Regulation of Advertisements**

Meaning of Misleading Advertisement (Section 2(28))

Misleading advertisements are a major area of focus under the Consumer Protection Act, 2019, recognised as a type of unfair trade practice. The Act provides a specific definition for what constitutes a misleading advertisement to enable regulatory action against them.

According to **Section 2(28)** of the Consumer Protection Act, 2019, misleading advertisement in relation to any product or service, means an advertisement, which—

falsely describes such product or service; or
gives a **false guarantee** to, or is likely to mislead the consumer as to the nature, substance, quantity or quality of such product or service; or
conveys an **express or implied representation** which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or
**deliberately conceals material facts** to the detriment of the consumer.

False or deceptive representation

A misleading advertisement can involve presenting information about a product or service in a way that is untrue or intended to deceive the consumer. This falls under the categories of:

**Falsely describes the product or service:** Making statements about the attributes, features, benefits, or performance of the product or service that are simply untrue.
**False guarantee:** Providing a guarantee about the product or service that is not genuine, misleading, or unlikely to be fulfilled.
**Express or implied representation constituting unfair trade practice:** The advertisement, through direct statements (express) or suggestions/implications (implied), conveys information that would qualify as an unfair trade practice (e.g., making false representations about quality, standard, price as listed under Section 2(47)).

These aspects highlight that deception can be direct through false statements or indirect through misleading implications.

False or misleading facts

Beyond outright false descriptions, a misleading advertisement can also be based on presenting **false or misleading facts** about the product or service, or even about external factors related to it (like price history or endorsements). This is captured by points within Section 2(28) and also aligns with the broader definition of unfair trade practice under Section 2(47) concerning false representations.

Giving false or misleading information about the **nature, substance, quantity, or quality** of the product or service.
Creating a misleading impression about the **price** at which the product or service is offered.
Making a claim about efficacy or benefit that is **not based on adequate or scientific data**.

Furthermore, a key element is the deliberate **concealment of material facts** to the detriment of the consumer. An advertisement can be misleading not only by stating something false but also by omitting crucial information that, if known, would alter the consumer's perception or decision about the product or service. For example, advertising a product's benefits while hiding significant side effects or limitations.

The overall test for a misleading advertisement is whether it is **likely to mislead the consumer** about the express or implied claim made within it, to their detriment.

Responsibility for Misleading Advertisements

The Consumer Protection Act, 2019, places responsibility for misleading advertisements not just on the company whose product or service is being advertised, but also on other parties involved in the creation and dissemination of the advertisement. This broadens accountability and helps deter the creation of deceptive ads.

Manufacturer, Service Provider, Publisher, Advertiser, Endorser**

The primary parties who can be held responsible for a misleading advertisement include:

**Manufacturer:** The company that produces the goods being advertised. They are directly responsible for ensuring the claims made about their products are true.
**Service Provider:** The entity that provides the service being advertised. They are responsible for the accuracy of claims about their services.
**Advertiser:** This refers to the company or individual who commissions and pays for the advertisement (often the manufacturer or service provider, but could also be a distributor or retailer). They are responsible for the content of the ad.
**Publisher:** The entity that disseminates the advertisement to the public. This includes media houses (newspapers, television channels, radio stations), online platforms, social media intermediaries, etc. While publishers have certain defences (e.g., if they did not have prior knowledge of the misleading nature and exercised due diligence), they can be held liable if they knowingly publish misleading ads.
**Endorser:** Any person who endorses an advertisement. This includes celebrities, experts, or any person representing that they have used the goods or services and believe them to be true. Endorsers have a responsibility to ensure that their endorsements are not misleading and reflect their genuine opinion or experience. They can be held liable if they fail to exercise due diligence to verify the claims made in the advertisement they are endorsing (Section 21(2)).

This multi-stakeholder approach to accountability ensures that all parties playing a significant role in placing a misleading advertisement before the consumer can potentially be held responsible and face consequences under the Act.

