MISLEADING ADVERTISEMENTS AND … Patrika wherein the advertisement had appeared had informed ASCI...

MISLEADINGADVERTISEMENTSAND CONSUMERS

PUSHPA GIRIMAJI

INDIAN INSTITUTE OF PUBLIC ADMINISTRATIONNEW DELHI

Consumer Education Monograph Series

Editors : S.S. Singh Rakesh Gupta Sapna Chadah

Published under aegis of consultancy assignment. Promoting Involve-ment of Research Institutions/Universities/Colleges, etc., in ConsumerProtection and Consumer Welfare

Sponsored by : The Department of Consumer Affairs, Ministry of Con-sumer Affairs, Food and Public Distribution, Government of India.

© Indian Institute of Public Administration, New Delhi 2006Price Rs. 20/-

Published by Indian Institute of Public Administration, New Delhi andPrinted at New United Process, A-26, Naraina Industrial Area,Ph-II, New Delhi, Ph. 25709125

MISLEADING ADVERTISEMENTSAND CONSUMERS

PUSHPA GIRIMAJI

The influence of advertisements on consumer choice isundeniable. And it’s this fact that makes it imperative thatadvertisements be fair and truthful. Misleading and falseadvertisements are not just unethical; they distort competitionand of course, consumer choice. False and misleadingadvertisements in fact violate several basic rights of consumers:the right to information, the right to choice, the right to beprotected against unsafe goods and services as well as unfairtrade practices.

Since advertisements are basically meant to promote aproduct or a service, one does see some exaggeration in theway they extol the virtues of the product. But when it goesbeyond that and deliberately utters a falsehood or tries tomisrepresent facts thereby misleading the consumer , then itbecomes objectionable.

When does an advertisement become “ misleading”?

When an edible oil advertisement gives you theimpression that you are free of heart problems so long as youare using that particular oil, then it is misrepresenting facts.When an advertisement of a water purifier that filters onlybacteria (and not viruses) claims that it gives 100 per cent safewater, then it is a false statement. When a mobile operatorpromises STD calls for 40 paise per minute, but omits to saythat this rate is applicable only when calls are made to anothermobile of the same company, then it constitutesmisrepresentation.

Similarly, when an advertiser or a manufacturer makesa claim about a product, he should be able to prove it. Or else itbecomes a false statement. If he says that his refrigerator isthe best or that it keeps the food inside germ-free, that claimshould be backed by adequate scientific data that substantiates

4 Misleading Advertisements and Consumers

the claim. . Or else, it becomes a false statement. . Similarly, ifan advertisement for a detergent says that it can remove greasein just one wash- it should be able to do just that and themanufacturer should be able to prove this. Or else, it is anincorrect statement or a false advertisement..

When an advertisement promises to give you a “freegift” every time you buy the advertised product, the free giftshould really be so. If the manufacturer is recovering either fullyor even partly, the cost of the so-called free gift, then theadvertisement becomes a false or a misleading claim, comingunder the definition of unfair trade practice. Likewise, if aretailer claims that he is offering a special discount on his goodsas part of a festival celebration, while he is actually using thefestival as an excuse to get rid of old and outdated goods, thenhe is deceiving consumers.

When a toothpaste advertisement says that it preventscavities, one expects the manufacturer to have the data to provethis. If he fails to do that, then he is making an unsubstantiatedclaim or a false statement. If an advertisement for a face creamclaims that it removes dark spots on the face and even preventsthem from coming back, the manufacturer should be able toprove this. Or else, it is a deceptive advertisement.

Even reducing crucial information about the product tominute letters at the bottom of the advertisement could be termedas an unfair trade practice, particularly if such information isnot intelligible to the consumer. In fact, in the case ofM.R.Ramesh VS M/S Prakash Moped House and Others,( RPNo 831 of 2001) the apex consumer court warned againstadvertisements that use fine print to hide crucial informationpertaining to products and services, thereby misleading theconsumer

Two categories of false and misleading advertisements:Broadly, one can categorise false and misleading

advertisements into two groups: In the first group would be thosethat basically violate the consumers’ right to information andchoice and thereby have the potential to cause the consumer,

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financial loss and even mental agony.. The second categorywould include those that peddle health cures and drugs ofquestionable efficacy and health gadgets of unknown values.This class of advertisements is the most dangerous, as theycan also have a severe repercussion on the health of theconsumer.

The best example in the second category is that ofNeeraj Clinic,. Rishikesh. Despite the Drugs and MagicRemedies (Objectionable Advertisements) Act, whichspecifically prohibits advertisements pertaining to severaldiseases including epilepsy, R.K.Gupta advertised withimpunity, his clinic and claimed that he was offering a surecure for epilepsy.

Ironically, way back as in 2000, the Indian MedicalAssociation had declared him a quack after a committee hadfound that he was giving his patients toxic drugs in high doses.And in May 2003, on a complaint from a consumer, theAdvertising Standards Council of India (ASCI) had held thatthe advertisement was in violation of the Drugs and MagicRemedies (Objectionable Advertisements) Act and theRajasthan Patrika wherein the advertisement had appearedhad informed ASCI that the advertisement department hadbeen advised to withhold further advertisements of theclinic.(Page 41, 18th report and accounts for the year 2003-2004,ASCI)

Yet, he continued to advertise in other newspapers- infact on the front pages of major newspapers and also ontelevision channels, wherein he produced “testimonials” frompeople who, the advertisements claimed, had been cured ofepilepsy. In the end, a non-resident Indian, who got hismedicines tested, complained through the Indian HighCommissioner in Canada. And finally, a case was registeredagainst him under the Narcotic Drugs and PsychotropicSubstances Act, on the ground that the drugs that headministered contained narcotics in high quantities.

Unfortunately, despite several laws meant to protectconsumers against such unfair trade practices, false and


misleading advertisements continue to exploit the vulnerabilityof consumers, a) because of their poor enforcement and b)because of the lacunae in some of the laws. In fact suchadvertisements now have a wider canvas: while earlier, onesaw them only in the print media,. today you can see them ontelevision, influencing a larger number of people and impactingeven the illiterate. Proliferation of advertisements throughtelevision marketing networks promoting health cures,slimming and beauty gadgets of unproven value is a cause ofgreat concern, because today the reach of television channelsis phenomenal. And undoubtedly, the impact of the visuals onthe television screen is far greater than the newspapers

Reach of the Media.:

As per the nationwide sample survey on householdamenities released by the National Sample SurveyOrganization (Ministry of Statistics and ProgrammeImplementation) in May 2005, 26 per cent of the ruralhouseholds and 66 per cent of the urban households in Indiaowned a television set in 2002. And while 41 per cent in urbanareas had cable television connection, ten per cent in ruralareas, had such facility. While 67 per cent of rural homes hada radio set, 51 per cent of urban homes possessed a radio set.These numbers must have gone up quite considerably by now.Quoting a research organization- Media Partners Asia Ltd-Cable Quest Magazine (May 2005 issue- on the internet) saidIndia had a subscription base of 51.6 million in the multi-channel television subscriber market .

The circulation of the print media is also growing. Ason March 31, 2003, the total circulation of newspapers(including dailies, weeklies, fortnightlies and monthlies)) in thecountry was 14.2 million (Source: Registrar of newspapers)

Even though there are only 4.1 million internetsubscribers in India, (as on December 2003: Internet ServiceProviders Association of India ),one cannot dismiss the damagesuch advertisements can do because internet kiosks and cafesare becoming increasingly popular in small towns and cities

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and a large number of students surf the internet at these kiosks.In fact, a survey ( Internet Service Providers Associationwebsite) showed that 61 per cent of the internet users accessedthe net from schools, colleges, place of work and cyber cafes.

Proliferation on the worldwide web too:

False and misleading advertisements pertaining tohealth cures can be found in abundance on the world wideweb too.- after all, such advertising is a worldwide phenomenon.. The proliferation of false and deceptive advertisements onthis relatively new medium of communication can be gaugedfrom the fact that in 2002, a network of consumer protectionand health authorities from around the globe found as manyas 1400 websites making questionable, unsubstantiatedhealth claims and promising “miracle” cures.

