Legal and Ethical Aspects of Advertising

8/6/2019 Legal and Ethical Aspects of Advertising

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Legal and Ethical Aspects of Advertising- Dr. Sheetal Kapoor

[email protected]

Advertising is any paid form of non-personal presentation andpromotion of ideas, goods, or services by an identified sponsor . Intoday's fast-paced, high-tech age businesses use advertising to makeprospects aware of their products and services and to earn profitsthrough increasing their sales and sales turnover. Advertising reflectscontemporary society. The making of an ad copy, its message, itsillustrations, the product advertised, the appeal-used all these have a

social flavour. Advertising affects society and gets affected by it. It istherefore, necessary to use this weapon with caution to avoid a corrosive effect onsocial values.

Can we escape ourselves from advertisements? Consumers are bombarded with morethan 1500 commercial messages a day . For most companies, the question is notwhether to communicate but rather what to say, how to say it, to whom and howoften. To reach target markets and build brand equity in this cluttered marketadvertisers sometimes overstep social and legal norms. This paper attempts to explorethe ethical concerns in advertising. Ethical norms deal with character, norms, moralsand ideals. They give an idea of what is fair or unfair or what is right and wrong. Theethical 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 enactmentgoverning the mass media. By citing live cases the paper discusses the nature ofproblems faced by the consumers through misleading advertisements and evaluatesthe relative efficacies of institutional mechanisms, laws and regulations available foreasy redressal of consumers. Outdated laws, poor enforcement of them are some ofthe lacunas in order to control advertising.

When is advertising deceptive-

The Constitution of India guarantees freedom of speech. Special restraint is needed incommercial speech including advertising. An advertisement is called deceptive when itmisleads people, alters the reality and affects buying behaviour. According to FederalTrade 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


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3. The practice is material and consumer injury is possible because consumers arelikely 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 thereality of the situation. It includes a misrepresentation, omission or a practice that islikely to mislead. These may include the following:

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

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

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

" Advertisements by some financial companies such as doubling money in a given timewithout base to justify claim are deceptive in nature.

" Many colleges misrepresent in their prospectus that the institution is affiliated to aparticular university and an accredited one. In one of the cases decided in 2004 thecomplainant took admission believing representations made in prospectus that college

was recognized by the government of Punjab and was also approved by the CentralCouncil of Indian Medicine for the whole course of five and a half years . Thecomplainant 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 andBaba 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 wasfiled by twelve students who had joined the BDS course offered by the BuddhistMission Dental College run by Vishwa Buddha Parishad. The students' complaint wasthat the college, in its advertisement and prospectus inviting applications for thecourse, had given the impression that it was affiliated to Magadh University, BodhGaya 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 attendingclasses, the students found to their dismay that the annual examinations were notbeing held because the college was neither affiliated to Magadh University, Bodh Gayaand nor recognized by the Dental Council of India. As a result the students lost twoprecious academic years, but also spent money on fees, hostel charges, etc. holdingthe college to be deficient the National Commission directed it to refund the admissionexpenses of all the twelve students along with interest of 12 percent .


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2. Violates Consumers' Right to Safety When an advertisement for cooking oilsays that using the said oil frees the user from heart problems, then such anadvertisement 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 ClassVIII 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 fixatorwas fixed on the legs which had to be adjusted every six hours. To her dismay Nadiyafound her left leg shorter by inches, and therefore she could not walk. BySeptember 1996, the pain had increased and the complainant was bed-ridden tillMarch, 1998. the Commission held the hospital and the doctors negligent and deficientin 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 theingredients used in it. For example, Haldiram offers many types of sharbats whichare artificially flavoured but the front side of the package has big and attractivepictures of the fruit itself, creating misunderstanding amongst the consumers.

3. Violates Consumers' Right to Choice: When material facts which are likely toinfluence buying decisions are not disclosed the advertisement becomes deceptive. Inseveral advertisements it is stated that 'conditions apply' but these conditions are notstated. Not disclosing material facts amounts to deception. For example, the recentprint ad for Videocon mentions a 1-ton split-AC available for Rs. 15,990/, a veryattractive 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 sideeffects 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 ofour 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 4per cent per annum. This means a huge target market of 300 million is available toadvertisers and they are already focusing on the kid channels.


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A survey by A C Nielsen UTV's research partner showed that an average child watchesTV 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 allage groups. Apart from the programmes children also view a lot of theadvertisements.

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

" 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? Mostparents would think it is unfair.

5. Puffery

It means the use of harmless superlatives. The advertisers use them to boast of themerits of their products (best, finest, number one, etc.). Even law permits trade

puffing or exaggeration. But subjective statements of opinion about a product's qualityare so untrue that it becomes an outright spoof and which is not true. In 1997 MRTPCommission asked Hindustan Lever company to stop its campaign that its Pepsodenttoothpaste was 102 per cent better than the Colgate toothpaste. Hindustan Lever wasrestrained from "referring to any Colgate Toothpaste in any manner, either directly orindirectly, by means of any allusion or hint in its TV commercials or newspaperadvertisements or hoardings, by comparison of its New Pepsodent with any product ofColgate 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 consumerattention. 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 figuresfor advertisements for products and services where women are not required. Thecorporate sector should be encouraged to eliminate the violation of women's rightsonline and the internet service providers to undertake efforts to minimizepornography, trafficking and all forms of gender based violence.


