumer to the advertised price. *ervice taxes, :AT, additional

charges are the various elements which a producer do not disclose in advertisement to

deceive the consumers financially. *uch misleads are generally done through online

advertisements.

c. Misuse of %ord “free” :- The general meaning of the word &free- is &without cost or

obligation-. 4owever, sellers often use this word for something which is merely included

4 Act o. @> of 2?>@

5 *ee'www.+ikipedia.orgFalse Advertising.

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in the overall price. For example in the advertisements quoting &buy one get one free-,

the other item is not solely free but the seller uses surplus charges on the first item to

deceive the buyer.

d. “!iscounts” and “sales”:- In various cases, liquidators of a closing store raise the price

of the items which were already marked'down. For outdated items, liquidators increase

the price and then give discounts on them showing the process as beneficial to the

consumer. In case of sales, returns are often not accepted, so if the customer gets to know

that he was misleaded or overcharged, there is no apparent alternative. !ost of the

advertisers use such practices to prove the acceptability of their products.e. Manipulation of terms: - !any terms do have their literal meaning, but their specific

expanse is not legally defined, which leads to their abuse. For example, advertising a

watch as &water resistant- giving an impression to the common buyer that it is water

proof but it stops working while driving in rain. Advertising about an institution or

college that it is affiliated to a certified university to deceive the students with high fees

or charges is an example of manipulation of terms @. A wide manipulation is done in terms

of warranties and guaranties of electronic gadgets. Take for example, when a tobacco

company uses terms like Blight, B low tar, Bultra'light, Bnatural etc to show that their

products have less adverse effect on health, it is considered as manipulation of terms. 5se

of terms like Bbest, Bnew, Brecommended etc are frequently used to mislead the

consumers.

/ONSUMER ,ROTE/TION A/T RE?ARDIN? FALSE AND MISLEADIN?

ADVERTISEMENTS

False and !isleading Advertisements come under &5nfair Trade ;ractices- which is given under

section 0


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adopts any unfair or deceptive practice is considered as unfair trade practices. It also comes

under the !onopolistic and "estrictive Trade ;olicy

and 90 *tate %ommissions along with the ational %ommission at (elhi in India. A complaint

regarding misleading advertisement can be filed before the suitable consumer court. 5nder

section 23 of %;A, in case of misleading advertisements the consumer court can pass a &cease

and desist- order against the mistaken party, award suitable compensation to the complaining

party?. In India there is no central statutory body or any uniform law or legislation regulating the

advertising industry. The Indian advertising industry is regulated and directed by a non'statutory

body named Advertising Standards Council of India ,ASCI. It is necessary for advertisers to

ensure that their advertisements are in accordance with all local and national advertisement law.

ROLE OF ADVERTISIN? STANDARDS /OUN/IL OF INDIA @AS/I

To ensure the truthiness and honesty of claims and representation made in the

advertisements.

To ensure that the advertisement do not contain any offensive material or fact which is

not accepted under the standards of public decency.

To safeguard consumers right against the promotion of products which are ha)ardous to

the society or to the individual.

• To ensure that advertisements observe fairness in competition so that it provide a better

market choice for the consumers in the market.21

I. Code of ASCI:-

8 ;.E.!a#umdar, #aw of Consumer Protection in $ndia, 7rient ;ublishing %ompany, /th editionreprint, 011C.

9 %onsumer ;rotection Act,2?>@

10 International ournal of "esearch in Finance G !arketing, http$www.mairec.org, 8ast seen>th !arch,0123

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http://www.mairec.org/http://www.mairec.org/http://www.mairec.org/


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A code for *elf'"egulation in Advertising has been adopted by A*%I to regulate

advertisement in India. It is applied to all the bodies which are involved in the

publishing, creation, and placement and commissioning of advertisements. This A*%I

%ode is applied to all the literal, verbal and visual advertisements in India, even if the

advertisement is published or originated in abroad but are exposed to a number of

consumers in India. This A*%I %ode is non'statutory but then also it is recogni)ed

under different Indian laws in addition to being adopted by various advertising

bodies. The A*%I %ode is not in competition with any law or any rules or machinery

of law, through which the laws are enforced. The A*%I %ode only accessori)e legal

controls under such laws and not replace them.

II. a%s protecting the Consumer and Societ/:-

• The ;ress %ouncil Act,2?C>

• Hlectronic !edia !onitoring %entre

• Hmblems and ames Act, 2?/1

• Doung ;ersons Act, 2?/@

• %ompanies Act, 2?/@

• *tandard of +eight and !easurement Act, 2?C@

• %onsumer ;rotection Act, 2?>@

In addition to the above mentioned acts, there are various numerous laws aimed at protecting the

interest of consumers.22

III. &roducts And Services 0anned From Advertising:-Advertisements are done at a broad level in different ways. There are some products which have

direct adverse effect over the society and the consumer. To safeguard the interest of consumers

from such products the government has band the advertisements of those products. Furthermore

it also runs various programmes to create awareness against those products. *ome of those

products have been enlisted below$

• T!4a))!:-

The %igarettes and 7ther Tobacco ;roducts


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• Magi)al Remedies:-

The (rugs and !agical "emedies Act, 2?/329 prohibits the advertising of magical

remedies of any disorder or disease.