Among such websites were those that promotedslimming and weight loss cures; all purpose pills that alleviatedanything from arthritis, diabetes, hypertension, heart diseaseto kidney problems, tuberculosis, asthma and hepatitis; herbalproducts that promised to rid you of colds , stomach ulcers,hangovers and arthritis; magnets and magnetic devices thattreated anything from headache and back injuries to insomnia,arthritis, circulation problems and sprains; multi-coloured shirtsthat claimed to relieve stress, make the wearer more intelligentand perceptive. On sale were also devices that claimed toobliterate all viruses in the body including AIDS, hepatitis andflu; an enriched urine treatment for incurable illnesses andproducts that enhanced sexual performance and reversed theprocess of ageing.

The “internet sweep” on misleading health claims wasconducted by the International Marketing SupervisionNetwork(IMSN), consisting law enforcement agencies of 30countries from the Asia-Pacific, Europe and North America.Following the “sweep”, IMSN issued warnings to consumers :beware of products or treatments that are advertised as a quickand effective ‘cure all’ for a wide range of ailments, be cautiousof testimonials claiming amazing results, watch out for


advertisers using phrases such as “scientific breakthrough”,“miraculous cure”, “exclusive product” and “secret ingredient”;and before you purchase, consult your pharmacist or otherhealth professionals.

Self Regulation by the Advertising Standards Councilof India:

While in some cases, falsehood or misrepresentationof facts is obvious, in most cases, one has to go behind theadvertisement to find out whether it is uttering falsehood or truth.And this is where the problem lies. By the time an unethicaladvertisement is exposed , it would have already done thedamage.

It is for this reason that the Advertising StandardsCouncil of India is trying to inculcate self-regulation among itsmembers so that such advertisements do not appear at all. .“Regulate yourself or someone else will” is its constant refrain.. A voluntary body of all those involved in advertising, includingadvertisers, advertising agencies and the media, ASCI hasdrawn up a comprehensive advertising code for self-regulation.

The four fundamental principles of the code are :

1. To ensure the truthfulness and honesty of representa-tions and claims made by advertisements and to safe-guard against misleading advertisements.

2. To ensure that advertisements are not offensive to gen-erally accepted standards of public decency.

3. To safeguard against the indiscriminate use of advertis-ing for the promotion of products which are regarded ashazardous to society or to individuals to a degree or of atype which is unacceptable to society at large

4. To ensure that advertisements observe fairness in com-petition so that the consumer’s need to be informed onchoices in the marketplace and the cannons of gener-ally accepted competitive behaviour in business are bothserved.

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If a consumer or even the industry, feels that anadvertisement contravenes the code, a complaint can be sentto ASCI . In fact, ASCI’s advertisements exhort consumers tocomplain, whenever they come across advertisements whichthey think is false or misleading or unethical “If an ad is wrong,we will set it right”; “if an ad is misleading, we will set it right”, “ifan ad is dishonest, we will set it right” says ASCI in itsadvertisements issued at regular intervals.

On receipt of a complaint, ASCI seeks the comments ofthe advertiser and gives him two weeks to respond. And thenplaces the response and the complaint before the ConsumerComplaints Cell (CCC) of ASCI for their decision. If there is noresponse from the advertiser, CCC can take an ex-partedecision. The CCC has 12 non-advertising professionals(including consumer activists) and nine advertisingpractitioners from the member firms . If, in the opinion of CCC, an advertisement violates the ASCI’s code, then the advertiseris asked to either withdraw the advertisement or modify it. .While ASCI members are bound to comply with the decisionof CCC, in respect of others, ASCI tries to persuade them andif necessary uses peer group influence and pressure to achieveits objective.

During the financial year 2003-2004, for example, ASCIreceived 182 complaints, out of which 123 were upheld (Orfound to be in violation of the code) Of these, in 94 cases, theadvertisements were withdrawn or modified appropriately inaccordance with the CCC decision.

Here are a few samples of ASCI’s work in the area ofmisleading advertisements: In June 2003, ASCI received acomplaint about an advertisement spot telecast on Cine CableChannel, Sahara TV, in October 2003, wherein theadvertisement for Ajanta Dento White Toothpaste said “IndianDental Association has endorsed this product with its seal ofacceptance”. IDA confirmed that such endorsement had notbeen provided by them. In the absence of any comments fromthe advertiser, ASCI took an ex-parte decision in July 2003,saying that the claim was false. ( complaints that were upheldby the CCC during April 2003 to march 2004, page 43, 18th


Report and Accounts for the year 2003-2004, the AdvertisingStandards Council of India)

In July 2003, ASCI received a complaint about anadvertisement published in the Hindustan Times, Delhi in June2003 by Ford India, with the caption: “Prices starting Rs 4.49lakhs, lowest interest rate-7.9 per cent” the ad showed the logoand picture of the new “Ford Ikon NXT” but carried thespecifications and offer on the 1.3 NXT and 1.6 NXT modelsand the review of the “Ikon NXT” done by Autocar, a leadingauto magazine. The complainant said that on speaking withthe authorized Ford dealers mentioned in the ad, he wasinformed that the bargain price was not for the NXT, but for theold “Endura” model of Ford, which was phased out earlier thatyear. Nowhere in the ad did this fact come up nor did the dealersmention it, till the complainant pointedly asked them about it. InAugust 2003, CCC held that the “Car model different from theone quoted at Rs 4.49 lakhs, likely to directly mislead theconsumer about the claim: prices starting Rs 4.49 lakhs” in thead”. The advertisement was withdrawn.(Page 19. . complaintsthat were upheld by the CCC during April 2003 to march 2004,18th Report and Accounts for the year 2003-2004, theAdvertising Standards Council of India)

Another complaint registered in October 2003, referredto an advertisement of Hindustan Level saying that Pepsodentis “one and a half times better at fighting germs than the populartoothpaste” that appeared in Sunday Times of India inSeptember that year.. The complainant alleged that HLL’s ownclinical tests confirmed that Pepsodent Germicheck fights germsup to 150 that is only 0.5 times better and not one and a halftimes better, as claimed in the ad. CCC held in December2003 that the claim “one a half times better at fighting germsthan the popular toothpaste” was misleading. The advertisementwas withdrawn (page 31)

Yet another complaint pertained to an advertisement ofGlucovita Badam Energy shown on sun TV in April 2004. Thecomplaint said that though the ad as well as the pack showedliberal doses of almonds, the stated contents on the pack did

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not mention almonds or real almond extracts in the product. InJune, CCC held that the visual depiction of ‘whole almonds’ inthe TVC and on the pack, and the claims of ’Badam Energy’and ‘exciting badam’ in the TVC and on the pack, to be falseand misleading. The advertiser assured that the ad campaignwas being modified and till such time, the ad in its present formwould be discontinued.(page 4, list of complaints that wereupheld by the CCC from April to June 2004, issued by theAdvertising Standards council of India)

ASCI’s efforts are commendable, but the problem is,ASCI does not have a system of suo motu action, it waits forcomplaints , be it from the consumer or the industry. Andtherefore many advertisements that violate the ASCI’s codego unnoticed because no one complains. And then ASCI doesnot provide for corrective advertisement, so by the time ASCIasks the advertiser to either withdraw or modify the offendingadvertisement, it would have already conveyed the falsemessage. Usually between the appearance of anadvertisement, receipt of the advertisement by ASCI and thedecision of the CCC, there is a time gap of anywhere betweena month to two months. Then there are the obvious problemsassociated with self-regulation- the black sheep among themembers who may violate the code or not comply with theCCC’s decision. Also there is not enough publicity for CCC’sdecisions to trigger public condemnation of those who put outmisleading facts in their advertisements.

Besides, representation on ASCI from the advertiserscategory continues to be poor. In its 18th Report and Accountsfor the year 2003-2004, ASCI said it was a cause of concernfor the self regulation movement that over 100 major advertiserswere not yet members of the Council.

Laws, regulations and codes that deal withadvertisements that are anti-consumer:

A number of laws, regulations and codes regulateadvertisements and protect the interests of consumers, But


only two laws –the Consumer Protection Act and theMonopolies and Restrictive Trade Practices Act- provide forcompensation to the consumers affected by false andmisleading advertisements . In fact under both the laws, falseand misleading advertisements are defined as “unfair tradepractices” (Pl See the definition of unfair trade practice in theannexure)

1. Monopolies and Restrictive Trade Practices Act:There are several laws, regulations and codes to tackle

false and misleading advertisements. But one law that reallymade an impact in the eighties and the nineties was theMonopolies and Restrictive Trade Practices Act. In the year1984, the government brought, through an amendment, “unfairtrade practices” under the purview of the Monopolies andRestrictive Trade Practices Commission. And thereby broughtadvertisements under the scanner of the investigative wing-the Office of the Director General(, Investigation andRegistration) as well as the MRTP Commission.