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7. Bait advertising

It means taking advantage of consumer psychology and depriving consumers of achoice. For example, a consumer is lured into a retail outlet by an advertisement for alow cost item and then is sold a higher priced version or to be defective. Once theconsumer enters the store, he or she is pressured to purchase another moreexpensive item. On visiting such stores, one finds a handful of outdated products onthe 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 inIndia advertisements for cigarettes, liquor, paan masala, products that are harmful tothe public continue to find a place despite the ban imposed by the government inprivate channels, cable, and through the use of surrogates. Examples include McDowell's Soda, and Wills lifestyle stores which are seen as surrogate advertising for McDowell'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 theirproduction is not banned, in what media should they be advertised?

- Further, if they are permitted to be advertised, whether the warning signs on thepackages 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 toplace their products in certain film scenes by integrating the products in the filmscripts and screen plays.

Legal Aspects of Advertising

Unfortunately despite several laws meant to protect consumers against such unfairtrade 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 bybringing a number of laws, regulations and codes. The following laws have beenenacted by the government, which contain provisions that regulate advertising inIndia.


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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 ofProduction, 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 theirrespective domain.

o Insurance Regulatory Development Authority

o Telecom Regulatory Authority of India


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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, 1954prohibits advertisements for products and services claiming to cure certain medicalconditions. As per the law, no advertisement should promise magical cure for anyailments or disease and the rules specify the diseases and ailments that cannot beadvertised promising cure or remedies. However, the enforcement of the Act by thestate authorities is poor because one finds a number of advertisements in the printmedia. The Act also does not cover advertisements that appear in various mediapertaining to health gadgets of unproven efficacy, like tummy trimmers, bands forblood pressure control, and gadgets to increase height. This Act does not provide forissuing corrective advertisements.

2. The Monopolies and Restrictive Trade Practice act, 1969: It had been themost effective Act in the eighties and nineties to regulate undesirable advertising. Inthe year 1984, the government brought, through an amendment, "unfair tradepractices" under the purview of the MRTP Commission and the Office of the DirectorGeneral (Investigation and Registration). However, this Act is being replaced by theCompetition Act, 2002 but the cases pending under the MRTP Commission are stillbeing heard. Moreover, a Competition Commission has been set up under theCompetition Act to deal with monopolies and restrictive trade practices. Thecomplaints pertaining to unfair trade practices are still being handled by the MRTPCommission or the consumer courts. The MRTP Act has been very effective in hauling

a number of advertisers to stop advertisements which are prejudicial to consumerinterest 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 acomplaint related to false and misleading advertisements, which are included underthe definition of unfair trade practice (Section 2 (r) The law mentions seven classes ofunfair trade practices in six subsections of this section of the law. The consumer courtscan however, take the following actions under section 14 of the Consumer ProtectionAct, 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 tothe affected party.

" Direct the advertiser to issue corrective advertisement


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4. Cable Television Networks (Regulation) Act, 1995: This law lays down theprocedure for registration of a cable television network and also regulates the

programmes and advertisements transmitted on cable network in India. Theregistering authority is the Head Post Master of a Head Post Office of the area withinwhose 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 inthe country. The Act prescribes a fine of up to Rs. 500 for any person using any reportor extract of report of a test or analysis made by the Central Drugs Laboratory or agovernment analyst for advertising of a drug or cosmetic.

6. Section 292 and Section 293 of the Indian Penal Code, 1860, prohibits thedissemination of any obscene matter. The Indian Post Office Act, 1898, imposes asimilar prohibition on the transmission of obscene matter through the post. TheCustoms Act, 1962, allows the detention and seizure of any obscene matter sought tobe imported into the country.

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

8. The Indecent Representation ofWomen (Prohibition) Act, 1986 forbids thedepiction of women in an indecent or derogatory manner in the mass media. Noperson shall publish, or cause to be published, or arrange or take part in thepublication or exhibition of, any advertisement which contains indecent representationof women in any form.

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

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

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

Self regulation by the advertising industry

With the increasing criticism of advertising, advertisers have devised self regulation toensure true and accurate messages. Moreover, with the advent of new communicationand information technologies, the national policy makers have also become less willingand less able to intervene. Since print and audio-visual media exercise the essentialfreedom of speech and they are financed by advertising revenues, media has alwaysresisted curbs thereby constraining the capacity of national governments to influencemedia. Further, the business also realizes that the long term profitability of theorganisation depends upon acting responsibly.


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3. Several consumers and consumer organizations such as, Consumer Voice arefighting 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 sothat any advertisement which is deceptive and false can be brought to the notice ofthe regulators.

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

5. Regarding misleading advertisements related to banks, consumers can complaint tothe Reserve Bank of India (RBI). Grievances regarding false advertisements bytelecom companies can be made to Telecom Regulatory Authority of India andinsurance related matters to IRDA.

The brighter side of all this is that as consumer awareness grows, marketers andadvertisers are fast learning that in these days when the consumer is king, nothingbut the best would do. As JWT agency quotes, "Advertising is a non-moral force, likeelectricity, which not only illuminates but electrocutes. Its worth to civilization dependsupon how it is used."

Legal and Ethical Aspects of Advertising

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