Authored By: Sangmitra Sharma
KLE Law college
- Introduction
Advertising has emerged as one of the most powerful instruments of contemporary consumer markets. Businesses use television, print media, digital and social media networks to convey information about products and services to the potential consumers. Advertising does not only educate consumers but also defines the buying actions and stimulates consumer behaviour. Advertisements in a competitive market economy are used to a legitimate end of promoting products and consumer choice.
Nevertheless, misleading advertisements, false statements, and exaggerated promises and statements can damage the interests of consumers posing serious damage. The false advertising can generate unrealistic perception of a product quality, effectiveness, or safety. Consumers who use such representations might lose money, face health hazards or any other kind of harm. Moreover, the fraudulent advertising activities misrepresent healthy competition as it provides fraudulent businesses with unfair competition over the honest businesses.
The issue of false advertising has taken on a new dimension especially in India following an intensive growth in digital e-commerce and social media marketing. Influencers, online content creators, and celebrities are becoming more active in advertising products via sponsored content with minimal or no disclosure or verification of statements. Consumers can believe that these endorsements are true views or tested product quality, when the truth may be that they are just paid promotions. Understanding the existence of these issues, Indian law has come up with various means to govern the misleading advertising activities. The Consumer Protection Act, 2019 became the significant step in consumer rights protection and combating unfair trade, such as misleading advertisement. The Act also added more provisions that were concerned with deceptive marketing and The Central Consumer Protection Authority (CCPA) was created to investigate and control deceptive marketing.
Although these legislative developments are there, great challenges in enforcing it still exist. The intricacy of the digital advertising industry, cross-border advertisement and influencer marketing has ensured that it is even more challenging to regulate and curb inaccurate advertisements by regulators.
This paper posits that despite the fact that a statutory framework has been created by India to govern the misleading advertisements, the existing law system is still experiencing major problems to enforce and hold liable people. There should be enhanced regulation, better liability profiles on advertisers and endorsers and enhanced consumer awareness to defend consumers in the digitized market place.
The Existing Legal Framework
Legal Framework Governing Misleading Advertisements
The Consumer Protection Act, 2019 (CPA) is the primary regulatory framework governing misleading advertising in India, which is complemented by industry-specific laws like The Food Safety and Standards Act, 2006 and The Drugs and Cosmetics Act, 1940 and by non-state agencies like The Advertising Standards Council of India. The CPA came up with new digitalised protection in facing the new digital phenomena such as e-commerce and influencer marketing, and thus, its protective scope was expanded into new communication outlets.
(a) Definition of misleading advertisement
The Consumer Protection Act, 2019 section 2(28) defines misleading advertisement as one that gives a false representation of a product or service, gives an unsubstantiated claims about what it or is, its quantity, or its quality, or intentionally leaves out material information which has the capacity to affect a buying decision. The section specifically inclusively encompasses aberrant practices that constitute a bait-and-switch or makes false claims of a nature which are unprovable.
(b) Unfair Trade Practices
According to Section2(47) of The Consumer Protection Act, 2019, misleading advertisements fall under the larger category of unfair trade practices which make use of deception to facilitate sales. The coverage claims are extended to the alleged quality, alleged standards, prices, alleged offered discounts, and alleged endorsement or approvals. The Code of Practice of the ASCI is an addition to this statutory framework; as it requires the provision of truthful information, and the failure to do so will be reportable to the Central Consumer Protection Authority (CCPA).
(c) Powers of the Central Consumer Protection Authority (CCPA).
The CCPA, as is enforced under Section 18 of the CPA, has the powers to investigate sui motu and complaint-initiated issues under Section 21. Its powers are powers to put an end to the flow of advertisements, to give penalties of up to 50 lakhs, to require corrections to advertisements and to arrange product recalls. The CCPA has issued more than 150 notices during the 2023-2025 period, with the health and beauty sector being the primary focus of the notices issued by the CCPA. According to the rules promulgated in 2022, high-risk advertisements are obliged to be pre-approved by the CCPA, including advertisements made with Ayurvedic claims.
(d) Liability of Endorsers and Celebrities
Section 21(5) of The Consumer Protection Act, 2019 creates liability on those who endorse in the absence of due diligence and that the liability can be proved by proving the pre-verification claims. Safe-harbour defence can be presented in case of reasonable care that can be proven. Notices that were issued to actors in 2024, and highlight the real-world application of this provision.
(e) Dispute Resolutions.