While Section 36 A of the MRTP Act defines an unfairtrade practice (UTP), . Section 36B gives the Commission thepower to inquire into any UTP : 1) upon its own knowledge orinformation, 2)upon receiving a complaint , 3) upon referenceby the central or the state government, and 4) upon applicationmade to it by the Director General (Investigation andRegistration)

Similarly, 36 C provides for investigation by the DG intosuspected unfair trade practices including misleadingadvertisements. . The Commission can also ask the DG toconduct preliminary investigation. 36 D deals with the powerswhich may be exercised by the Commission inquiring into anunfair trade practice.

36D. Powers which may be exercised by theCommission inquiring into an unfair trade practice:

(1) The Commission may inquire into any unfair trade prac-tice which may come before it for inquiry and, if aftersuch inquiry, it is of opinion that the practice is prejudi-cial to the public interest, or to the interest of any con-

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sumer or consumers generally, it may, by order directthat -

(a) the practice shall be discontinued or shall not be re-peated;

(b) any agreement relating to such unfair trade practiceshall be void or shall stand modified in respect thereofin such manner as may be specified in the order;

(c) any information, statement or advertisement relatingto such unfair trade practice shall be disclosed, is-sued or published, as the case may be, in such man-ner as may be specified in the order.

(2) The Commission may, instead of making any order un-der this section, permit any party to carry on any tradepractice, if it so applies and takes such steps within thetime specified by the Commission as may be necessaryto ensure that the trade practice is no longer prejudicialto the public interest or to the interest of any consumeror consumers generally, and, in any such case, if theCommission is satisfied that necessary steps have beentaken within the time so specified, it may decide not tomake any order under this section in respect of that tradepractice.

(3) No order shall-be made under sub-section (1) in respectof any trade practice which is expressly authorised byany law for the time being in force.

A few orders of the Commission on misleadingadvertisements:

Take the advertisement issued by the New UdayaPharmacy and Ayurvedic Laboratory, promoting an ayurvedicproprietory medicine, “:Kamilari”. Claiming to be a sure curefor jaundice, viral hepatitis and gall bladder stone, theadvertisement said the medicine had absolutely no side effects.The advertisement concluded: “Kamilari pills and syrup areeffective even in critical stages of jaundice. If you have a bottleof Kamilari in your house, then jaundice is common cold toyou”. Following a complaint from a consumer saying that it


had not helped him with his gall bladder stone, the Commissionsent a notice of enquiry and asked the Laboratory to prove theefficacy of the drug. On its failing to do so, the Commissionissued a “Cease and desist” order, putting stop to theadvertisement. ( Order of august 12, 1994, reported in (1994)2CTJ 381 (MRTPC)

Similarly when S.K.Agro Industries Pvt Limitedpromised to double, within two years, the amount invested byconsumers in its horticulture project, the Commission issued a“Cease and desist “ order against the advertisement. Holdingthat the respondent had indulged in an unfair trade practice,the Commission said : “The advertisement does not give theslightest hint as to how it is possible to double the amount intwo yeas. Even the explanation furnished to the DG duringinvestigations would fail to convince any reasonable personthat it is possible to earn 100 per cent profit on such aninvestment just within two years” (order dated Jan 20, 1994,reported in (1994) 2 CYJ 73 (MRTPC))

In the case of Krishan Chand Chawla VS TechnologyPark Limited, the application for compensation filed before theCommission alleged that the false and misleadingadvertisement about a residential complex issued by therespondent had resulted in the consumer making a payment ofRs 61,664 to the respondent. Observed the Commission in itsorder: “It is manifestly clear that the applicant has been a victimof false and misleading claims made by the respondent that ithas the requisite information and approval of the competentauthorities to develop the land into a residential complex calledPark City. From the warnings issued by the District Magistrate,Ghaziabad and Bulandsher, there was little doubt that the claimof the respondent was false and misleading”. The Commissionin this case directed the respondent to refund the money alongwith 18 per cent interest and also pay the consumer acompensation of Rs 5000 for the harassment suffered and Rs3000 as cost of litigation ( Compensation application no 193 of1995, decided on Dec 2, 1997, reported in 1998 CTJ200(MRTPC)

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In the matter of PCCI (A division of Pravin Classes),wherein the advertisement promoted a “Master in ComputerApplication” course, the Commission held that theadvertisement was false and misleading in that it falselyconveyed the impression that the respondent had the requisiterecognition from some university or the council of technicaleducation and issued cease and desist order against theadvertisement. (Order issued on March 18, 1994, reported in(1994) 2 CTJ 127 (MRTP).

From fly-by-night non-banking financial companies andplantation companies to educational institutions, quackspeddling magic cures for a variety of ailments andmanufacturers making false claims about their products, theMRTPC hauled up a large number of advertisers and put stopto advertisements that were prejudicial to consumer interest,through its “Cease and desist” orders.

However now, unless the government decidesotherwise, all complaints pertaining to unfair trade practicesbefore the MRTPC will be transferred to the consumer courtsand the MRTPC would be wound up , as the CompetitionCommission which takes over the job of policing anti-competitive activities from the MRTPC, deals with onlymonopolistic and restrictive trade practices and not unfair tradepractices.

2. The Consumer Protection Act to the rescue:Section 2 ( r ) of the Consumer Protection Act gives a

comprehensive definition of unfair trade practice (pl. seeannexure for the definition) and Section 14 deals with thedirections that the court can give to deal with such practices .The consumer courts have given some excellent orders in thisarea, but they cannot deal with misleading advertisements likethe MRTPC. . For one, the consumer courts neither have thepower nor the infrastructure to investigate, suo motto intomisleading advertisement nor take up such cases on theirown, as done by the MRTP Commission. Nor do they have aninvestigative wing like the office of the DG (Investigation andRegistration) under the MRTP Act. The consumer courts can


only adjudicate over complaints filed before them.However, the consumer courts can issue interim orders

stopping such advertisements pending disposal of the case.They can give directions to the advertiser to discontinue suchadvertisements and not to repeat it. They can awardcompensation for any loss or suffering caused on account ofsuch unfair trade practice, they can also award punitivedamages and costs of litigation. But most important, they candirect the advertiser to issue corrective advertisement.

Section 14 h ( c ) of the Act , describing the powers ofthe court, says that the court can order “ corrective advertisementto neutralize the effect of misleading advertisement at the costof the opposite party responsible for issuing such misleadingadvertisement”.

In so far as misleading advertisements are caused, thisis the most important provision and can really have a deterrenteffect, if used effectively. Unfortunately, this provision has hardlyor perhaps never been used.

Which advertiser will dare to publish false or misleadingadvertisement, with the threat of spending money on correctiveadvertisements that completely damage him, hanging over hishead? Imagine this: an advertisement for a shampoo claimsthat it stops hair fall. The court looks at the evidence before itand holds that the advertisement was false. It then directs themanufacturer to issue corrective advertisements stating thatthe claim made in the earlier advertisement was false and thatthe shampoo does not prevent falling of hair, for three monthson all television channels on which the false advertisementsappeared earlier!

Orders of the apex consumer court pertaining tomisleading advertisements:

In its order in the case of M.R.Ramesh VS M/S PrakashMoped House and Others,( RP No 831 of 2001) the apexconsumer court warned against advertisements that usefine print to hide crucial information pertaining to products and

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services, thereby misleading the consumer. And by awardingsubstantial compensation to the consumer, who was misledby such an advertisement, the National Commission made itclear that it would not take such violations of consumers rightto information lightly. It’s advise to manufacturers and serviceproviders : “ advertisements should not mislead and shouldgive a clear picture of the quality of the goods sold”.

This case pertains to a motorbike – Hero Honda CD-100 that Mr M.R.Ramesh bought in Bangalore in February1993. His contention was that at the time of purchase, he wasassured that the bike would run 80 kms on a litre of petrol.However, the bike gave 22 kms less than promised . He filedbefore the National Consumer Disputes RedressalCommission, New Delhi, , an advertisement published inOctober 1993, wherein the manufacturer had made such aclaim about the mileage of the motorcycle. The manufacturer,on the other hand, brought on record advertisements issuedduring the period which carried an asterisk on the numericalfigure of 80 and at the foot of the advertisement in small print,said “at 40 kmph/130 kg” , thereby qualifying the claim.

