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In our business of media and advertising timely information sharing is knowledge creation. Industry Omnibus is an endeavor to showcase industry best practices through industry wide research, case studies, industry newsletters and other relevant information with exchange4media subscribers. Industry Omnibus further meets the expectations of our industry, which has made exchange4media an industry resource.

Legal and Ethical Aspects of Advertising- Dr. Sheetal Kapoor
Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor . In today's fast-paced, high-tech age businesses use advertising to make prospects aware of their products and services and to earn profits through increasing their sales and sales turnover. Advertising reflects contemporary society. The making of an ad copy, its message, its illustrations, the product advertised, the appeal-used all these have a social flavour. Advertising affects society and gets affected by it. It is therefore, necessary to use this weapon with caution to avoid a corrosive effect on social values.

Can we escape ourselves from advertisements? Consumers are bombarded with more than 1500 commercial messages a day . For most companies, the question is not whether to communicate but rather what to say, how to say it, to whom and how often. To reach target markets and build brand equity in this cluttered market advertisers sometimes overstep social and legal norms. This paper attempts to explore the ethical concerns in advertising. Ethical norms deal with character, norms, morals and ideals. They give an idea of what is fair or unfair or what is right and wrong. The ethical principles underlie social policies and are dictated by the society we live in. Like any other profession, the advertising field is governed by the laws and enactment governing the mass media. By citing live cases the paper discusses the nature of problems faced by the consumers through misleading advertisements and evaluates the relative efficacies of institutional mechanisms, laws and regulations available for easy redressal of consumers. Outdated laws, poor enforcement of them are some of the lacunas in order to control advertising.

When is advertising deceptive-

The Constitution of India guarantees freedom of speech. Special restraint is needed in commercial speech including advertising. An advertisement is called deceptive when it misleads people, alters the reality and affects buying behaviour. According to Federal Trade Commission (USA) deception occurs when -

1. There is misrepresentation, omission, or a practice that is likely to mislead.

2. The consumer is acting responsibly in given circumstances

3. The practice is material and consumer injury is possible because consumers are likely to have chosen differently if there is no deception.

Deception exists when an advertisement is introduced into the perceptual process of the audience in such a way that the output of that perceptual process differs from the reality of the situation. It includes a misrepresentation, omission or a practice that is likely to mislead. These may include the following:

1. Violates Consumers' Right to Information: Use of untrue paid testimonials to convince buyers, quoting misleading prices, disparaging a rival product in a misleading manner are some examples of misleading. Advertisers of anti- aging creams, complexion improving creams, weight loss programs, anti-dandruff shampoos, and manufacturers of vitamins or dietary supplements are usually guilty of making exaggerated product claims. Some of the examples of advertisements in this category are:

" A fairness cream is advertised with the claim that its user will get a fair complexion within a month.

" Parle G Original Gluco Biscuits puts a tall claim of being 'the World's largest selling biscuits' on its package on the basis of the results of a survey done in the Year 2003 by A. C. Nielsen.

" Advertisements by some financial companies such as doubling money in a given time without base to justify claim are deceptive in nature.

" Many colleges misrepresent in their prospectus that the institution is affiliated to a particular university and an accredited one. In one of the cases decided in 2004 the complainant took admission believing representations made in prospectus that college was recognized by the government of Punjab and was also approved by the Central Council of Indian Medicine for the whole course of five and a half years . The complainant deposited Rs.1,00,000/- as donation and Rs. 65,000 as admission fees. Four years after 1996-97 no exams were being held. The Punjab University, CCIM and Baba Farid University did not grant any affiliation for want of requisite infrastructure. It was held to be a case of unfair trade practice and deficiency in service.

In the case of Bhupesh Khurana vs Vishwa Buddha Parishad a class action suit was filed by twelve students who had joined the BDS course offered by the Buddhist Mission Dental College run by Vishwa Buddha Parishad. The students' complaint was that the college, in its advertisement and prospectus inviting applications for the course, had given the impression that it was affiliated to Magadh University, Bodh Gaya and recognized by the Dental Council of India and was fully equipped to give the degree of Bachelor of Dental Science. However, after joining the college and attending classes, the students found to their dismay that the annual examinations were not being held because the college was neither affiliated to Magadh University, Bodh Gaya and nor recognized by the Dental Council of India. As a result the students lost two precious academic years, but also spent money on fees, hostel charges, etc. holding the college to be deficient the National Commission directed it to refund the admission expenses of all the twelve students along with interest of 12 percent .

