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Consumer Protection Act, 2019- Restraining false and misleading advertisements

General Meaning of Advertisement:

Advertisements are a mode of communication between the manufacturers and the consumers. It is an age-old method which is used in every country to generate certain ideas in the minds of the viewers so that they can be persuaded to purchase the product or avail those services. These communications can be made through print media like newspapers, magazines, books, posters, hoardings, broadcast media like radios, televisions and internet media that includes social media and websites.

Some forms of advertisements have been present all over the world for centuries together. In England the advertisements were in the form of notices related to births, deaths, marriages, ship timings, employment and such similar issues in the printed newspapers. In India, advertisements started in the eighteenth century with Bengal Gazette as it was India's first newspaper.

Later in nineteenth century as trade and commerce flourished the trend of advertising products was initiated in India that increased the number of advertisements being published in newspapers and magazines. The twentieth century saw the field of advertising flourishing with the advent of television, radios, cinemas, internet and commercialisation of brand products. This industry has witnessed a revolution that led to transformation of advertising and hence till date continues seeing perennially dynamic changes.

Laws to curb misleading advertisements:

Over a period of time, as the competition became keen, for better acceptability and selling of their products, some advertisements started misleading and misguiding the viewers. To rein in this form of misleading advertisements various laws were made, such as, The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954. However, the Act was quite outdated related to misleading advertisements and other issues that were being faced and additionally the law did not recommend any heavy penalties or imprisonment.

The Monopolies and Restrictive Trade Practices Act, 1969 according to which providing false information regarding goods and services was considered to be a part of “unfair trade practices”. The Consumer Protection Act, 1986 provided that any false representation of goods or services will be treated as unfair trade practices.

The Cable Television Network Regulation Act and Rule, 1995 lacked any enforcing agency and Food Safety and Standards Act, 2006 mentioned about misleading advertisements but did not talk about corrective advertisements. Despite these abovementioned Acts, none of them spoke about deterrents or penalties to be implied on the makers or the promoters of these misleading advertisements.

Therefore, a dire need was felt to introduce The Consumer Protection Act, 2019, repealing The Consumer Protection Act, 1986, which imposes penalties on the manufacturers and endorsers of such advertisements. Provisions like the definition of the misleading advertisements got notified on 15th July, 2020 and came into effect on 20th July, 2020. Some of the other provisions such as Central Consumer Protection Authority and the penalties under Chapter III got notified on 23rd July, 2020 and came into effect on 24th July, 2020.

Consumer Protection Act, 2019 provisions on misleading advertisements:

Section 2(28): defines misleading advertisements as any advertisement in relation to any product or service which:
  1. Falsely describes such product or services or
  2. It gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or services or
  3. It conveys an express or implied representation which, if made by the manufacturer or seller or services provider thereof, would constitute an unfair trade practices or
  4. Deliberately conceals important information.
Section 10- establishment of Central Consumer Protection Authority to be known as the Central Authority to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interest of pubic and consumers and to promote, protect and enforce the rights of consumers as a class.

Section 16- power of District Collector (by whatever name called) may, on a complaint or on a reference made to him by the Central Authority or the Commissioner of a regional office, inquire into or investigate complaints regarding violation of rights of consumers as a class, on matters relating to violation of consumer rights, unfair trade practices and false or misleading advertisements, within his jurisdiction and submit his report to the Central Authority or the Commissioner of a regional office, as the case may be.

Section 17:
complaints to authorities relating to violation of consumer rights or unfair trade practices or false or misleading advertisements which are prejudicial to the interest of consumers as a class, may be forwarded either in writing or in electronic mode, to any one of the authorities, namely, the District Collector or the Commissioner of a regional office or the Central Authority.

Section 18(1)(c):
power of Central Authority is to ensures that no false or misleading advertisements is made of any goods or services which contravenes the provisions of this Act or the rules or regulations made there under; and section 18(1)(d) ensures that no person takes part in the publication of any advertisements which is false or misleading.

Section 19(1):
power of Central Authority to refer to matter for investigation or to other Regulator may, after receiving any information or complaint or directions from the Central Government or of its own motion, conduct or cause to be conducted a preliminary inquiry as to whether there exists a prima facie case of violation of consumer rights or any unfair trade practices or false or misleading advertisements, by any person, which is prejudicial to the public interest or to the interests of consumers and if it is satisfied that there exists a prima facie case, it shall cause investigation to be made by the District- General or by the District Collector.

Section 21:
Powers to Central Authority to issue directions and penalties against any false or misleading advertisements:
  1. Where the Central Authority is satisfied after investigation that any advertisements is false or misleading and is prejudicial to the interest of any consumer or is in contravention of consumer rights, it may, by order, issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such advertisement or to modify the same in such manner and within such time as may be specified in that order.
     