The National Commission made two importantobservations here: (1) that there was no explanation from themanufacturer as to how the advertisement shown by theconsumer did not carry any such qualifying statement. (2) Evenadvertisements that specified at the bottom in fine print,“40kmph/130 kg” or “under standard conditions” were notintelligible to the consumer and were therefore deceptive .

Said the Commission: “Such an advertisement as putout by the respondents is misleading. It amounts to unfair tradepractice. When the respondents claimed that motor cycle cangive mileage of 80 kms per litre, they cannot just be absolvedof their responsibility not to clearly indicate that this would beso when the motor cycle is driven at a speed of 40kms perhour and the load would be 130kg. Simply by putting an asteriskand then indicating such condition in small print at the bottomof the advertisement is certainly deceptive. Moreover, when itis stated that this mileage can be obtained at a particular speed


and load under “standard conditions”, then those standardconditions must be indicated so that the consumer is dulyinformed of the bargain he is in it. Rather in our view any suchadvertisement should take into account the conditions of theroads in the cities”.

It directed the manufacturer not to make such a claim infuture without stating clearly, intelligibly and “in the same typeof letters”, the basis for the claim. The consumer wanted theprice of the motor cycle to be refunded to him. However, keepingin mind the fact that the case was almost ten years old, theNational Commission instead awarded the consumer acompensation of Rs 25,000 .

2, In the case of Bhupesh Khurana vs Vishwa BuddhaParishad, (OP no 168 of 1994) a class action suit was filed bytwelve students,, who had joined the BDS course offered bythe Buddhist Mission Dental College run by Vishwa BuddhaParishad. The students’ complaint was that the college, in itsadvertisement calling for applications for admission to thecourse, had given the impression that it was affiliated to MagadhUniversity, Bodh Gaya and recognised by the Dental Councilof India and was fully equipped and qualified to give theBachelor of Dental Science degree to the students. However,after joining the college and attending classes ,the studentsfound to their dismay that the annual examinations were notbeing held because the college was neither affiliated to MagadhUniversity nor the course, recognized by Dental Council. As aresult, they not only lost two valuable academic yeas, but alsothe money spent on fees, hostel charges, etc.

Holding the service rendered by the college to bedeficient, the National Commission directed it to refund theadmission expenses of all the twelve students along with 12per cent interest calculated from the date of receipt of the amounttill the date of payment. In addition, it also directed the institutionto pay Rs 20,000 to each of them by way of compensation forthe expenses defrayed on purchase of books, hostel, etc andfor the loss of two academic years. It also awarded Rs 10,000as costs of the petition.

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3.Cable Television Network Regualation ActThe cable Television Network Regulation Act mandates

that all advertisements transmitted through the cable televisionnetwork adhere to the Advertising Code formulated under it.Briefly, the code stipulates that all advertisements shouldconform to the laws of the country, the product advertised shouldnot suffer from any defect or deficiency as mentioned in theConsumer Protection Act, 1986 and should not containreferences which are likely to lead the public to infer that theproduct advertised has some miraculous property or qualitywhich is difficult of being proved. Any ‘Authorized Officer‘,either the district magistrate or the sub divisional magistrate orthe commissioner of police or any other officer notified by thecentral or the state government can take action against anyviolation of the Advertising Code

The main problem with this code is the enforcing agency.Such an advertising code should be enforced by anindependent regulator, like say a broadcasting regulator andcertainly not the police. In Australia, for example, theBroadcasting Regulator looks at violations of advertising codeson television.

4. Drugs and Magic Remedies (ObjectionableAdvertisements) Act

The Drugs and Magic Remedies (ObjectionableAdvertisements) Act, 1954, basically prohibits four kinds ofadvertisements pertaining to drugs and magical cures. Section3 of the Act says that no person shall take any part in thepublication of any advertisement promoting a drug or leadingto the use of a drug for

a) The procurement of miscarriage in women or preven-tion of conception in women

b) the maintenance or improvement of thr capacity of hu-man being for sexual pleasure

c) correction of menstrual disorders in women.Section 3 further prohibits any advertisement promoting

drugs for the diagnosis, cure, mitigation, treatment or prevention


of any disease, disorder or condition specified in the ScheduleAnd the schedule lists a number of diseases, disorders orconditions such as diabetes, cataract, cancer, fevers (ingeneral), obesity, rheumatism, impotence, high or low bloodpressure, female diseases, epilepsy, stature of persons,venereal diseases, glaucoma, sterility in women, dropsy, etc.

Section 4 of the Act prohibits advertisements relating toa drug if the advertisement contains any matter which directlyor indirectly gives a false impression regarding the truecharacter of the drug or

Makes a false claim for the drug orIs otherwise false or misleading .Section 5 of the Act prohibits advertisements of magic

remedies for treatment of certain diseases and disorders..Violation of the law attracts imprisonment for six months

or fine or both, for first conviction and for subsequent conviction,imprisonment for a year or fine or both.

Earlier, AIDS/HIV was not in the Schedule of the Act.But subsequently, the union ministry of health decided toinclude the disease in the schedule to the Rules, so that it wouldprohibit misleading advertisements for the cure of AIDS andhelp regulatory authorities take action against suchadvertisements.

What prompted this move was the Kerala High Court’sorder in 2002, against the manufacture, sale and promotion ofthe ayurvedic drug Immuno QR as a sure cure for AIDS. Inresponse to a public interest litigation, the Bombay High Courthad also restrained Mr Majid from making “tall and unfoundedclaims” about the drug. (Press Information Bureau pressrelease, titled “Kerala High Court bans magic drug; court orderto be severe deterrent for quacks”, dated February 22, 2002).

The law is quite outdated and inadequate to deal withthe present day situation- while it prohibits misleading healthclaims in the print media, it has no provision to tackle the sameadvertisements that may appear on the television or the internet.It also cannot tackle advertisements pertaining to healthgadgets of unproven efficacy. . Besides, the law would be far

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more effective if it prescribed as penalty, correctiveadvertisements, instead of imprisonment or fine.

But even as it exists today, it’s enforcement by the Stateauthorities is poor because one sees any number ofadvertisements in the print media itself, promoting indigenouscures or medicines for a variety of ailments listed in theSchedule of the Act. The state drug control authorities aresupposed to enforce the law. But hardly any information isavailable about the enforcement by various states. The websiteof the Tamil Nadu Drugs Conrol Department, under the headingachievements during 2003-2004, says that. four cases underDrugs & Magic Remedies (Objectionable Advertisement) Actwere detected during the year. These were objectionableadvertisements (1) for the treatment of asthma, sinus, smokeand dust allergy; (2) for the treatment of cramps, delayedmestruation (3) for the cure of disorder of menstrual flow andfor the treatment of sexual potency. The fourth case pertainedto stocking of material with objectionable advertisement,attracting the provisions of Drugs & Magic Remedies(Objectionable Advertisement) Act.

In the year 2003, Consumer Education and Researchsociety, Ahmedabad, brought to the notice of the regulatoryauthority in Gujarat, the sale and promotion of certain healthgadgets by Conybio Health Care, in violation of the Drugsand Magic Remedies (Objectionable Advertisements) Act.

The company was found promoting and distributing sunshade to cure one from

migraine and sun stroke, socks for acidity, pillow covers for spondylitis, palm guards for Parkinson’s disease,eye-shade for sinusitis, T-shirts for high, low blood pressure, short pants that cure gas, acidity, prostate, piles, urinary systemproblems, ladies briefs for menstrual problems, bed sheets for paralysis strokes and brassieres for breast cancer.

When the regulator asked the company to producescientific evidence to support the effect of infrared rays whichit claimed was present in the products , the company said ithad never undertaken such studies by any recognized Indian


institute. Subsequently, the regulator prohibited the sale andpromotion of the products. ( CERS press release, Nov 21,2003)

5. The Infant Milk Substitute, Feeding Bottles andInfant Foods (Regulation of Production, Supply andDistribution) Act , 1992 and the The Infant MilkSubstitute, Feeding Bottles and Infant Foods (Regulationof Production, Supply and Distribution) AmendmentAct, 2002

This law is also against misleading advertisements . Itprohibits advertisements and promotion of infant milksubstitutes, feeding bottles, and infant foods because theirpromotion creates a misconception and thereby misleadsconsumers into believing that infant foods or milk substitutessold in the market are as good or better than mother’s milk.

