The Black Magic of Misleading and False Advertising: Enchanting the Untold

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From Yami Gautam’s Fair and Lovely to the infamous Red Bull advertisement, haven’t we seen enough? As laymen, it is not very difficult to fathom the concept of an unfair or misleading advertisement; so long as one knows the meaning of those words, it is quite simple to decipher what such an ad would entail. Normally, one sees their favourite celebrity or influencer advertising a product that excites their interest, attracts their attention, and eventually convinces them of possessing certain properties. Now, the difference between a bona fide and a misleading advertisement lies at the fag end. ‘Is a product truly capable of accomplishing what it claims or is it simply overstating its ability?’ is the real question. 

The aforementioned two instances have obviously failed to fulfil their purpose of purchase. While Fair and Lovely never really changed the natural colour of one’s skin, Red Bull, too, has never given us wings. But the distinction lies in the approach, set-up, satire, and most of all, the legality of either advertisement. Red Bull, on the one hand, simply made a sarcastic, hyperbole, and tagline; Fair and Lovely, on the other hand, made a groundless, unscientific claim of bleaching your skin without bleaching agents and making you ‘fair’ and ‘lovely’. Images to trick the consumer were used and specifications omitted. If not by now, then at least by the end of this legal analysis, one will be able to completely comprehend the legal distinction between these two advertisements.

 

WHAT AMOUNTS TO A FALSE ADVERTISEMENT?

Per §2(28) of the Consumer Protection Act, 2019 (1) : A misleading advertisement is one that “falsely describes such product or service; or conveys an express or implied representation which, if made by the manufacturer, seller, or service provider thereof, would constitute an unfair trade practice; or deliberately conceals important information; gives a false guarantee to, or is likely to mislead, the consumers as to the nature, substance, quantity, or quality of such product or service.”

The Hon’ble Delhi High Court (2) has also outlined the concept with the following guidelines:

1. An advertisement is protected under Article 19(1)(a) as commercial speech.

2. Provided that it is not false, misleading, or deceptive in any manner.

3. However, a glorious representation of one’s product cannot be considered deceptive or misleading and only when it goes beyond mere glorification will it lose its protection under Article 19(1)(a).

The Indian Constitution’s Article 19(1)(a) protects the freedom of expression, including the right to engage in commercial speech. This right, however, is not unrestricted and can be subject to reasonable limitations, particularly if it interferes with the rights of consumers as guaranteed by the Consumer Protection Act of 2019. Under Article 19(1), commercial speech, including advertisements is protected. The Indian Supreme Court has upheld the notion that commercials are protected by the constitution as a form of speech. A functioning democracy and market economy depend on the free flow of ideas and information, which is what this protection seeks to maintain. To shield consumers from deceptive advertising, the Consumer Protection Act of 2019 places reasonable limitations on commercial speech. These limitations are intended to stop intentional withholding of material facts, implied misrepresentations, and misleading descriptions. In the case of Hindustan Unilever Limited v. Gujarat Co-operative Mil Marketing Federation Ltd. (3), the court held that, although companies are allowed to advertise under Article 19(1)(a), this right does not apply to dishonest business practices. The court emphasised that one legitimate limitation on commercial speech is to shield consumers from deceptive advertising.

The interaction between Article 19(1)(a) and the Consumer Protection Act of 2019 demonstrates the importance of balancing the right to free speech with consumer protection. Businesses are free to advertise their products and services, but this freedom comes with the responsibility of not misleading customers. Regulatory frameworks and judicial oversight play critical roles in maintaining this balance, ensuring that consumer rights are protected without unduly restricting commercial speech.

In the case of Havells India Ltd. v. Amritanshu Khaitan (4) , the court clarified the difference between comparative and disparaging advertising. While one is healthy and bona fide, the other is not. Furthermore, it also concurred with previous judgements that only defamation of a competitor leads to a cause of action. The Kolkata High Court held that one is allowed to call one’s own product superior and better than the competitors’, even if it is not true, and it would not amount to legal injury. (5)

The basic tension between free speech and consumer protection is brought to light by the balance between Article 19(1)(a) and the Consumer Protection Act. Marketers contend that highlighting a product’s advantages, even through exaggeration, should be permitted under their right to free speech in the commercial sphere. But this has to be balanced with the responsibility to not deceive customers. Encouraging deceptive advertising under the pretence of free speech can damage consumer confidence and create inefficiencies in the market. Therefore, regulatory oversight is crucial in preserving this equilibrium and guaranteeing that consumer protection discourages misleading practices, rather than stifling lawful commercial speech.