The first offenses are punishable by fines of up to 10 lakhs by Section 21(2) of The Consumer Protection Act, 2019 and subsequent violations could be punished by fines of up to 50 lakhs, with the likelihood of a ban on endorsers (1-3 years) being imposed. Section 89 forms the basis of criminal liability as a result of false advertising which results in harm directly or indirectly. Cases are determined by a three-level commission. It offers expeditious redress, and is based on a three-tier commission- District: <₹1 crore; State: ₹1-10 crore; National: >₹10 crore. E-filing has been in effect since 2020 and provides expeditious redress.
- Advertising Standards and Self-Regulation
Besides being regulated by law, advertising in India is also regulated through self-regulation. Advertising Standards Council of India is a central figure in encouraging the ethical advertising behaviours. ASCI Code involves advertisements that are true, verifiable, and not deceiving to the consumers. The advertisements should neither overstate the performance of the goods nor take advantage of the lack of knowledge among consumers. The businesses should ensure the evidence to any factual claims presented in adverts. Even though ASCI results do not have a legal binding power, they play a huge role in upholding ethical practices in the advertising sector.
- Problems and limitations of Self-Regulation of Advertising.
Despite the fact that the self-regulatory model that has been put in place by the Advertising Standards Council of India is significant in upholding ethical standards of advertising, there are various weaknesses that limit its ability to regulate misleading advertisements.
(a) Lack of Statutory Enforcement Powers
A big weakness of ASCI is that it lacks legal powers to penalize or enforce its decision. ASCI is a voluntary organisation, unlike regulatory authorities that are established by a legislative act. Consequently, its judgments are mostly based on the goodwill of the advertisers to adhere to its suggestions. Failure by the advertiser to comply would mean that ASCI can neither directly fine nor hold the advertiser legally accountable.
(b) Limited jurisdiction over Internet Advertising.
The emergence of new difficulties in controlling the misleading advert has been brought about by the fast-developing nature of online marketing and social media advertising. Bloggers, social media influencers, and celebrities often advertise products impolitely without the relevant disclosure. As these advertisements are usually in informal forms of personal posts or videos, then self-regulating bodies find it hard to monitor and regulate them.
(c) Slow Resolution of Complaints.
The time that it takes to research and address complaints is another issue that is related to self-regulatory mechanisms. Those consumers who make complaints over misleading advertisements may take long to have a ruling. The misleading advertisement might still prevail in the process of consumer decisions and be harmful during this period.
(d) Lack of Consumer Awareness
Lots of consumers do not know that they could submit complaints against misleading advertisements with the help of regulatory bodies or even self-regulatory organisations. Because of this ignorance, numerous fraudulent advertising activities are undetected, and thus businesses unknowingly carry on with the activities in a manner that they are not penalized.
(e) Limited Deterrent Effect
The deterrent effect can be limited, because since the decisions of ASCI usually end in demand to make changes or cancel the advertisements. Companies with a stake in putting misleading ads might feel that the threat of a regulatory penalty is not that high.
These restrictions show that despite the fact that self-regulation plays a role in ethical advertisement, it is not able to curb the increasing issue of deceptive adverts. This leads to the need to look at the part played by the judicial intervention and statutory enforcement in safeguarding the interests of the consumer.
- Juridical approach to Misleading Adverts.
The judiciary has been instrumental in protecting the interests of consumers by taking care of the misleading advertisements and other unfair trade practices. Though a legal framework of regulating deceptive advertising is laid through statutory provisions, especially through that which is contained in the Consumer Protection Act, 2019; it is the judicial interpretation of this, which is in a subtle manner that has effectively operationalised and advanced such provisions.
The Indian courts have continuously emphasized that advertisements should not give a false perception about the nature, quality, or performance of goods and services and cause deception to customers. The judicial pronouncements have, thus, significantly contributed to consumer protection as they define legal principles that guide the advertising practices.
(a)Recognition of Advertising as Commercial Speech
The case that is considered a landmark case in the Indian jurisprudence on advertising is the case of Tata Press Ltd v MTNL. In this case, the Supreme Court reviewed the application of commercial advertisements as a speech that was covered by the Constitution of India. The Court ruled that advertisement was a commercial speech and was therefore safeguarded by the 19(1)(a) of The Indian Constitution, the right to freedom of expression and opinion.
However, the Court explained that this protection cannot be absolute. The advertisements that have false or misleading information cannot have constitutional immunity. The Court noted that misleading advertisements may deceive customers and hence the acceptable limitation put to protect the consumers.
The importance of this ruling is that it creates a principled balance between freedom of commercial expression and the need to protect consumers.
(b) Misleading Medical Advertisements Regulation.
Some other landmark case on misleading advertisements is Hamdard Dawakhana v Union of India. The validity of the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954, which banned adverts that had the claim to some kind of magic remedy against some diseases, was questioned in this case.