Section 3 of 7 the Act says that

No person shall (a)advertise or take part in thepublication of any advertisement, for the distribution, sale orsupply of infant milk substitutes or feeding bottles or infant foods.

(b) give an impression or create a belief in any mannerthat feeding of infant milk substitutes and infant foods isequivalent to or better than mother’s milk.

6. Misleading advertisements and regulators:In addition to these laws, the regulatory agencies

established under different laws have also formulated rules,regulations and advertisement codes to ensure that advertisersdo not mislead consumers through their publicity material,including advertisements.

A. Telecom Regulatory Authority of India :Section 11 (1) under Chapter III of the Telecom

Regulatory Authority of India Act, refers to the powers andfunctions of the Authority.

Section 11 (1) (i) refers to the authority’s function as theprotector of the interest of consumers of telecom service.Section 11 (1) (e) refers to ensuring the compliance of terms

Pushpa Girimaji 23

and conditions of license.Section 13 of the Act says that “The Authority may, for

the discharge of its functions under sub section (1) of Section(11) issue such directions from time to time to the serviceproviders, as it may consider necessary.

Accordingly, in exercise of the powers conferred uponit under sub-Section 2 of Section 11 of the Telecom RegulatoryAuthority of India Act, 1997 read with Clauses 7 & 9 of theTelecommunications Tariff Order, 1999, the TelecomRegulatory Authority of India issued the TelecommunicationsTariff (Publication and Reporting) Requirement on April 8, 1999.Some of the important directions issued under this are: 1. Everyservice provider shall publish all tariffs applicable in respect oftelecommunication services and ensure the availability of suchpublication to its subscribers in advance of the applicability ofsuch tariffs. 2 The publication of tariffs shall be in accordancewith the provisions of the Telecommunications Tariff Order 1999and any amendments made thereto. The publication of tariffsshall contain all relevant information that a subscriber may needto have, including, inter alia, that pertaining to :(a) Registrationand installation charges, security deposit, rentals, tariff for local,domestic and international long distance calls, special services,rebates and discounts.(b) Timings of peak and off-peak hoursand tariffs applicable thereto.(c) Billing cycles, mode ofpayment, and consequences of delayed payment and non –payment.(d) The terms and conditions under which a servicemay be obtained, utilised and terminated.(e) Addresses andtelephone numbers of the offices of the service provider andnames and addresses of authorised representatives of theservice provider for further information and clarification.(f) Thechoice of tariff packages available to a subscriber alongwiththe details of the procedure prescribed for exercising thechoice.(g) The alternative packages, if any, available to thesubscriber and the manner in which they differ from the standardpackages, including comparison of its financial implications toenable the subscriber to make an informed choice.

Consequently, the TRAI has hauled up operators for


failing to issue tariff information in the advertisements in themanner prescribed by the Authority.

The authority has also issued directions to the operatorsto discontinue or modify advertisements found to be misleadingor false and not in the interest of the consumer.

In its press release No 4 of 2005, TRAI said it had issueddirectives to Tata Teleservices and Reliance Infocomm Ltd tostop referring to their fixed wireless service in advertisementsas “walky” and “unlimited cordless” respectively as it conveyedthe impression to potential customers that the service offeredwas similar to mobile service.

A similar directive was also issued to MahanagarTelephone Nigam Ltd for its reference to its fixed line serviceas “landline bhi-mobile bhi- jahan aap wahan”.

This was in exercise of its power under Section 13 readwith Section 11 (a) (b) of the TRAI Act.

B. Insurance Regulatory Development AuthorityThe Insurance Regulatory and Development Authority’s

(IRDA) regulation on advertisements lays down strict guidelinesnot only on the content of the advertisements issued by insurersand their intermediaries, but also on their compliance . Besidesstipulating that all advertisements follow the code formulatedby ASCI, the regulation mandates that the advertisementsrelated to insurance policy should not in any way be unfair ormisleading. The IRDA . (Insurance Advertisements andDisclosure)Regulations 2000 defines “unfair or misleadingadvertisement” as any advertisement (a) that fails to clearlyidentify the product as insurance; (b)makes claims beyond theability of the policy to deliver or beyond the reasonableexpectation of performance; (c)describes benefits that do notmatch the policy provisions; (d)uses words or phrases in a waywhich hides or minimizes the costs of the hazard insured againstor the risks inherent in the policy; omits to disclose or disclosesinsufficiently, important exclusions, limitations and conditionsof the contract; gives information in a misleading way; illustratesfuture benefits on assumptions which are not realistic norrealisable in the light of the insurer’s current performance; where

Pushpa Girimaji 25

the benefits are not guaranteed, does not explicitly say so asprominently as the benefits are stated or says so in a manneror form that it could remain unnoticed; implies a group or otherrelationship like sponsorship, affiliation or approval, that doesnot exist; makes unfair or incomplete comparisons with productswhich are not comparable or disparages competitors.

The regulations also mandate that every insurer orintermediary or insurance agent shall have a complianceofficer, who shall be responsible to oversee the advertisingprogramme and his name and official position shall becommunicated to the Authority. It also stipulates that the insurermaintain an advertisement register, which can be inspected bythe Authority and also file with the authority , a copy of everyadvertisement as soon as it is issued. If an advertisement isnot in accordance with these regulations, then the Authoritycan direct issue of corrective advertisement (“corrected ormodified advertisement shall receive the same type of publicityas the one sought to be corrected or modified”); it can directdiscontinuance of the advertisement or any other action deemedfit by the Authority , keeping in view the circumstances of thecase, in order to ensure that the interests of the public areprotected.

C. Securities and Exchange Board of India: Chapter IX of the (Disclosure and Investor :Protection)

guidelines, 2000 of the Securities and Exchange Board of India(SEBI) provides specific guidelines on advertisements.

Some of them are :9.1.1 An issue advertisement shall be truthful, fair and

clear and shall not contain any statement which is un-true or misleading.

9.1.2 Any advertisement reproducing or purporting toreproduce any information contained in a offer documentshall reproduce such information in full and disclose allrelevant facts and not be restricted to select extracts re-lating to that item.

9.1.3 An issue advertisement shall be considered to


be misleading, if it contains -a) Statements made about the performance or activi-

ties of the company in the absence of necessary ex-planatory or qualifying statements, which may givean exaggerated picture of the performance or activi-ties, than what it really is.

b) An inaccurate portrayal of past performance or itsportrayal in a manner which implies that past gainsor income will be repeated in the future.

9.1.4a) An advertisement shall be set forth in a clear, con-

cise and understandable language.b) Extensive use of technical, legal terminology or com-

plex language and the inclusion of excessive detailswhich may distract the investor, shall be avoided.

9.1.5 An issue advertisement shall not contain state-ments which promise or guarantee rapid increase inprofits.

9.1.6 An issue advertisement shall not contain any in-formation that is not contained in the offer document.

9.1.7 No models, celebrities, fictional characters, land-marks or caricatures or the likes shall be displayed onor form part of the offer documents or issue advertise-ments.

9.1.8) Issue advertisements shall not appear in the form ofcrawlers (theadvertisements which run simultaneouslywith the programme in a narrow strip at the bottom of thetelevision screen) on television.In addition to these , SEBI has also drawn up an

exclusive advertising code for mutual funds (Schedule VI) underthe SEBI (Mutual Funds) Regulations 1996. And as asupplement to the code, it has also published detailedguidelines for advertisements on mutual funds.

D. Reserve Bank of India:As a regulator and supervisor of the financial system,

the Reserve bank of India too exercises its power to curb falseand misleading advertisements by various financial institutions.

Pushpa Girimaji 27

Chapter III B of the RBI Act deals with “Provisionsrelating to non-banking institutions receiving deposits andfinancial institutions”.

Under this chapter 45J gives the Central Bank the powerto regulate and prohibit issue of prospectus or advertisementsoliciting deposits of money.

Says 45J:. Bank to regulate or prohibit issue ofprospectus or advertisement soliciting deposits of money Thebank may, if it considers necessary in the public interest so todo, by general or special order

(a) regulate or prohibit the issue by any non banking insti-tution of any prospectus or advertisement soliciting de-posits of money from the public; and

(b) specify the conditions subject to which any such pro-spectus or advertisement, if not prohibited, may be is-sued.In exercise of the powers vested in the Bank under

Sections 45J, 45K, 45L and 45MA of the Reserve Bank of IndiaAct, 1934 , it has notified detailed directions on advertisementsissued by non-banking financial companies, miscellaneousnon-banking companies and residuary non-bankingcompanies.