 

PUFFING AND MISLEADING ADVERTISEMENT

Under the Consumer Protection Act of 2019, it is essential to distinguish between misleading advertising and puffing, which are exaggerated claims that are not deceptive. Puffing is the term for advertising claims that are unmeasurably subjective, and therefore not subject to legal action. Conversely, deceptive advertising encompasses inaccurate depictions, tacit misrepresentations, or purposeful withholding of crucial details.

The Consumer Protection Act of 2019 provides a clear definition of misleading advertisements in §2(28). Nonetheless, puffing is not mentioned in the Act specifically. To draw this fine line, courts have intervened. Puffing is regarded as lawful as long as the claims made aren’t so misleading as to mislead customers about the true nature of the good or service. In the case of PepsiCo India Holdings Pvt. Ltd. v. Hindustan Coca-Cola Beverages Pvt. Ltd., (6) Coca-Cola was accused by PepsiCo of demeaning its product in an advertisement. As a result of PepsiCo.’s assertions that they had not provided misleading information about Coca-Cola’s product, the court determined that the advertisements were merely puffery. This instance shows how puffing is accepted as appropriate exaggeration in promotional material. Businesses must be aware of the thin line separating deceptive advertising from puffery in order to stay out of legal hot water. Although some degree of promotional exaggeration is permitted in puffery, it must not go too far in deceiving consumers, as this is against the Consumer Protection Act of 2019, and illegal.

The subtle distinction between deceptive and puffing advertising lies in how it affects how consumers perceive and make decisions. Puffing is considered a harmless form of exaggeration, but when it becomes dishonest, it becomes problematic. Advertisers have to tread carefully, making sure that their claims don’t cross the boundary into deceptive abilities while remaining inside the domain of subjective opinions. Maintaining consumer trust and legal compliance both depend on this balance. A deceived customer can have long-term repercussions on a brand’s loyalty and reputation, in addition to being a legal liability.

 

BRANDS AND THEIR CLAIMS

Some of the world’s biggest brands have been caught up in notorious false advertising lawsuits. This makes us think about how making a far-reaching or misleading claim not only violates a consumer’s right to data, the right to make a decision, or the right to be protected from dangerous products, but also compromises the goodwill of the brand. Financial challenges and legal repercussions, eventually leading to a loss of consumers and trust in its products has been the natural conclusion to many such lawsuits. The following instances (7) underscore the honesty, transparency, and accuracy an advertisement calls for:

Due to its deceptive advertising tactics, well-known Volkswagen encountered grave legal issues. The company ran “clean diesel”; marketing, misrepresenting diesel in VW and Audi cars – calling it both compliant with emissions regulations and green/eco-friendly. Reportedly, their claims on low-emission and eco-friendly diesel vehicles relied on the use of “defeat device” (8) that easily manipulated emissions tests by giving false results. Following a protracted legal battle centred on fraudulent advertising, the blatant dishonesty led Volkswagen to settle. The company received immense backlash due to the $10 billion compensation to the US Federal Trade Commission, eroding its reputation.

The example of Red Bull in the beginning stands uncorrected, as the company faced a class- action lawsuit valuing $13 million. Not for its infamous slogan, ‘Red Bull Give You Wings’, but for making false claims that their drinks would provide certain practical advantages, like enhanced physical performance and reaction time, without any scientific backing , tricking customers into paying a higher price for their energy drinks. So much so that, any consumer who ever bought a drink was liable to receive a $10 cheque in compensation. While Red Bull remains a well-known brand, this lawsuit emphasised the need to carefully evaluate the veracity of their marketing statements and the possible effects on their standing with the public and customer confidence. 

Another incident from 2014 comes to light. A well-known beauty and skincare brand by the name of L`Oreal faced legal action for marketing two skincare products: Lancôme Génifique and L’Oreal Paris Youth Code. Even though making exaggerated beauty claims is no surprise in the said industry, the company violated the law when it misled its consumers and deceived them with terms like “clinically proven”; to “boost genes”; and produce “visibly younger skin in just seven days”; The FTC questioned the veracity of these audacious health claims, concluding that they were unsubstantiated and vague. (9)

 

AUTHORITIES AND PENALTIES

The Central Consumer Protection Authority (CCPA), also referred to as the Central Authority, was established under §10 (10) of the Act of 2019 to regulate problems pertaining to deceptive ads that infringe upon consumer rights. Its goal is to ensure no goods or services are falsely or deceptively advertised, violating the terms of the statute or any rules thereunder. While ensuring that no one is a party to such advertisements, the CCPA also holds the power to hear matters on violations of consumer rights, unfair trade, and misleading or deceptive advertising. It aims to advance, uphold, and defend the rights of consumers. (11)

Additionally, §16 (12) of the Act, 2019 grants the District Collector the authority to look into complaints of false or misleading ads upon receiving them or upon obtaining a referral from the Central Authority. An aggrieved consumer may bring to the notice of the District Collector an instance of unfair trade practices and seek an inquiry under § 18 of the Statute, which also permits ‘Suo-Moto’ action.