2. Violates Consumers' Right to Safety When an advertisement for cooking oil says that using the said oil frees the user from heart problems, then such an advertisement is misrepresenting the facts. Companies advertise products highlighting health cures and drugs of questionable efficacy and health gadgets of unknown values. Tempted by an advertisement, claiming to increase a person's height, Nadiya,a Class VIII student having a height of 135 cms got admitted to Fathima Hospital for surgery, on 24-7-1996, for increasing her height. The surgery was conducted and a ring fixator was fixed on the legs which had to be adjusted every six hours. To her dismay Nadiya found her left leg shorter by inches, and therefore she could not walk. By September 1996, the pain had increased and the complainant was bed-ridden till March, 1998. the Commission held the hospital and the doctors negligent and deficient in their service and directed them to pay Rs. 5,00,000 with costs amounting to Rs. 2,000 to the complainant.

Many of the juice, sharbat, wafer manufacturing companies do not mention the ingredients used in it. For example, Haldiram offers many types of sharbats which are artificially flavoured but the front side of the package has big and attractive pictures of the fruit itself, creating misunderstanding amongst the consumers.

3. Violates Consumers' Right to Choice: When material facts which are likely to influence buying decisions are not disclosed the advertisement becomes deceptive. In several advertisements it is stated that 'conditions apply' but these conditions are not stated. Not disclosing material facts amounts to deception. For example, the recent print ad for Videocon mentions a 1-ton split-AC available for Rs. 15,990/, a very attractive offer. But there is a small asterisk which mentions three things in small font. They are:

" Conditions apply

" Prices valid in Delhi and NCR under exchange only

" Actual products may differ from those displayed in the offer.

Such ads not only mislead consumers by concealing important information from them. Advertisements for general medicines available over the counter, never talk of the side effects that may result from their frequent use.

4. Advertisements directed at children

Children in India constitute 18.7 per cent of the World kids population and one-third of our country's population is under the age of 15 years. Thus in India, children form a massive 30per cent of the total population and this segment is growing at a rate of 4 per cent per annum. This means a huge target market of 300 million is available to advertisers and they are already focusing on the kid channels.

A survey by A C Nielsen UTV's research partner showed that an average child watches TV for about three hours on week days and 3.7 hours on weekends, the time spent on television goes up with age, and the preferred language of viewing is Hindi across all age groups. Apart from the programmes children also view a lot of the advertisements.

In India the advertising expenditure per year on products meant for children but purchased by parents, like health drinks, is 12 to 15 per cent of the total Rs. 38,000 million. Ad expenditure per year on products meant for children and also bought by them such as chocolates is seven to eight per cent. The advertisers rely on the children's pester power on their parents. The ethical issues involved are advertisers try to exploit Young children by advertising products that are not conducive to their health.

" Children are nave and gullible and are vulnerable to advertiser's enticements.

" They lack independent judgment and experience.

" The line between the children's shows and commercials is fading

" Is the strategy of selling to parents by convincing the children a fair one? Most parents would think it is unfair.

5. Puffery

It means the use of harmless superlatives. The advertisers use them to boast of the merits of their products (best, finest, number one, etc.). Even law permits trade puffing or exaggeration. But subjective statements of opinion about a product's quality are so untrue that it becomes an outright spoof and which is not true. In 1997 MRTP Commission asked Hindustan Lever company to stop its campaign that its Pepsodent toothpaste was 102 per cent better than the Colgate toothpaste. Hindustan Lever was restrained from "referring to any Colgate Toothpaste in any manner, either directly or indirectly, by means of any allusion or hint in its TV commercials or newspaper advertisements or hoardings, by comparison of its New Pepsodent with any product of Colgate in general, and Colgate Dental cream in particular .

6. Use of sex appeals

Sex appeal is used explicitly to sell all kinds of things. It is used to gain consumer attention. It is used where it is not even appropriate to the product or service being advertised. Women are shown as decorative objects or as sexually provocative figures for advertisements for products and services where women are not required. The corporate sector should be encouraged to eliminate the violation of women's rights online and the internet service providers to undertake efforts to minimize pornography, trafficking and all forms of gender based violence.

7. Bait advertising

It means taking advantage of consumer psychology and depriving consumers of a choice. For example, a consumer is lured into a retail outlet by an advertisement for a low cost item and then is sold a higher priced version or to be defective. Once the consumer enters the store, he or she is pressured to purchase another more expensive item. On visiting such stores, one finds a handful of outdated products on the discount announced and other better products as 'fresh stock'.

8. Advertising of harmful products

Advertising is not restricted to products that are good for people. According to law in India advertisements for cigarettes, liquor, paan masala, products that are harmful to the public continue to find a place despite the ban imposed by the government in private channels, cable, and through the use of surrogates. Examples include Mc Dowell's Soda, and Wills lifestyle stores which are seen as surrogate advertising for Mc Dowell's Whiskey and Wills cigarettes respectively. The issues involved are:

- Whether such products should be advertised or not?