As per these guidelines, besides complying with theNon-banking Financial Companies and Miscellaneous Non-banking companies (Advertisement) Rules, 1977, they alsohave to give certain information specified by the RBI , whenthey issue advertisements calling for deposits. For example,they have to specify the mode of payment, actual rate of returnby way of interest, premium, bonus or other advantage to thedepositor, the terms and conditions subject to which a depositwill be returned, etc. And the advertisements have to state thatthe deposits being solicited are not insured.

E. Medical Council of India:Chapter 6 of the Code of Ethics Regulations 2002,

formulated under the Indian Medical Council Act also dealswith advertisements.

Some extracts:


Chapter 6: unethical acts:

“6.1 advertising. 6.1.1 Soliciting of patients directly orindirectly, by a physician, by a group of physicians or byinstitutions or organisations is unethical. A physician shall notmake use of him / her (or his / her name) as subject of any formor manner of advertising or publicity through any mode eitheralone or in conjunction with others which is of such a characteras to invite attention to him or to his professional position, skill,qualification, achievements, attainments, specialities,appointments, associations, affiliations or honours and/or ofsuch character as would ordinarily result in his selfaggrandizement. A physician shall not give to any person,whether for compensation or otherwise, any approval,recommendation, endorsement, certificate, report or statementwith respect of any drug, medicine, nostrum remedy, surgical,or therapeutic article, apparatus or appliance or any commercialproduct or article with respect of any property, quality or usethereof or any test, demonstration or trial thereof, for use inconnection with his name, signature, or photograph in any formor manner of advertising through any mode nor shall he boastof cases, operations, cures or remedies or permit the publicationof report thereof through any mode.

7. Regulation of certain advertisements underPrevention of Food Adutleration Act, Fruit ProductsOrder, Drugs and cosmetics Act, Bureau of IndianStandards Act, Agricultural Produce (Grading and

Marketing) Act.

There are also certain restrictions on advertisementsunder various consumer protection laws .

Section 43 A.of the Prevention of Food Adulteration Act,for example, regulates food advertisements. It says:

Restriction on Advertisement :- There shall be noadvertisement of any food which is misleading or contravening

Pushpa Girimaji 29

the provisions of prevention of Food Adulteration Act, 1954 (37of 1954) or the rules made thereunder.

Explanation. The term “Advertisement’ means anyvisible representation or announcement made by means of anylight sound, smoke or gas.

Similarly, Clause 11m sub-clause 3 of the Fruit Products(amendment) Order says that “Sweetened aerated watercontaining no fruit juice or fruit pulp or containing less than 10per cent of fruit juice or fruit pulp shall have a clear andconspicuous marking on the body of the container to the effect‘contains no fruit’. In case artificial flavour has been used, thewords ‘artificially flavoured’ shall be declared on the label. Thepublicity and advertisements made for sweetened aeratedwaters through any media shall also conspicuously explain /display the fact that those products do not contain any fruit juice”

Rule 106 of the Drugs and Cosmetics act refers to“Diseases which a drug may not purport to prevent or cure”-

(1) No drug may purport or claim to prevent or cure or mayconvey to the intending user thereof any idea that it mayprevent or cure, one or more of the diseases or ailmentsspecified in Schedule J

(2) No drug may purport or claim to procure or assist to pro-cure or may convey to the intending user thereof anyidea that it may procure or assist to procure, miscarriagein women.Section J contains over 50 diseases, disorders and

conditions such as AIDS, genetic disorders, baldness, cataract,diabetes, improvement in height of children and adults,improvement in vision, myocardial infarction, obesity,spondilitis, stones in gall bladder, varicose vein, etc.

8.Code for Commercial Broadcasting, All India Radio:

All India Radio and Doordarshan have their own codefor advertising.

Some excerpts from the General Rules of Conduct inAdvertising under the Code for commercial Broadcasting, AllIndia Radio:


The items advertised shall not suffer from any defect ordeficiency as mentioned in Consumer Protection Act 1986.

No advertisement shall contain reference which arelikely to lead the public to infer that the product advertised orany advertised or any of its ingredients has some special ormiraculous or super-natural property or quality, which is difficultof being proved, e.g. cure for baldness, skin whitener, etc.

No advertisement shall contain the words ‘Guarantee’or ‘Guaranteed’ etc., unless the full terms of the guanranteeare available for inspection by the Directorate General, All IndiaRadio, are clearly set out in the advertisement and are madeavailable to the purchaser in the writing at the point of sale orwith the goods; in all cases, terms must include details of theremedial action available to the purchaser. No advertisementshall contain a direct or implied reference to any guaranteewhich purports to take away or diminish the legal rights of thepurchaser.

Testimonials must be genuine and used in a mannernot to mislead the listeners.

INTER-MINISTERIAL COMMITTEE:

Replying to an unstarred question posed by Mr RamdasAthawale on misleading advertisements appearing ontelevision, , the Information and Broadcasting minister Mr JaipalReddy told the Lok Sabha in December 2004 that the centralgovernment had constituted an inter-ministerial committee tolook into violations of the advertising code on television. Thecommittee can take note of such advertisements on its own oron a complaint from a citizen However, no such instance (ofmisleading advertisement) had come to the notice of theCommittee, he said.. (Please see annexure for the entire textof the Parliament question and answer)

CONCLUSION:

In order to protect consumer interest, the governmentshould establish an independent broadcast regulator who willdraw up a strict code of practice - particularly for telemarketingservices - so that only those products and gadgets that do notviolate the Drugs and Magic Remedies Act and have provenvalue are allowed to be promoted on television. As for otheradvertisements that are found to be false or misleading,corrective advertisements are the best solution. Another optionis to revive the MRTPC as the Unfair Trade PracticesCommission with the specific purpose of preventing false and

Pushpa Girimaji 31

GOVERNMENT OF INDIAGOVERNMENT OF INDIAGOVERNMENT OF INDIAGOVERNMENT OF INDIAGOVERNMENT OF INDIAMINISTRY OFMINISTRY OFMINISTRY OFMINISTRY OFMINISTRY OFINFORMATION AND BROADCASTINGINFORMATION AND BROADCASTINGINFORMATION AND BROADCASTINGINFORMATION AND BROADCASTINGINFORMATION AND BROADCASTING

LOK SABHALOK SABHALOK SABHALOK SABHALOK SABHAUNSTARRED QUESTION NO 2702UNSTARRED QUESTION NO 2702UNSTARRED QUESTION NO 2702UNSTARRED QUESTION NO 2702UNSTARRED QUESTION NO 2702

TO BE ANSWERED ON 16.12.2004

MISLEADING ADVERTISEMENTSMISLEADING ADVERTISEMENTSMISLEADING ADVERTISEMENTSMISLEADING ADVERTISEMENTSMISLEADING ADVERTISEMENTS

2702. SHRI RAMDAS ATHAWALE(a) whether the Government is aware about the large number

of advertisements being telecast by television and other me-dia which provide confusion, incomplete and wrong infor-mation to the customers;

(b) whether the Government has received any memorandum/complaints in this regard during the last three years.;

(c) if so, the details thereof;(d) whether the Government propose to ban such confusing/

misleading advertisements;(e) if not, the reasons therefor; and(f) the action taken or proposed to be taken by the Government

in this regard?

ANSWERANSWERANSWERANSWERANSWER

THE MINISTER OF INFORMATION AND BROADCASTING ANDCULTURE (SHRI JAIPAL REDDY)

(a) to (f): The Press in India is free from Government control.The Press Council of India (PCI) is a statutory body established forpreserving the freedom of the Press and for maintaining andimproving the standards of newspapers and news agencies in India.PCI has set the Norms for Journalistic Ethics, which states that theEditors should insist on their right to have the final say in theacceptance or rejection of advertisements.

The Advertisement Code framed by the Advertising


Standards Council of India (ASCI) aims to ensure the truthfulnessand honesty of representations of claims made by advertisementsand so safeguard against misleading advertisements.

As regards the electronic media, Prasar Bharati, a statutoryautonomous Corporation, follows its own code for commercialadvertising, which contains stringent provisions for safeguardingthe interest of society in general, and consumers in particular.

