False and Misleading Advertisements

TITLE
Impact of False and Misleading Advertisement on Consumer and Its Solution

DETAILS OF THE AUTHOR

Name: - Aaditya Vasu
Institution: - Damodaram Sanjivayya National Law University, Visakhapatnam
Email ID: - freneticforlaw@hotmail.com
Postal Address: - Damodaram Sanjivayya National Law University, Plot No. 116, Sector-11,
MVP Colony, Visakhapatnam-530017.
Contact Number: - +91-9771258882, +91-8096139609.
DETAILS OF CO-AUTHOR
Name: - Swathi Srivastava.
Institution:- Damodaram Sanjivayya National Law University, Visakhapatnam.
E-mail ID: - swathi_potla23@gmail.com
Postal Address:- Damodaram Sanjivayya National Law University, Plot No. 116, Sector-11,
MVP Colony, Visakhapatnam-530017.
Contact Number: - +91-8179442804.

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TITLE
Impact of False and Misleading advertisement on consumer and its solution

ABSTRACT
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. Moreover it will also cover
Indian laws and many national and international cases for a broad concept of this issue. Method
adopted for this research will be doctrinal and the sources for reference will include A.I.Rs, law
journals, text books, websites and articles.
Key Words: False, Advertisement, Consumer, Right.

INTRODUCTION
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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 groupwhose views are often not
heard1
- John F Kennedy
Advertisement is the process of communicating the most convincing selling message to the right
potential consumer of products or services. It is communicated in a way to influence the
consumer at the right time and place and at least possible cost. It bridges the gap between
producer and consumer. There are various ways of advertisements. Day-by-day many new
innovative techniques of advertisements are coming into the market. In this world of
industrialization and technology, importance of advertising is steadily on the increase.
Advertising, using media is a prevalent, effective force shaping the attitude and behavior of
todays consumers. Advertisements are generally paid by sponsors and are viewed through
different traditional media including newspapers, magazines, banners, television commercials,
radio, mails and various other new media like websites and text messages.
False and misleading advertising is the use of wrong or misleading statements in advertising.
Such advertisements are used to deceive the consumer through false information about the
product. Whether it is a zero cholesterol snack or baby oil that leads to stronger bones or tonics
that help a child grow faster, misleading advertisements are drawing unsuspecting consumers
into purchasing products that offer minimal or no health benefits. Today puffery advertisements
are at their height; advertisers unbarred use caption like fair skin in a week or long hair in one
month which even apparently seems to be false. There are certain guidelines and provisions
regarding advertisements. When any advertisement states something about a product then the
advertiser must have the facts and proof to prove the truthness of the ad. Take for example,
when a toothpaste advertisement states that it contains calcium or it protect from cavities, the
advertisers must have the data to prove this. If he fails to do so then he is making a fake or
deceptive advertisement. Truth is the most essential concept of advertisements which states
that consumers have all the rights to know the necessary information of the products they are
buying. False advertising is illegal in most of the countries including India. Many governments
1 Available at http://www.consumersinternational.org/who-we-are/consumer-rights. last visited
5th March,2014.
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around the world use regulations to control such advertisements. However advertisers still find
various ways to befool consumers in ways that are legal or technically illegal but unenforceable.
ETHICAL AND UNETHICAL ADVERTISEMENTS
Unethical 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.
But some manipulations, a bit of exaggerated claims and a pinch of puffery in advertisements are
permissible and it is not considered as unethical. So products advertised as Best, Oftenly Used,
Mostly Recommended, Long Lasting etc., are accepted and are ethical. So 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 absolutism2.
I.

Ethical Issues in Advertising:-

Advertising is a highly visible market activity and any lapse in ethical standards may be risky for
the company. Some of the common examples of ethical issues in advertising are given below3:

Vulgarity used to gain consumers attention

Misleading information and deception
Puffery
Stereotypes
Racial issues
Controversial products are (alcohol, gambling, tobacco etc.)ethics in Advertising
Consumer should not be mislead
What it promises must be there in the performance of products
Advertising should not be indecent and obscene
As advertising is also a social process, it must honor the norms of social behavior, and

moral sense of the society should not be offended.