The Supreme Court in the matter of Common Cause v. UoI (13) emphasised the role of AISC (14) as a non-governmental organisation, tackling the lack of a penal law against ‘misleading advertisement’ with the goal of maintaining and upholding the public’s faith in advertisements by adhering to a self- regulating code of ethics, morality, honesty, and competitive fairness.

The CCPA published the ‘Guidelines for Prevention of Misleading Advertising and Endorsements’ in June 2022. It defines essential terms like bait advertising, free claim advertising, surrogate advertising, etc. They protect child consumers and spectators from misinformation and deception and take specific note of them as highly susceptible and easy targets. The Guidelines ensure that disclaimers at the beginning of an advertisement do not conceal or subsume important information. CCPA also fines a contravention with Rs. 10 lakh (15) and every future contravention with Rs. 50 lakh.

 

WAY FORWARD

The influence of advertising and display is increasingly penetrating our society with rapidly changing trends, social media, and click-of-a-button data sharing, making the existing supervisory rules and regulations insufficient for tackling this conundrum. The rights of consumers are truly hanging by a thread in this modern digital era. Traditional problems like making bogus claims, overstating prices, and incorrect labelling are only the tip of the iceberg.

These increasing risks require not only statutory tackling but consumer awareness as well. While the law penalising violations in this matter must remain effective, the influx of new violations requires consumers and the public at large to take the bull by the horns. This can be achieved through consumer education, making informed choices, and the overall empowerment of the Indian public. Needless to say, a business is required to uphold integrity and ethics while seeking to further their profits . A deceptive and misleading advertisement is a mesh of half-woven truths and promises that yearn to entrap hopeful innocents.

 

FOOTNOTES

(1) Consumer Protection Act, 2019, § 2(28), No. 35, Acts of Parliament, 2019 (India).

(2) Dabur India v. Colortek Meghalaya Pvt. Ltd., 2010 SCC OnLine Del 391.

(3) Hindustan Unilever Limited v. Gujarat Co-operative Mil Marketing Federation Ltd., 5 Suit (L) No.204 of 2017 BOM HC.

(4) Havells India Ltd. v. Amritanshu Khaitan, 2015 SCC OnLine Del 8115.

(5) Reckitt & Colman of India Ltd. v. M.P. Ramchandran, 1998 SCC OnLine Cal 422.

(6) PepsiCo India Holdings Pvt. Ltd. v. Hindustan Coca-Cola Beverages Pvt. Ltd., 2003 (27) PTC305 (DEL).

(7) Brock Munro, (March 20 2024) 5 Misleading Advertising Examples, Publift Blog At: https://www.publift.com/blog/misleading-advertising-examples

(8) GUILBERT GATES et all. (March 2017) ‘How Volkswagen’s ‘Defeat Devices’ Works: Scandal Explained’, The New York Times At: https://www.nytimes.com/interactive/2015/business/international/vw-diesel-emissions-scandal-explained.html

(9) Lesley Fair (June 30, 2014) FTC to ‘L’Oréal: Scientific claims need proof that’s more than just skin deep’, Federal Trade Commission Blog, USA At:https://www.ftc.gov/business-guidance/blog/2014/06/ftc-loreal-scientific-claims-need-proof-thats-more-just-skin-deep.

(10) Consumer Protection Act, 2019, § 10, No. 35, Acts of Parliament, 2019(India).

(11) Chawla, N., Kumar, B. E-Commerce and Consumer Protection in India: The Emerging Trend. J Bus Ethics 180, 581–604 (2022). https://doi.org/10.1007/s10551-021-04884-3.

(12) Consumer Protection Act, 2019, § 16, No. 35, Acts of Parliament, 2019(India).

(13) Common Cause V. UoI AIR 2018 SC 1665.

(14) The Advertising Standards Council of India, https://ascionline.in/index.php/ascicodes.html.

(15) Central Issue ‘Guidelines on Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, (June 2022) Ministry of Consumer Affairs, Food & Public Distribution.

 
Aarya Shrivastava
Dibyansh Bagaria
Samyak

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