Advertisements transmitted/ re-transmitted through theCable Television Network are required to adhere to the provisions ofthe Advertising Code prescribed under the Cable Television Networks(Regulation) Act, and Rules framed there under, which inter- aliaprescribe that advertisements shall conform the laws of the country,the product advertised shall not suffer from any defect or deficiencyas mentioned in the Consumer Protection Act, 1986 and shall notcontain references which are likely to lead the public to infer thatthe product advertised has some miraculous property or qualitywhich is difficult of being proved. Under Section 19 of the Cable Actan ‘Authorized Officer‘, i.e. District Magistrate / Sub DivisionalMagistrate and Commissioner of Police and such other officers asmay be notified by the Central/ State Government in this regardunder the Cable Act, 1995, can take action for violation of theAdvertising Code.

The Central Government has constituted an inter-ministerialCommittee to take cognizance suo moto or look into specificcomplaints regarding violation of advertising code by TV channels.No such instance has come to the notice of the Committee so far.

The Central Board of Film Certification (CBFC) certifies films,including that of advertisements for public exhibition under theprovisions of Section 5(B) of the Cinematograph Act 1952 and theguidelines framed there under.

MRTP ACTMRTP ACTMRTP ACTMRTP ACTMRTP ACT

36A. DEFINITION OF UNFAIR TRADE PRACTICE.In this Part, unless the context otherwise requires “unfair trade

practice” means a trade practice which, for the purpose of promotingthe sale, use or supply of any goods or for the provisions of any

Pushpa Girimaji 33

services, adopts any unfair method or unfair or deceptive practiceincluding any of the following practices, namely :-

(1) the practice of making any statement, whether orally or inwriting or by visible representation which, -

(i) falsely represents that the goods are of a particular stan-dard, quality, quantity, grade, composition, style or model;

(ii) falsely represents that the services are of a particularstandard, quality or grade;

(iii) falsely represents any re-built, second-hand, renovated,reconditioned or old goods as new goods;

(iv) represents that the goods or services have sponsorships,approval, performance, characteristics, accessories, usesor benefits which such goods or services do not have;

(v) represents that the seller or the supplier has a sponsor-ship or approval or affiliation which such seller or sup-plier does not have;

(vi) makes a false or misleading representation concerningthe need for, or the usefulness of, any goods or services;

(vii) gives to the public any warranty or guarantee of the per-formance, efficacy or length of life of a product or of anygoods that is not based on an adequate or proper testthereof : Provided that where a defence is raised to theeffect that such warranty or guarantee is based on ad-equate or proper test, the burden of proof of such defenceshall lie on the person raising such defence;

(viii) makes to the public a representation in a form that pur-ports to be - (i) a warranty or guarantee of a product or ofany goods or services; or (ii) a promise to replace, main-tain or repair an article or any part thereof or to repeator continue a service until it has achieved a specified re-sult. if such purported warranty or guarantee or promiseis materially misleading or if there is no reasonable pros-pect that such warranty, guarantee or promise will becarried out;

(ix) materially misleading the public concerning the price atwhich a product or like products or goods or services, havebeen, or are, ordinarily sold or provided, and, for this pur-


pose, a representation as to price shall be deemed to referto the price at which the product or goods or services hasor have been sold by sellers or provided by suppliers gen-erally in the relevant market unless it is clearly specifiedto be the price at which the product has been sold orservices have been provided by the person by whom or onwhose behalf the representation is made;

(x) gives false or misleading facts disparaging the goods, ser-vices or trade of another person. Explanation : For thepurposes of clause (1), a statement that is -

a) expressed on an article offered or displayed for sale, oron its wrapper or container; or

b) expressed on anything attached to, inserted in, or ac-companying, an article offered or displayed for sale, oron anything on which the article is mounted for dis-play or sale; or

c) contained in or on anything that is sold, sent, delivered,transmitted or in any other manner whatsoever madeavailable to a member of the public, shall be deemed tobe a statement made to the public by, and only by, theperson who had caused the statement to be so expressed,made or contained;

(2) permits the publication of any advertisement whether inany newspaper or otherwise, for the sale or supply at a bar-gain price, of goods or services that are not intended to beoffered for sale or supply at the bargain price, or for a periodthat is, and in quantities that are, reasonable, having regardto the nature of the market in which the business is carriedon, the nature and size of business, and the nature of theadvertisement. Explanation : For the purpose of clause (2),“bargain price” means -

(a) a price that is stated in any advertisement to be a bar-gain price, by reference to an ordinary price or otherwise,or

(b) a price that a person who reads, hears, or sees the adver-tisement, would reasonably understand to be a bargainprice having regard to the prices at which the product

Pushpa Girimaji 35

advertised or like products are ordinarily sold;(3) permits -

(a) the offering of gifts, prizes or other items with the inten-tion of not providing them as offered or creating the im-pression that something is being given or offered free ofcharge when it is fully or partly covered by the amountcharged in the transaction as a whole.

(b) the conduct of any contest, lottery, game of chance orskill, for the purpose of promoting, directly or indirectly,the sale, use or supply of any product or any business in-terest;

(4) permits the sale or supply of goods intended to be used, or areof a kind likely to be used by consumers, knowing or havingreason to believe that the goods do not comply with the stan-dards prescribed by competent authority relating to perfor-mance, composition, contents, design, constructions, finish-ing or packaging as are necessary to prevent or reduce therisk of injury to the person using the goods;

(5) permits the hoarding or destruction of goods, or refuses tosell the goods or to make them available for sale, or to pro-vide any service, if such hoarding or destruction or refusalraises or tends to raise or is intended to raise, the cost of thoseor other similar goods or services.

36D. POWERS WHICH MAY BE EXERCISED BY THE COMMISSIONINQUIRING INTO AN UNFAIR TRADE PRACTICE.

(1) The Commission may inquire into any unfair trade practicewhich may come before it for inquiry and, if after such in-quiry, it is of opinion that the practice is prejudicial to thepublic interest, or to the interest of any consumer or con-sumers generally, it may, by order direct that -

(a) the practice shall be discontinued or shall not be re-peated;

(b) any agreement relating to such unfair trade practice shallbe void or shall stand modified in respect thereof in suchmanner as may be specified in the order;

(c) any information, statement or advertisement relating


to such unfair trade practice shall be disclosed, issued orpublished, as the case may be, in such manner as may bespecified in the order.

(2) The Commission may, instead of making any order underthis section, permit any party to carry on any trade practice,if it so applies and takes such steps within the time specifiedby the Commission as may be necessary to ensure that thetrade practice is no longer prejudicial to the public interestor to the interest of any consumer or consumers generally,and, in any such case, if the Commission is satisfied that nec-essary steps have been taken within the time so specified, itmay decide not to make any order under this section in re-spect of that trade practice.

(3) No order shall-be made under sub-section (1) in respect of anytrade practice which is expressly authorised by any law forthe time being in force.

UUUUUNFAIRNFAIRNFAIRNFAIRNFAIR T T T T TRADERADERADERADERADE P P P P PRACTICERACTICERACTICERACTICERACTICE U U U U UNDERNDERNDERNDERNDER C C C C CONSUMERONSUMERONSUMERONSUMERONSUMER P P P P PROTECITONROTECITONROTECITONROTECITONROTECITON A A A A ACTCTCTCTCT

r) “unfair trade practice” means a trade practice which, for thepurpose of promoting the sale, use or supply of any goods orfor the provision of any service, adopts any unfair method orunfair or deceptive practice including any of the followingpractices, namely;—

(1) the practice of making any statement, whether orally or inwriting or by visible representation which,—

(i) falsely represents that the goods are of a particular stan-dard, quality, quantity, grade, composition, style or model;

(ii) falsely represents that the services are of a particularstandard, quality or grade;

(iii) falsely represents any re-built, second-hand, reno-vated,reconditioned or old goods as new goods;

(iv) represents that the goods or services have sponsor-ship,approval, performance, characteristics, accesso-ries, usesor benefits which such goods or services do not have;

(v) represents that the seller or the supplier has aspon-sorship or approval or affiliation which such selleror supplier does not have;

Pushpa Girimaji 37

(vi) makes a false or misleading representation concern-ingthe need for, or the usefulness of, any goods or services;

(vii) gives to the public any warranty or guarantee of the per-formance, efficacy or length of life of a product or of anygoods that is not based on an adequate or proper testthereof;

Provided that where a defence is raised to the effect thatsuch warranty or guarantee is based on adequate orproper test, the burden of proof of such defence shall lieon the person raising such defence;

(viii) makes to the public a representation in a form that pur-ports to be—

(i) a warranty or guarantee of a product or of any goodsor services; or

(ii) a promise to replace, maintain or repair an article orany part thereof or to repeat or continue a service untilit has achieved a specified result, if such purported war-ranty or guarantee or prom-ise is materially mislead-ing or if there is no reasonable prospect that such war-ranty, guaran-tee or promise will be carried out;

(ix) materially misleads the public concerning the price atwhich a product or like products or goods or services, havebeen or are, ordinarily sold or provided, and, for this pur-pose, a representation as to price shall be deemed to referto the price at which the product or goods or services hasor have been sold by sellers or provided by suppliers gen-erally in the relevant market unless it is clearly specifiedto be the price at which the product has been sold orservices have been provided by the person by whom or onwhose behalf the representation is made;

(x) gives false or misleading facts disparaging the goods, ser-vices or trade of another person.