- If they should be advertised, and they will need to be advertised so long as their production is not banned, in what media should they be advertised?

- Further, if they are permitted to be advertised, whether the warning signs on the packages of these products really serve any purpose?

The role of in-film advertising and surrogate advertising in promoting the sale of these products also needs to be examined more closely. Advertisers pay film producers to place their products in certain film scenes by integrating the products in the film scripts and screen plays.

Legal Aspects of Advertising

Unfortunately despite several laws meant to protect consumers against such unfair trade practices, false and misleading advertisements continue to exploit the consumer. A number of institutions are involved in regulating advertising. These are:

1. Self regulation by the industry

2. Regulation by the Government

In India the government assumes the role of regulating the business activity by bringing a number of laws, regulations and codes. The following laws have been enacted by the government, which contain provisions that regulate advertising in India.

These laws can be divided into two categories.

I. Laws having horizontal application on advertising

II. The Consumer Protection Act, 1986.

III. The Emblems and Names (Prevention of Improper Use) Act, 1950

IV. Trade and Merchandise Marks Act, 1958.

V. Cable Television Networks (Regulation) Act, 1995

VI. Indecent Representation of Women (Prohibition) Act, 1986.

VII. Monopolies and Restrictive Trade Practices Act, 1969.

VIII. Motor Vehicles Act, 1988

IX. Laws having vertical application on advertising

X. Section 58 Companies Act, 1956

XI. Drugs and Cosmetics Act, 1940.

XII. Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954.

XIII. Pre-natal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994.

XIV. Prevention of Food Adulteration Act, 1954/ Food Safety and Standards Act, 2005.

XV. Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

XVI. Prize Competition Act, 1955

XVII. The Infant Milk Substitute, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992 and Amendment Act, 2002.

XVIII. Transplantation of Human Organs Act, 1994

XIX. The Young Persons (Harmful Publications) Act, 1956

XX. The following Regulatory authorities have power to regulate advertising in their respective domain.

o Insurance Regulatory Development Authority

o Telecom Regulatory Authority of India

o Securities and Exchange Board of India

o Reserve Bank of India

o Medical Council of India

Some of the important features of various laws concerning advertising are:

1. The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 prohibits advertisements for products and services claiming to cure certain medical conditions. As per the law, no advertisement should promise magical cure for any ailments or disease and the rules specify the diseases and ailments that cannot be advertised promising cure or remedies. However, the enforcement of the Act by the state authorities is poor because one finds a number of advertisements in the print media. The Act also does not cover advertisements that appear in various media pertaining to health gadgets of unproven efficacy, like tummy trimmers, bands for blood pressure control, and gadgets to increase height. This Act does not provide for issuing corrective advertisements.

2. The Monopolies and Restrictive Trade Practice act, 1969: It had been the most effective Act in the eighties and nineties to regulate undesirable advertising. In the year 1984, the government brought, through an amendment, "unfair trade practices" under the purview of the MRTP Commission and the Office of the Director General (Investigation and Registration). However, this Act is being replaced by the Competition Act, 2002 but the cases pending under the MRTP Commission are still being heard. Moreover, a Competition Commission has been set up under the Competition Act to deal with monopolies and restrictive trade practices. The complaints pertaining to unfair trade practices are still being handled by the MRTP Commission or the consumer courts. The MRTP Act has been very effective in hauling a number of advertisers to stop advertisements which are prejudicial to consumer interest through its 'cease and desist orders'.

3. The Consumer Protection Act, 1986: The Consumer Protection Act, 1986, applies to advertisements for all products in the market place. A consumer may file a complaint related to false and misleading advertisements, which are included under the definition of unfair trade practice (Section 2 (r) The law mentions seven classes of unfair trade practices in six subsections of this section of the law. The consumer courts can however, take the following actions under section 14 of the Consumer Protection Act, 1986:

" Issue interim orders stopping such advertisements pending disposal

" To pass cease and desist orders.

" Award compensation for loss or suffering, punitive damages and cost of litigation to the affected party.

" Direct the advertiser to issue corrective advertisement

4. Cable Television Networks (Regulation) Act, 1995: This law lays down the procedure for registration of a cable television network and also regulates the programmes and advertisements transmitted on cable network in India. The registering authority is the Head Post Master of a Head Post Office of the area within whose territorial jurisdiction the office of the cable operator is situated.