• ,riBe )&its and M!ney /ir)lati!n S)&emes:-

The ;ri)e %hits and !oney %irculation *chemes Act, 2?C>23 bans the advertisements

which are related to pri)e chits and money circulation.

• ,&ysi)ians:-

The Indian !edical %ouncil


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In 5*A there is a statutory regulatory body regarding the advertisements. There is a substantial

regulation of advertisements by the federal government. That federal regulatory body is the

Federal Trade /!mmissi!n @FT/+ It is charged with power to enforce the Federal %ommission

Acts prohibition for deceptive or unfair trade practices. The FT% can scrutini)e the action of a

single company or an industry. It can issue cease and desist orders, and ask for variety court

imposed civil and criminal provisions consisting civil penalties fines and even imprisonment.

The publicity which results from any FT% investigation or desist and cease order can be

destructive to any business2>.

There is no private right of action or recovery under FT%. A complaint may be filed by a private

party under FT% which may in certain cases, opt to investigate end impose the order and

retribution stated above. ot only the FT% pursue a small percentage of complaints that itreceives but it also follow the policy of not involving in itself in any private dispute between

competitors. The FT%s #urisdictions over advertising issues are closely related to the

#urisdiction of other federal agencies regarding labeling claims. It is important to carefully

consider all relevant federal regulation while determining advertisements and product claims. For

example, claims regarding health, safety or environmental benefits may stimulate both the

regulatory #urisdiction of the agency responsible for regulating the product in question


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The complainant was lured by misleading advertisement claiming treatment for

dandruff. At the first sitting itself his hair started falling down and after the second

sitting he became almost bald. 4olding the opposite party to be guilty of adopting

unfair trade practice was directed to pay compensation of "s /1,111'.

• &hilips India td. v. 4a2esh 0hatia56: false claiming as to feature of a product.

;romoting a product ;hilips power house music system claiming to have 2C remote

control functions beside other features but in fact, not providing the same was unfair

trade practice. 6ut since the complainant used the system for ten years, refund was

not ordered but a compensation of "s 21,111' was granted.

• !r. C.S. 4ahal2ar v. S. 3ham2ho7e5(: assem8led items as 8randed.

(elivering an assembled air conditioner although the complainant paid for an Amtrex

air conditioner amounted to unfair trade practice as both quotation and the money

received clearly showed that the opposite party undertook to supply an Amtrak made

air conditioner.

• Su8hash Mill 9d/og v. Arun &ratap Singh and Another 55: representing falsel/ as to

the name of manufacturer.

*ale of machinery falsely representing it to be that of a certain manufacturer

amounted to unfair trade practices. +hen such machine stared giving trouble and no

ratification of problems was made, the complainant was entitled to refund of price

and compensation.

20 011/ %T @>2


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• 0a7a7 Auto td. and another v. &an2a7 3umar 5: false claim of mileage.

Advertisement claiming to give the mileage of >C kms. per litre on average for

motorcycle which in fact give an average of only @/ kms. per litre was held to be

false and misleading advertisement since the words B in ideal condition was

mentioned only in small print. +hen the manufacturer approached the ational

%ommission against the order of *tate %ommission, the ational %ommission

holding it to be frivolous and vexatious slapped it with further cost of "s /,111'.

• Co; and 3ings ,I &vt. td v. 1 9


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Advertisements. They also award cost of litigation and punitive damages. !ost importantly,

they can order the advertisers to issue corrective advertisements. It is the most important

provision and can really have a binding effect if administered effectively but despite these laws

which are meant to protect the consumers right from unfair trade practices and misleading

advertisements, the vulnerability of consumers are continuously exploited.

In a vast country like India, even after development in commercial and trade sectors, the

condition of consumers rights is still poor. There are acts and provisions given under various

Acts regarding consumers issues but these acts lack proper administration in absence of a strict

and strong statutory body. There are many governmental and non'governmental organi)ations

like All India %onsumer ;rotection 7rgani)ation, The %onsumer Hye India, %onsumer India etc.

which are assisting consumers and fighting for their rights but these organi)ations are notsufficient enough to tackle the rapidly increasing cases of violation of consumers right through

various unfair trade practices which mainly include cases of False and !isleading

Advertisements. eed of a statutory body regarding this alarming issue has often been sought but

no satisfactory actions has yet been taken by the government. ow there is a need of such body

to save the consumers from further exploitation. overnment must take some reasonable

measures to assure the rights of the consumers.

T&an%ing C!

Aaditya Vas @At&!r and S#ati Srivastava @/!-At&!r$

Stdents$ ;A LL; $ t& Semester$

Dam!daram San"ivayya Nati!nal La# University$

Visa%&a'atnam-3+

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false and misleading advertisements

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