The Supreme Court supported the validity of the law and stressed that the commercials on medical prescriptions could easily deceive susceptible consumers. The Court emphasized that people with severe diseases can count on overstated or even false statements made on advertisements and, thus, protection against such misleading actions is necessary.
This ruling highlighted the need to control advertisements which have the potential to threaten the health of people.
(c) Broadening of Consumer Protection Ideals.
In Luknow Development Authority v M.K. Gupta, the Supreme Court also strengthened the rights of consumers. Though the case was mainly about the inadequacy of the services in housing projects the Court emphasized the necessity of the extensive application of consumer protection laws in order to protect the consumers against exploitation and unfair trade practices.
The Court noticed that the aim of the consumer protection laws is to offer simple, fast and economical solutions to consumers who suffer losses as a result of unfair or misleading acts.
This ruling is often referred to as being used in consumer protection cases since it laid the groundwork of consumer welfare being the central goal of regulating and judicial activity.
(d) Professional Services Misleading Claims.
In Indian Medical Association v V.P. Shantha the scope of the consumer protection law was further increased. The Supreme Court considered the question of whether medical services might be considered service to the consumer protection laws. The Court decided that medical professionals that offer services on consideration were subject to the consumer protection law.
The decision has far-reaching consequences on misleading advertisements in professional services. Under consumer protection laws, medical practitioners and healthcare institutions can now be held accountable in case of exaggerated claims regarding the treatments or services that they offer.
(e) Judicial approach to comparative advertisement.
The other major problem that Indian courts have dealt with is that of comparative advertisement whereby businesses compare their products with others in the market in an attempt to sell them. The Delhi High Court in PepsiCo Inc v Hindustan Coca Cola Ltd, tested the aspect of advertisements on the scale of comparing competing soft-drink brands as unfair trade practices.
The Court stated that comparative advertising can be done as long as it is factual and is not deceptive to the consumers. Advertisements that misstate facts or unfairly negate the product of the competitor are however considered illegal.
Likewise, in Colgate Palmolive India Ltd vs Hindustan Unilever Ltd, the Delhi high court restated that companies have the right to make comparisons but should not provide false information on the quality or efficacy of the other competing products.
These rulings create legal essentials on the boundaries of comparative advertisement.
(f) Misleading Product Representation Consumer Remedies.
Another case on misleading product representations was in the Supreme Court in National seeds Corporation Ltd v M. Madhusudhan Reddy. Here, farmers bought seeds on the basis of the claims by the manufacturer with regards to their productivity. Nevertheless, the seeds did not deliver what they promised and the farmers were making losses.
The Supreme Court supported the claim by the manufacturing company that it had made misleading representations and compensated the farmers who were victimized. The Court underscored the fact that manufacturers have to make sure that assertions that they made in their advertisements are accurate and have evidence.
This ruling supports the fact that consumers have a right to compensation in case they incur loss as a result of misleading advertisements.
(g) Emphasis on Consumer Welfare by the Judiciary.
In each of these, it has been noted that Indian courts have always stressed that consumer protection is a fundamental element of the fair and transparent market economy. The judicial intervention has been critical in ensuring that business enterprises are not involved in misleading advertisements.
It has been observed by the courts many times that false advertisements undermine consumer confidence and market competition. Thus, the court decisions have led to the creation of legal principles according to which advertisements must be honest, open, and confirmable.
- Critical Evaluation
In India, misleading advertising still exists, even despite the existence of statutory provisions and judicial precedents.
One of the central issues is related to the blistering development of digital marketing. Through social media, advertisers are able to target millions of consumers in real time and the industry is often unregulated. Influencer marketing has also blurred the line between genuine consumer feedback and sponsored and promoted material.
Another problem is the challenge of tracking internet advertisements. It might be difficult to identify deceptive statements that are spread in thousands of digital platforms and sites to be noticed by regulatory authorities.
There is an argument that the legal framework that is presently in existence does not sufficiently deal with these new challenges. To create transparency in the digital advertising, more effective regulatory practices and more explicit disclosure demands of sponsored content are needed.
III. Comparative Analysis and Reform Proposals
- Comparative Perspectives
An international comparative analysis of the legal frameworks of various jurisdictions can bring a lot of understanding of how the different jurisdictions currently deal with misleading advertisements and protect consumer interests. Various nations have established dedicated regulatory mechanisms aimed at enhancing transparency in the field of advertising, as well as, to hold advertisers responsible of government misleading marketing practices.