ASCI (Advertising Standards Council of India) regulate advertising in India.
Some more ethics and standards to be followed in advertisements:2 See- http://www.euroasiapub.org, last visited on 8th March, 2014
3 ibid
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a. Permission shall not be granted when objects 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 Consumer Protection Act 1986.4
c. Products 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. Picture 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.
Various Deceptive Methods Of Advertisements5
a. Manipulation Of Measurement: Producers may manipulate the standards of the product to mean something different than
the widely understood meaning. Such illegal trade practices are often carried with food
items, standard of gold etc. Companies 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. Selling of
underweight milk pouch, failure to mention the purity or standard of the gold are often
encountered facts which are misleaded by advertisements.
b. Hidden 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. Service taxes, VAT, additional
charges are the various elements which a producer do not disclose in advertisement to
deceive the consumers financially. Such misleads are generally done through online
advertisements.
c. Misuse of word free:- The general meaning of the word free is without cost or
obligation. However, sellers often use this word for something which is merely included
4 Act No. 68 of 1986
5 See-www.Wikipedia.org/False 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. Discounts 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. Most of the
advertisers use such practices to prove the acceptability of their products.
e. Manipulation of terms: - Many 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 6. A wide manipulation is done in terms
of warranties and guaranties of electronic gadgets. Take for example, when a tobacco
company uses terms like light, low tar, ultra-light, natural etc to show that their
products have less adverse effect on health, it is considered as manipulation of terms. Use
of terms like best, new, recommended etc are frequently used to mislead the
consumers.

CONSUMER

PROTECTION

ACT

REGARDING

FALSE

AND

MISLEADING

ADVERTISEMENTS
False and Misleading Advertisements come under Unfair Trade Practices which is given under
section 2(r)7 of Consumer Protection Act, 19868. It states a trade practice which is used for the
purpose of promoting the sale, use or supply of any good or for the provision of any service,
6 Y.V.Rao, Commentary on Consumer Protection Act,1986, Asia Law House,2nd edition,2009.
7 See section 2(1) (r), Consumer Protection Act, 1986.
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adopts any unfair or deceptive practice is considered as unfair trade practices. It also comes
under the Monopolistic and Restrictive Trade Policy (MRTP) Act. The regulatory provision of
the CPA are to be implemented through the clearance of complaints by a three tier quasi-judicial
machinery, established at the district, state and the national levels respectively known as District
Consumer Disputes Redressal Forum, the State Consumer Disputes Redressal Commission and
the National Consumer Disputes Redressal Commission. There are about 500 District Forums
and 32 State Commissions along with the National Commission at Delhi in India. A complaint
regarding misleading advertisement can be filed before the suitable consumer court. Under
section 14 of CPA, 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
party9. 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 ADVERTISING STANDARDS COUNCIL OF INDIA (ASCI)

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 hazardous 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.10
I.
Code of ASCI:-

8 P.K.Majumdar, Law of Consumer Protection in India, Orient Publishing Company, 5th edition
reprint, 2007.
9 Consumer Protection Act,1986
10 International Journal of Research in Finance & Marketing, http://www.mairec.org, Last seen
8th March,2014
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A code for Self-Regulation in Advertising has been adopted by ASCI 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 ASCI
Code 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 ASCI Code is non-statutory but then also it is recognized
under different Indian laws in addition to being adopted by various advertising
bodies. The ASCI Code is not in competition with any law or any rules or machinery
of law, through which the laws are enforced. The ASCI Code only accessorize legal
II.

controls under such laws and not replace them.

Laws protecting the Consumer and Society:The Press Council Act,1978
Electronic Media Monitoring Centre
Emblems and Names Act, 1950
Young Persons Act, 1956
Companies Act, 1956
Standard of Weight and Measurement Act, 1976
Consumer Protection Act, 1986

In addition to the above mentioned acts, there are various numerous laws aimed at protecting the
interest of consumers.11
III.

Products And Services Banned 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. Some of those
products have been enlisted below:

Tobacco:The Cigarettes and Other Tobacco Products (Prohibition Of advertisement And

Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 200312
prohibits all direct and indirect advertising of tobacco products in all media.

11 Article on Advertising Law in India, by Hemant Goyal and Jitendra Jain, Global Jurix
Advocate and Solicitors
12 Act No. 34 of 2003.
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Magical Remedies:The Drugs and Magical Remedies Act, 195413 prohibits the advertising of magical
remedies of any disorder or disease.

Prize chits and Money Circulation Schemes:The Prize Chits and Money Circulation Schemes Act, 1978 14 bans the advertisements
which are related to prize chits and money circulation.

Physicians:The Indian Medical Council (Professional Conduct, Etiquette And Ethics)

Regulations, 200215 which is issued under the Indian Medical Council Act, 1956 16 do
not allow physicians for the advertisement of their services in any manner or through
any mode of advertisement because seeking patients directly or indirectly, by any
physician or by any medical organization is unethical.

Legal Services:The Bar Council of India rules which was formulated under the Advocates Act,
196117 strictly bans the advertisements and publicity rules governing law firms web
websites. These rules were implemented to reduce the false advertisements by
lawyers for their publicity and to attract clients.