  2. Notwithstanding the order passed under sub-section (1), if the Central Authority is of the opinion that it is necessary to impose a penalty in respect of such false or misleading advertisement, by a manufacturer or an endorser, it may, by order, impose on manufacturer or endorser a penalty which may extend to ten lakh rupees:
    Provided that the Central Authority may, for every subsequent contravention by a manufacturer or endorser, impose a penalty, which may extend to fifty lakh rupees.
     
  3. Notwithstanding any order under sub-sections (1) and (2), where the Central Authority deems it necessary, it may, by order, prohibit the endorser of a false or misleading advertisement from making endorsement of any product or service for a period which may extend to one year:
    Provided that the Central Authority may, for every subsequent contravention, prohibit such endorser from making endorsement in respect of any product or service for a period which may extend to three years.
  4. Where the Central Authority is satisfied after investigation that any person is found to publish, or is a party to the publication of, a misleading advertisement, it may impose on such person a penalty which may extend to ten lakh rupees.
  5. No endorser shall be liable to a penalty under sub-sections (2) and (3) if he has exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by him.
  6. No person shall be liable to such penalty if he proves that he had published or arranged for the publication of such advertisement in the ordinary course of his business: Provided that no such defence shall be available to such person if he had previous knowledge of the order passed by the Central Authority for withdrawal or modification of such advertisement.
  7. While determining the penalty under this section, regard shall be had to the following, namely:
    1. the population and the area impacted or affected by such offence;
    2. the frequency and duration of such offence;
    3. the vulnerability of the class of persons likely to be adversely affected by such offence; and
    4. the gross revenue from the sales effected by virtue of such offence.
  8. The Central Authority shall give the person an opportunity of being heard before an order under this section is passed.
Section 39(1)(l)- findings of District Commission is to issue corrective advertisement to neutralise the effect of misleading advertisement at the cost of the opposite party responsible for issuing such misleading advertisement;
(m) to provide for adequate costs to the parties; and
(n) to cease and desist from issuing any misleading advertisement.

Section 89- punishment for false or misleading advertisement is that Any manufacturer or service provider who causes a false or misleading advertisement to be made which is prejudicial to the interest of consumers shall be punished with imprisonment for a term which may extend to two years and with fine which may extend to ten lakh rupees; and for every subsequent offence, be punished with imprisonment for a term which may extend to five years and with fine which may extend to fifty lakh rupees.

Comparison between Consumer Protection Act, 1986 and 2019:

Consumer Protection Act, 1986 provided with “unfair trade practices” under section 2r as a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice including making a false or misleading representation concerning the need for, or the usefulness of, any goods or services.

Moreover, section 14(hc) states that corrective advertisements should be issued to neutralize the effect of misleading advertisement at the cost of opposite party responsible for issuing such misleading advertisement.

However, in the 2019 Act, there is a clearer definition of advertisements under section 2(1) encompassing all forms of ‘audio or visual publicity, representation, endorsement or pronouncement made by means of lights, sound, smoke, gas, print, electronic media, internet or website and includes any notice, circular, label, wrapper, invoice or such other documents.' An explicit meaning has been given to misleading advertisement under section 2(28) along with establishment of Central Consumer Protection Authority, under section 10, that would be regulating matters relating to violation of rights of consumers, unfair trade practices and false and misleading advertisement.

A Director- General or District Collector shall be appointed by the Central Government as the head of the Investigation Wing. Furthermore, section 21 imposes penalties on the manufacturer or the endorser for manufacturing or endorsing any advertisement that violates the interests of the consumers' rights.

Thus, with the usage of the term ‘misleading advertisements' instead of ‘unfair trade practices' it becomes easier to categorically name the dubious and ill-intentioned advertisements so that action can be taken against the offender. A separate Central Consumer Protection Authority establishment to investigate, hold inquiry, produce evidence and deal with misleading advertisers and advertisements can assure efficiency and efficacy in dealing with matters related to false and misleading advertisements.

References:
  • https://consumeraffairs.nic.in/more/misleading-advertisement
  • http://egazette.nic.in/WriteReadData/2019/210422.pdf- Consumer Protection Act, 2019.
  • https://www.accc.gov.au/consumers/advertising-promotions/false-or-misleading-claims
  • https://taxguru.in/corporate-law/consumer-protection-act-2019-false-misleading-advertisements.

    Award Winning Article Is Written By: Ms.Srishti Prakash

    Awarded certificate of Excellence
    Authentication No: FB105421366606-23-221

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