(a) The European Union
An effective legal framework, which deals with misleading advertisements, has been issued by the European Union, in particular, the Unfair Commercial Practices Directive 2005/29/EC. This Directive specifically prohibits commercial activities which deceive consumers about the nature, characteristics or price of goods and services. An advertisement under the Directive is considered misleading in case it includes false information or produces a deceptive impression which is likely to shape consumer choices. The member states must enforce these provisions through their national consumer protection authorities, so that the EU model gives a priority to transparency and harmonization of consumer protection among member states.
(b) The United Kingdom
Misleading advertisement is regulated in the United Kingdom by the Consumer Protection from Unfair Trading Regulations 2008. These laws bar deceptive acts and omissions that have the potential to mislead the consumers with regard to the quality, price or advantages of goods. Advertising standards are also controlled by the Advertising Standards Authority who have code that advertisements must be truthful and not misleading. It is a hybrid system which consists of statutory and industry self-regulation, where advertising behaviors are well regulated.
(c) The United States
The Federal Trade Commission (FTC) under the Federal Trade Commission Act is the main regulatory agency of misleading advertisements in the United States. The FTC forbids unfair or misleading practices in the commercial activity, has the power to examine misleading advertisements, and may punish the offenders. The advertisers should make sure that the advertisement is truthful and sufficiently supported by evidence. Besides, the United States has established a set of rules that require influencers to state sponsored endorsements visibly to reduce the effects of deceit in online advertising.
- Reform Proposals in context to India.
The Consumer Protection Act of 2019 provides a structure on how to deal with deceptive advertisements, whereas the online market is coming up fast. Further reforms are required to actually safeguard the consumers in this dynamic environment.
(a) Stronger Regulations in Digital and Influencer Advertisements.
The influencers and digital advertisers should also place a clear declaration of when they are posting sponsored content. Transparent disclosure will help avoid the tendency of being deceived by the hidden promotions to customers.
(b) Enhanced Enforcement of the Law.
The Central Consumer Protection Authority should be given more authority: increased fines and enhanced monitoring devices. Such measures will aid in discouraging unscrupulous cases of advertising practices.
(c) Increased Responsibility of the Internet Platforms.
Internet advertising should make sensible effort to prevent the proliferation of deceptive advertisements using their services.
- Conclusion
Misleading advertising is one of the greatest barriers to consumer protection in India, where digital marketing and social media advertising are increasing at an alarming rate. Advertisement does contribute to ensuring that the shopper is informed and a shopping competition is a good thing, however, the misleading information can be that which is false or exaggerated, leading to financial or health issues.
India has made significant legal measures to combat this issue. Consumer Protection Act of 2019 controls false advertisements and enhances rights of consumers. Central Consumer Protection Authority has gone a step further to enforce this by permitting the investigators to conduct their investigations into false advertising and penalize the same. The requirement to be truthful in advertisements has also been strengthened by courts such as in the case of Tata Press Ltd v. MTNL and National Seeds Corporation Ltd vs. M. Madhusudhan Reddy.
Regardless of these precautions, the rapid growth of online platforms, influencer marketing, as well as web advertisements continue to pose new regulatory challenges. To ensure that effective protection is guaranteed, it is important to enhance enforcement, improve transparency in digital advertising, and raise awareness to consumers.
Simply put, advertisers and endorsers require more vigilance and accountability to ensure that advertising in the changing digital market in India is transparent, fair and in line with the aim of protecting consumers.
Reference(S):
Statutes and Regulations
Consumer Protection Act 2019 (India) s 2(28), s 2(47), s 18, s 21(2), s 21(5), s 89.
Drugs and Cosmetics Act 1940 (India).
Drugs and Magic Remedies (Objectionable Advertisements) Act 1954 (India).
Food Safety and Standards Act 2006 (India).
Unfair Commercial Practices Directive 2005/29/EC OJ L149/22.
Consumer Protection from Unfair Trading Regulations 2008 (SI 2008/1277).
Federal Trade Commission Act 15 USC § 41–58 (2018).
Cases
Tata Press Ltd v MTNL (1995) 5 SCC 716.
Hamdard Dawakhana v Union of India AIR 1960 SC 554.
Lucknow Development Authority v MK Gupta (1994) 1 SCC 243.
Indian Medical Association v VP Shantha (1996) 1 SCC 552.
PepsiCo Inc v Hindustan Coca Cola Ltd 2003 (27) PTC 305 (Del).
Colgate Palmolive India Ltd v Hindustan Unilever Ltd 2014 (58) PTC 300 (Del).
National Seeds Corporation Ltd v M Madhusudhan Reddy (2020) 1 SCC 319.