5. Drugs and Cosmetics Act, 1940

This law regulates the production, manufacture and sale of all drugs and cosmetics in the country. The Act prescribes a fine of up to Rs. 500 for any person using any report or extract of report of a test or analysis made by the Central Drugs Laboratory or a government analyst for advertising of a drug or cosmetic.

6. Section 292 and Section 293 of the Indian Penal Code, 1860, prohibits the dissemination of any obscene matter. The Indian Post Office Act, 1898, imposes a similar prohibition on the transmission of obscene matter through the post. The Customs Act, 1962, allows the detention and seizure of any obscene matter sought to be imported into the country.

7. The Children's Act, 1960, prohibits the disclosure of names and address and other particulars of any child involved in any proceedings.

8. The Indecent Representation of Women (Prohibition) Act, 1986 forbids the depiction of women in an indecent or derogatory manner in the mass media. No person shall publish, or cause to be published, or arrange or take part in the publication or exhibition of, any advertisement which contains indecent representation of women in any form.

9. The Emblems and Names (Prevention of Improper Use) Act, 1950, prohibits the use by any private party of certain names, emblems, etc.

10. Motor Vehicles Act, 1988: This law affects outdoor advertisements, like bill boards, posters, neon signs, etc. The Act, grants powers to remove such advertisements which may distract drivers and have the potential of causing road accidents.

A number of regulatory agencies have also formulated advertising codes to ensure that advertisers do not mislead consumers.

Self regulation by the advertising industry

With the increasing criticism of advertising, advertisers have devised self regulation to ensure true and accurate messages. Moreover, with the advent of new communication and information technologies, the national policy makers have also become less willing and less able to intervene. Since print and audio-visual media exercise the essential freedom of speech and they are financed by advertising revenues, media has always resisted curbs thereby constraining the capacity of national governments to influence media. Further, the business also realizes that the long term profitability of the organisation depends upon acting responsibly.

Agencies involved in self regulation

A number of agencies are involved. These can be classified into the following:

" Advertising trade associations

o Advertising Standards Council of India (ASCI)

o Advertising Association of India (AAAI)

o Press Council of India

o Prasar Bharti

" Individual media and media groups

o Code for commercial advertising on Doordarshan

o All India Radio Code for commercial advertising

ASCI's code of Self Regulation says: "Advertisements should be truthful and fair to consumers and competitors within the bounds of generally accepted standards of public decency and propriety. Not used indiscriminately for the promotion of products, hazardous or harmful to society or to individuals particularly minors, to a degree unacceptable to society at large".

Unfortunately despite several laws meant to protect consumers against such unfair trade practices, false and misleading advertisements continue to exploit the consumer. Outdated laws, poor enforcement of them are some of the lacunas in order to control advertising. The need of the hour is better laws in keeping with the times, better enforcement, corrective advertisements, better self-regulation by industry independent regulator to regulate health and children -related advertisements.

Need for Consumer Action

1. As empowered consumers we should not be gullible to risky advertisements. Children are easily swayed by the false claim of the advertisers and fall in the trap of the greedy advertisers. Therefore one should not blindly follow the advertisements and use logic and reasoning before purchasing anything.

2. MRTP Act had the powers of taking suo motu action whereas the Consumer Protection Act or ASCI, does not have such powers. Only if a consumer or industry complaints to the Consumer Courts or to ASCI then the action can be taken. By the time the action is taken by these bodies to either withdraw or modify the offending advertisement the advertisement has already conveyed the false message. Therefore, it is time to make some amendment in the Act and to give powers to the consumer courts for suo motu action so that they can take up cases of false advertisements on their own.

3. Several consumers and consumer organizations such as, Consumer Voice are fighting against the misleading advertisements. Magazines such as, Consumer Voice, Insight publish advertisements running a column on misleading advertisements. They also request consumers to share their opinions regarding various advertisements so that any advertisement which is deceptive and false can be brought to the notice of the regulators.

4. Further many colleges and schools have started Consumer Clubs where discussions are being carried on unethical advertisements. Kamala Nehru College is the first college in Delhi University for taking this initiative. If consumers feel that an advertisement is not true they can write to Advertising Standard Council of India also.

5. Regarding misleading advertisements related to banks, consumers can complaint to the Reserve Bank of India (RBI). Grievances regarding false advertisements by telecom companies can be made to Telecom Regulatory Authority of India and insurance related matters to IRDA.

The brighter side of all this is that as consumer awareness grows, marketers and advertisers are fast learning that in these days when the consumer is king, nothing but the best would do. As JWT agency quotes, "Advertising is a non-moral force, like electricity, which not only illuminates but electrocutes. Its worth to civilization depends upon how it is used."


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