Powers of the Central Consumer Protection Authority (CCPA) to take action against misleading advertisements (Section 20)

The Central Consumer Protection Authority (CCPA) is the regulatory body established under the Consumer Protection Act, 2019, with broad powers to protect consumers as a class. One of its key functions is to proactively address misleading advertisements. While Section 20 primarily discusses the CCPA's power to conduct investigations, the specific actions and penalties regarding misleading ads are detailed in **Section 21**.

Powers of the CCPA related to Misleading Advertisements (Section 21):

Where the Central Authority (CCPA) is satisfied, after investigation, that any advertisement is misleading and is prejudicial to the interest of any consumer or is in contravention of the rights of consumers, it may, by order, issue directions to the concerned trader, manufacturer, endorser, advertiser, or publisher. These directions can include:

**To discontinue such advertisement:** The CCPA can order the immediate stopping of the misleading advertisement.
**To modify such advertisement:** The CCPA can direct changes to be made to the advertisement to remove the misleading elements.
**To issue corrective advertisement:** In some cases, the CCPA may direct the party to issue an advertisement to neutralise the effect of the misleading advertisement (Section 39(g) also gives forums this power).
**Impose monetary penalty:** The CCPA can impose penalties (as detailed in the next subheading).
**Prohibit endorsement:** The CCPA can prohibit an endorser from endorsing any product or service for a specified period.

Initiation of Action (Section 18 & 20):

The CCPA can take action against misleading advertisements based on complaints received from any person, or suo motu (on its own initiative). Section 18 outlines the functions of the Central Authority, including protecting, promoting, and enforcing consumer rights as a class and preventing unfair trade practices. Section 20 gives the CCPA powers to conduct inquiry or investigation if it has reason to believe that any unfair trade practice, including a misleading advertisement, has been committed or is likely to be committed.

The CCPA's powers under Section 21 provide a robust executive mechanism to address misleading advertisements swiftly and effectively, imposing deterrent penalties and directing corrective actions without requiring consumers to individually approach consumer forums.

Penalty for Misleading Advertisement (Section 147)

The prompt refers to Section 147 for penalties for misleading advertisements. However, as noted earlier, **Section 147** deals with the punishment for failure to comply with directions of the Central Authority related to search and seizure during investigations. The penalties for misleading advertisements are primarily laid down in **Section 21** (monetary penalty by CCPA) and **Section 89** (criminal penalty).

Monetary Penalty by CCPA (Section 21):

As detailed under the CCPA's powers, the Central Consumer Protection Authority can impose monetary penalties on parties involved in misleading advertisements:

**Manufacturer or Endorser:** A penalty of up to **ten lakh rupees** for the first contravention. For every subsequent contravention, the penalty may extend to **fifty lakh rupees**.
**Publisher:** A penalty of up to **ten lakh rupees** for the first contravention. For every subsequent contravention, the penalty may extend to **fifty lakh rupees**, if the publisher has seen or approved the advertisement before its publication and has reason to believe that it is misleading. (Publishers can often escape liability if they acted merely as disseminators without knowledge of the misleading nature and exercised due diligence).

Prohibition on Endorsement (Section 21):

In addition to monetary penalty, the CCPA can prohibit an **endorser** of a misleading advertisement from making any endorsement for any product or service for a period which may extend to **one year** for the first contravention, and for a period which may extend to **three years** for subsequent contraventions.

This provision puts significant responsibility on endorsers, requiring them to perform due diligence before endorsing products or services.

Criminal Penalty (Section 89):

Separate from the CCPA's powers, the Act also provides for a criminal penalty:

Any person who makes or publishes, or causes to be made or published, any false or misleading advertisement, which is prejudicial to the interest of consumers, can be punishable with:

**Imprisonment** for a term which may extend to **two years**; AND
With **fine** which may extend to **ten lakh rupees**.

This criminal action would be taken before a Magistrate, potentially initiated by the CCPA or other authorised entity.

Therefore, the penalty regime for misleading advertisements under the Act is multi-pronged, involving substantial fines, potential prohibition on endorsements, and even criminal sanctions, aimed at ensuring truthfulness and transparency in advertising.