Misleading ads to face the music, govt working on stringent laws

Following a directive from the Prime Minister’s Office (PMO), the consumer affairs ministry under minister K V Thomas is working on a set of proposals aimed at reining in misleading ads.

The move comes in the wake of attempts by the government to address the needs of consumers who feel cheated after buying products based on exaggerated or misleading claims made by advertisers.

Whilst the Advertising Standards Council of India (ASCI) does have a code that prescribes the norms for advertising, this is voluntary. Barring television, where the code can be enforced, since it is part of the rules under the Cable TV Act, the code does not have a legal back-stop for media such as print and outdoor.

Print advertising is the largest in India, comprising 46 per cent of the Rs 26,000-crore total advertising pie. TV advertising comes next at 42 per cent, five per cent is outdoor, four per cent is radio and three per cent is digital advertising.

Bejon Misra, a consumer affairs expert and former chairman of the Consumer Co-ordination Council, a national body of consumer organisations in the country, says quite often advertisers take advantage of the existing loopholes.

“It is the consumer who suffers at the end of the day when he purchases a product based on false claims,” he says.

Unlike in the United States (US), where the laws protecting consumers are stringent, in India aggrieved parties approach consumer courts against companies whose products they have purchased based on tall claims. Such matters typically drag on for years.

Whilst the government does have the authority to take up class action suits (or public interest litigation) on behalf of aggrieved consumers, that is never exercised.

Misra says the problem in India lies in the fact that consumers are not adequately compensated. “That becomes important if you want to address the issue at its core,” he says. “This will prevent companies from making tall claims in their advertising.”

In the US, the penalty for making tall claims is steep. In a recent case, sports goods maker Reebok agreed to pay $25 million as consumer refunds to settle a lawsuit alleging that its EasyTone shoes were deceptively advertised.

The settlement followed a complaint made by the Federal Trade Commission, a watchdog body in the US, that said Reebok had falsely claimed that walking in EasyTone footwear had proved to lead to 28 per cent more strength and tone in the gluteus maximus (or the rear muscles), 11 per cent in the hamstrings and 11 per cent in the calves.

According to experts, false advertising in the US can lead to lawsuits by competitors or class action suits by consumers or enforcement actions by the Federal Trade Commission (FTC). The latter in many cases intervenes in matters where the campaign concerned is a national one involving the interests of many consumers.

Whilst this kind of intervention is yet to be seen in India, what the ministry is looking to do is to either strengthen the existing Consumer Protection Act or come out with a separate piece of legislation that will look to penalise advertisers who make false claims.

After tabling the proposals, a discussion with the ASCI and the Information & Broadcasting Ministry amongst various other stakeholders will be initiated by the ministry.

Officials from the ministry were not immediately available for their comments. Allen Colaco, secretary general, ASCI said the body would fully co-operate with the ministry in its efforts to protect consumers.