Misleading Ads Regulation: Consumer Protection Act 2019 Insights

INTRODUCTION

The rise of misleading advertisements in India’s digital and traditional media landscapes has necessitated robust regulatory frameworks to protect consumers and ensure fair market practices. The Consumer Protection Act 2019 introduces comprehensive mechanisms to address deceptive advertising, empowering the Central Consumer Protection Authority (CCPA) and establishing accessible grievance redressal systems to safeguard consumer rights in an evolving marketplace.

REGULATORY MECHANISMS

The CCPA incorporated under Section 10 of the Act serves as a significant enhancement of the oversight power.[i] The CCPA has been given suo moto powers to initiate investigations and orders in cases of false representation wherein the advertisement is deceptive, as is evident through its move against the various e-commerce entities it targeted in 2022 over misleading practices relating to price depiction.

 

Three-Tier Regulatory Structure

Regulatory scheme operates through a three-tier structure:

1.     The CCPA at the central level

2.     State Consumer Protection Authorities

3.     District Consumer Protection Councils

Powers of the CCPA

The sections 18-21 of the Act categorically gives out powers to the CCPA which includes:

• Investigation of consumer rights violation

• Recall of hazardous products

• Reimbursement of price of hazardous products recalled

• Stopping of injurious practices derogatory to collective interests of consumers

• Inflicting punishment up to ₹10 lakhs for those who are violators for the first time and more than ₹50 lakhs on subsequent occasions[ii]

Enforcement Actions

These regulatory mechanisms did a good job in the case of CCPA v. Sensodyne (2023),[iii] when it exposed an advertisement proclaiming itself “recommended by dentists worldwide”. The CCPA imposed heavy fines and decreed correction advertisements.

Sector-Specific Guidelines

The CCPA has also issued guidelines for certain sectors-

• Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements Guidelines, 2022

• Prevention of Dark Patterns Guidelines, 2023

• E-Commerce Entities Guidelines, 2020

Recent enforcement actions reflect the commitment of the CCPA towards consumer protection. In Magic Remedies Pvt. Ltd. v. CCPA,[iv] 2023 the authority acted decisively against the advertisement making false health claims.

[Image Sources: Shutterstock]

Preventive Measures and Collaboration

The regulatory framework promotes preventive measures by making sure advertisements of certain sectors such as health and education must be pre-approved.

The CCPA has also developed a portal for complaints filed by consumers against misleading ads. These mechanisms result in fast responses and resolutions to complaints against misleading adverts. In full collaboration with the other regulatory bodies, such as the Advertising Standards Council of India (ASCI), all these mechanisms are implemented to form an all-rounded framework on misleading adverts.[v]

CONSUMER GRIEVANCE REDRESSAL

It creates a comprehensive grievance redressal machinery which significantly improves over the earlier one. The Act establishes a three-tier quasi-judicial machinery comprising District Commissions, State Commissions and the National Commission each with specific pecuniary jurisdiction. District commissions deal with complaints whose value is not more than ₹1 crore, ₹1 crore to ₹10 crores value is dealt with by state commissions and anything above ₹10 crores value is dealt by national commission.

E-Daakhil Portal

A by-product of the E-Daakhil portal, launched in September 2020, has been streamlining the procedural framework on complaint filing, through which electronic filing of complaints by consumers became a possibility. This digital initiative spectacularly enhanced access for clients: Such an incident set a precedent establishing effectiveness in digital complaint management, seen in the case of Rajesh Kumar v. Amazon India (2022),[vi] where the complainant successfully filled and tracked his misdescription grievance through the portal.

Innovative Features

The Act introduces first-of-its-type features such as electronic filing of complaints, video conferencing for hearings, and deemed admissibility of complaints if no decision is taken within 21 days. In Real Estate Buyers Association v. Supertech Ltd. (2023),[vii] the National Commission effectively utilized video conferencing to hear complicated cases involving multiple consumers affected by misleading advertisements in property dealings.

Mediation Cells

Major addition made is the provision for mediation cells constituted as satellite additions to consumer commissions. Sharma v. XYZ Insurance Co. (2023)[viii] where all said savings in terms of cost and time could be settled through mediation with regard to a case alleging false advertisement on insurance. Commissions are directed to refer fit cases for mediation under the Act. Section 37 elaborates the mediation process.

Remedial Powers

• Consumer commissions have been empowered with remedial machinery for:

•  Removal of defects from goods

• Replacement of defective goods

• Return of price paid

• Compensation for any loss or injury suffered

• Discontinuation of unfair trade practices

• Ceased hazardous goods from being offered

• Reimbursement of cost incurred in legal proceedings[ix]

ANALYSIS OF LANDMARK CASES

Significant jurisprudence of misleading advertisements have come through several landmark decisions. In Hindustan Unilever Ltd. v. Reckitt Benckiser India Ltd., (2023)[x] Delhi High Court established comprehensive guidelines relating to comparative advertising noting that though comparative advertisement is permissible, any comparison must be supported by scientific evidence. This decision stands as a pillar in regulating comparative advertisements.

International Digital Marketing Solutions v. CCPA (2023)[xi] This case involved the growing concern of social media influencer advertising. The National Commission held that influencers are supposed to indicate clearly that partnerships are paid for and that they must research any claims regarding the product they are advertising. This resulted in the CCPA specifying its rules on social media influencers, which include influencers indicating clearly any material connections with the advertiser.

The Supreme Court considered the case of Consumer Education and Research Centre v. Wellness Products Association (2023),[xii] which related to misleading advertisements in the health and wellness space. The Supreme Court ordered all health-related claims be supported by scientifically credible evidence and clinical trials. This judgment assumes particular importance in light of a variety of spurious health claims that proliferated during the COVID-19 pandemic.

Educational Institute Forum v. CCPA (2022)[xiii] case dealt with misleading advertisements of education institutions. In this, the Commission ruled that educational institutions had to show data for any claims they were making regarding placements, rankings, and success rates. This kind of judgment led to strict guidelines in terms of educational advertising, thus affecting the ways institutions market their services.

One of the most important cases related to regulating digital advertisements is that of Digital Consumers Association v. E-commerce Platforms (2023),[xiv] through which the National Commission ruled on dark patterns in online advertisement. A judgment was issued by the court as its criterion for detecting and penalizing deceptive design practices in digital advertisements.

Author:  Amrita Pradhan, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

REFERENCES

[i] The Consumer Protection Act, 2019, § 10.

[ii] The Consumer Protection Act, 2019, §§ 18, 19, 20, 21.

[iii] Consumer Education and Research Centre v. Wellness Products Association, (2023) 8 SCC 781.

[iv] Magic Remedies Pvt. Ltd. v. CCPA, (2023) 5 SCC 567.

[v] Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022, Gazette of India (June 9, 2022).

[vi] Rajesh Kumar v. Amazon India, 2022 SCC OnLine NCDRC 145.

[vii] Real Estate Buyers Association v. Supertech Ltd., 2023 SCC OnLine NCDRC 89.

[viii] Sharma v. XYZ Insurance Co., 2023 SCC OnLine NCDRC 234.

[ix] The Consumer Protection Act, 2019 § 37.

[x] Supra note 04.

[xi] International Digital Marketing Solutions v. CCPA, 2023 SCC OnLine NCDRC 178.

[xii] Consumer Education and Research Centre v. Wellness Products Association, (2023) 8 SCC 781.

[xiii] Educational Institute Forum v. CCPA, (2022) 12 SCC 789.

[xiv] Digital Consumers Association v. E-commerce Platforms, (2023) 6 SCC 344.