LAW REGARDING FALSE AND MISLEADING ADVERTISEMENTS IN USA

13 Act No.21 of 1954.

14 Act No. 43 of 1978.
15 Published in Part III, Section 4 of the Gazette of India, dated 6th April, 2002.
16 Act No. 102 of 1956.
17 Act No. 25 of 1961.
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In USA 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 Commission (FTC). It is charged with power to enforce the Federal Commission
Acts prohibition for deceptive or unfair trade practices. The FTC can scrutinize 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 FTC investigation or desist and cease order can be
destructive to any business18.
There is no private right of action or recovery under FTC. A complaint may be filed by a private
party under FTC which may in certain cases, opt to investigate end impose the order and
retribution stated above. Not only the FTC pursue a small percentage of complaints that it
receives but it also follow the policy of not involving in itself in any private dispute between
competitors.

The FTCs jurisdictions over advertising issues are closely related to the

jurisdiction 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 jurisdiction of the agency responsible for regulating the product in question (for
example the Food and Drug Administration, Consumer Product Safety Commission or
Environmental Protection Agency), and the FTC's powers to the extent such claims may be
insufficiently substantiated or otherwise considered deceptive. Further, if some products have
been imported into the U.S., additional advertising and labeling laws and regulation may apply,
such as the Made-in-USA and country-of-origin marking essentials enforced by both the FTC
and U.S. Customs Service.
CASES IN INDIA RELATED TO FALSE AND MISLEADING ADVERTISEMENTS
The Body Care v. Ashok Kumar Solanki19

18See www.morganlewis.com Last seen 10th march,2014

19 2005 CTJ 417=2005 (1) CPJ 402 (Delhi).
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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. Holding the opposite party to be guilty of adopting
unfair trade practice was directed to pay compensation of Rs 50,000/-.

Philips India Ltd. v. Rakesh Bhatia20: false claiming as to feature of a product.

Promoting a product Philips power house music system claiming to have 17 remote
control functions beside other features but in fact, not providing the same was unfair
trade practice. But since the complainant used the system for ten years, refund was
not ordered but a compensation of Rs 10,000/- was granted.

Dr. C.S. Rahalkar v. S. Khamkhoje21: assembled items as branded.

Delivering 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.

Subhash Mill Udyog v. Arun Pratap Singh and Another 22: representing falsely as to
the name of manufacturer.
Sale of machinery falsely representing it to be that of a certain manufacturer
amounted to unfair trade practices. When such machine stared giving trouble and no
ratification of problems was made, the complainant was entitled to refund of price
and compensation.

20 2005 CTJ 681 (Delhi) =2005 (1) CPJ (Delhi).

21 2005 CTJ 540=2005 (3) CPJ 181 (Chhattisgarh).
22 2007 CTJ 1093 (Madhya Pradesh)
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Bajaj Auto Ltd. and another v. Pankaj Kumar23: false claim of mileage.
Advertisement claiming to give the mileage of 87 kms. per litre on average for
motorcycle which in fact give an average of only 65 kms. per litre was held to be
false and misleading advertisement since the words in ideal condition was
mentioned only in small print. When the manufacturer approached the National
Commission against the order of State Commission, the National Commission
holding it to be frivolous and vexatious slapped it with further cost of Rs 5,000/-.

Cox and Kings (I) Pvt. Ltd v. Joseph A Fernandes and anothe 24: Misleading
Advertisement.
Tours and Travels advertised Two nights/ Three days Cruise on a cruise ship from
Singapore to Malaysia. The cruise was practically of two nights and one and half days
only because the cruise ship was to leave Singapore at 11:59am counting one minute
as one full day. The National Commission held it to be unfair trade practice rejecting
the argument of the opposite party that such representation was in vogue throughout
in travel services. It strongly condemned the practice and directed it to withdraw the
advertisement and issue a corrective advertisement.

CONCLUSION
Every morning when we wake up advertisements are there to greet. It comes to us through
various means whether by reading newspaper, listening to radio, watching television or browsing
internet. Advertisements follow us all day long. Most of them are grossly unethical and
misleading. They deceive consumers by making them believe or purchase products through
factually wrong and distorted information.
Under the Consumer Protection Act, Consumer Forums have been empowered to award damages
and compensation for any suffering or loss which is caused through False and Misleading
23 2005 CTJ 980 (NC).
24 2006 CTJ 783(NC).
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Advertisements. They also award cost of litigation and punitive damages. Most 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 organizations
like All India Consumer Protection Organization, The Consumer Eye India, Consumer India etc.
which are assisting consumers and fighting for their rights but these organizations are not
sufficient enough to tackle the rapidly increasing cases of violation of consumers right through
various unfair trade practices which mainly include cases of False and Misleading
Advertisements. Need of a statutory body regarding this alarming issue has often been sought but
no satisfactory actions has yet been taken by the government. Now there is a need of such body
to save the consumers from further exploitation. Government must take some reasonable
measures to assure the rights of the consumers.

Thanking You
Aaditya Vasu (Author) and Swati Srivastava (Co-Author),
Students, BA LLB , 4th Semester,
Damodaram Sanjivayya National Law University,
Visakhapatnam-17.

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