MULTI REGULATOR APPROACH TO MISLEADING ADVERTISEMENTS

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Central Consumer Protection Authority

The Consumer Protection Act, 2019 (“CPA”) defines misleading advertisements as advertisements which “falsely describe the product or service; give a false guarantee or is likely to mislead the consumers as to the nature, substance, quality or quantity of such productor service; or deliberately conceals important information about the product or service.”[1]

The Central Consumer Protection Authority (“CCPA”) has been set up to be the watchdog of consumer rights and safeguard against false or misleading advertisements. The CCPA may inquire or cause an inquiry into misleading advertisements, either suo motu or upon receiving a complaint. If the advertisement is found to be misleading, the CCPA may order the modification of the advertisement and may impose a penalty of up Rs. 10 lakhs.[2] The CCPA may, after a preliminary inquiry, also refer the matter to the relevant Regulator established under any other law.[3]

Recently, the CCPA has been in the news for reportedly ordering the discontinuation of an advertisement for a toothpaste brand featuring endorsements from dentists practicing in other countries, and has also directed an investigation into the superlative claims being made by the product such as “recommended by dentists worldwide” and “world’s no. 1 sensitivity toothpaste”.

Prohibition of Misleading Advertisements under the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954

It is interesting to note that under the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 (“DMRA”) advertisements of drugs which directly or indirectly gives a false impression regarding the true character of the drug; or makes a false claim for the drug; or is otherwise false or misleading in any material particular are prohibited.[4] Advertisements in violation of this provision would render the advertiser liable for criminal prosecution[5] which includes imprisonment of up to six months and/or a fine. An amendment to the DMRA has been proposed, which increases the imprisonment term to up to two years with fine up to Rs 10 lakh.

Advertising Standards Council of India

The Advertising Standards Council of India (“ASCI”) is a self-regulating body that regulates advertisements across sectors to ensure protection of interest of consumers. The Code for Self-Regulation in Advertising intends to control the content and regulate misleading advertisements. The ASCI has a Consumer Complaints Council (“CCC”) which looks into complaints or takes suo moto action against advertisements that are allegedly in violation of the Code for Self-Regulation. Further, several regulatory authorities, including the Ministry of AYUSH, have partnered with the ASCI to regulate misleading advertisements.

At first glance, it appears that all the authorities have overlapping jurisdictions over misleading advertisements that. However, it may be noted that the CCPA takes cognizance of whether the rights of consumers may be affected by the misleading advertisement, the DMRA prohibits drugs from making claims that are misleading to consumers, and the ASCI examines whether the advertisement is an honest representation of the product being advertised. Each regulatory body will examine the advertisement against different parameters and with varying degrees of stringency, but with the aim of protecting consumers.

In today’s day and age, compliance with the marketing laws to ensure protection of the consumers is of paramount importance to the legislators. Reputed global and Indian companies have a strong culture of complying with the laws, regulations and guidelines provided for good governance. Every company must ensure that comprehensive documented policies for marketing and advertisements are put in place and embedded in their business conduct standards. These policies and procedures must be regularly updated as per the changing landscape of laws, and employees must be trained and educated with regular training sessions, seminars, conferences, and lectures. Last but not the least, all advertisements and marketing materials for any medium should be carefully reviewed as per the company’s policies and procedures before they are communicated to the masses or consumers.


AUTHORS:

Pradnesh Warke,
Associate Partner, Link Legal
pradnesh.warke@linklegal.in

Pradnesh is an Associate Partner at Link Legal focusing on Healthcare, Life Sciences and Agriculture. He has extensive experience in healthcare medical device industry in areas of litigation, corporate advisory, strategic transactions, compliance advisory and other related activities.

Eshika Phadke,
Associate, Link Legal


DISCLAIMER:

The contents of this article are for general information and discussion only and is not intended for any solicitation of work. This article should not be relied upon as a legal advice or opinion.


[1] Section 2(28) of the Consumer Protection Act, 2019

[2] Section 21 of the Consumer Protection Act, 2019

[3] Section 19 of the Consumer Protection Act, 2019

[4] Section 4 of the DMRA

[5] Offences punishable under the DMRA are to be tried by a presidency magistrate or magistrate of the first class.

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