Explanation—For the purposes of clause (1), astatement that is—

(a) expressed on an article offered or displayed for sale, or onits wrapper or container; or

(b) expressed on anything attached to, inserted in, or accom-


panying, an article offered or displayed for sale, or on any-thing on which the article is mounted for display or sale;or

(c) contained in or on anything that is sold, sent, delivered,transmit-ted or in any other manner whatsoever madeavailable to a member of the public, shall be deemed to be a statement made to the public by,and only by, the person who had caused the statement tobe so expressed, made or contained;

(2) permits the publication of any advertisement whether inany news-paper or otherwise, for the sale or supply at a bar-gain price, of goods or services that are not intended to beoffered for sale or supply at the bargain price, or for a periodthat is, and in quantities that are, reasonable, having regardto the nature of the market in which the business is carriedon, the nature and size of business, and the nature of theadvertisement.

Explanation .—For the purpose of clause (2), “bargainingprice” means—

(a) a price that is stated in any advertisement to be a bar-gain price, by reference to an ordinary price or otherwise,or

(b) a price that a person who reads, hears or sees the adver-tisement, would reasonably understand to be a bargainprice having regard to the prices at which the productadvertised or like products are ordinarily sold;

(3) permits—(a) the offering of gifts, prizes or other items with the inten-

tion of not providing them as offered or creating impres-sion that something is being given or offered free of chargewhen it is fully or partly covered by the amount chargedin the transaction as a whole;

(b) the conduct of any contest, lottery, game of chance orskill, for the purpose of promoting, directly or indirectly,the sale, use or supply of any product or any business in-terest;

(3A) withholding from the participants of any scheme of-

Pushpa Girimaji 39

fering gifts, prizes or other items free of charge, on itsclosure the information about final results of thescheme.

Explanation.—For the purposes of this sub-clause, the par-ticipants of a scheme shall be deemed to have been in-formed of the final results of the scheme where suchresults are within a reasonable time, published, promi-nently in the same newspapers in which the scheme wasoriginally advertised;

(4) permits the sale or supply of goods intended to be used, or areof a kind likely to be used, by consumers, knowing or havingreason to believe that the goods do not comply with the stan-dards prescribed by competent authority relating to perfor-mance, composition, contents, design, constructions,fin-ishing or packaging as are necessary to prevent or reducethe risk of injury to the person using the goods;

(5) permits the hoarding or destruction of goods, or refuses tosell the goods or to make them available for sale or to provideany service, if such hoarding or destruction or refusal raisesor tends to raise or is intended to raise, the cost of those orother similar goods or services.

(6) manufacture of spurious goods or offering such goodsfor sale or adopts deceptive practices in the provision ofservices.

14. Finding of the District Forum.—(1) If, after the proceeding conducted under section 13, the Dis-

trict Forum is satisfied that the goods complained againstsuffer from any of the defects specified in the complaint orthat any of the allegations contained in the complaint aboutthe services are proved, it shall issue an order to the oppositeparty directing him to do one or more of the following things,namely:—

(a) to remove the defect pointed out by the appropriate labo-ratory from the goods in question;

(b) to replace the goods with new goods of similar descrip-tion which shall be free from any defect;

(c) to return to the complainant the price, or, as the case


may be, the charges paid by the complainant;(d) to pay such amount as may be awarded by it as compen-

sation to the consumer for any loss or injury suffered bythe consumer due to the negligence of the opposite party.Provided that the District Forum shall have the powerto grant punitive damages in such circumstances as itdeems fit;

(e) to remove the defects in goods or deficiencies in the ser-vices in question;

(f) to discontinue the unfair trade practice or the restric-tive trade practice or not to repeat it;

(g) not to offer the hazardous goods for sale;(h) to withdraw the hazardous goods from being offered for

sale;(ha) to cease manufacture of hazardous goods and to de-

sist from offering services which are hazardous innature;

(hb) to pay such sum as may be determined by it if it is ofthe opinion that loss or injury has been suffered by alarge number of consumers who are not identifiableconveniently:Provided that the minimum amount of sum so pay-able shall not be less than five per cent. of the value ofsuch defective goods sold or service provided, as thecase may be, to such consumers:Provided further that the amount so obtained shallbe credited in favour of such person and utilized insuch manner as may be prescribed;

(hc) to issue corrective advertisement to neutralize theeffect of misleading advertisement at the cost of theopposite party responsible for issuing such mislead-ing advertisement;

(i) to provide for adequate costs to parties.

Pushpa Girimaji 41

AAAAADVERTISINGDVERTISINGDVERTISINGDVERTISINGDVERTISING C C C C CODEODEODEODEODE, C, C, C, C, CABLEABLEABLEABLEABLE T T T T TELEVISIONELEVISIONELEVISIONELEVISIONELEVISION N N N N NETWORKSETWORKSETWORKSETWORKSETWORKS

(R(R(R(R(REGULATIONEGULATIONEGULATIONEGULATIONEGULATION ) A ) A ) A ) A ) ACTCTCTCTCT:::::

7. Advertising Code. -(1) Advertising carried in the cable service shall be so designed as

to conform to the laws of the country and should not offendmorality, decency and religious susceptibilities of the sub-scribers.

(2) No advertisement shall be permitted which- (i) derides any race, caste, colour, creed and nationality;(ii) is against any provision of the Constitution of India.(iii) tends to incite people to crime, cause disorder or violence,

or breach of law or glorifies violence or obscenity in anyway ;

(iv) presents criminality as desirable; (v) exploits the national emblem, or any part of the Constitu-

tion or the person or personality of a national leader or aState dignitary;

(vi) in its depiction of women violates the constitutional guar-antees to all citizens. In particular, no advertisement shallbe permitted which projects a derogatory image ofwomen. Women must not be portrayed in a manner thatemphasises passive, submissive qualities and encouragesthem to play a subordinate, secondary role in the familyand society. The cable operator shall ensure that the por-trayal of the female form, in the programmes carried inhis cable service, is tasteful and aesthetic, and is withinthe well established norms of good taste and decency;

(vii) exploits social evils like dowry, child marriage. (viii)promotes directly or indirectly production, sale or con-

sumption of-(A) cigarettes, tobacco products, wine, alcohol, liquor or

other intoxicants;(B) infant milk substitutes, feeding bottle or infant food.

(3) No advertisement shall be permitted, the objects whereof, arewholly or mainly of a religious or political nature; advertise-ments must not be directed towards any religious or politi-


cal end.8(3A) No advertisement shall contain references which hurt reli-

gious sentiments. (4) The goods or services advertised shall not suffer from any

defect or deficiency as mentioned in Consumer ProtectionAct, 1986.

(5) No advertisement shall contain references which are likely tolead the public to infer that the product advertised or any ofits ingredients has some special or miraculous or super-natu-ral property or quality, which is difficult of being proved.

(6) The picture and the audible matter of the advertisementshall not be excessively ‘loud;

(7) No advertisement which endangers the safety of children orcreates in them any interest in unhealthy practices or showsthem begging or in an undignified or indecent manner shallnot be carried in the cable service.

(8) Indecent, vulgar, suggestive, repulsive or offensive themes ortreatment shall be avoided in all advertisements.

(9) No advertisement which violates the standards of practicefor advertising agencies as approved by the Advertising Agen-cies Association of India, Bombay, from time to time shall becarried in the cable service.

(10) All advertisement should be clearly distinguishable from theprogramme and should not in any manner interfere withthe programme viz., use of lower part of screen to carry cap-tions, static or moving alongside the programme.

Pushpa Girimaji 43

THE GAZETTE OF INDIA: EXTRAORDINARYTHE GAZETTE OF INDIA: EXTRAORDINARYTHE GAZETTE OF INDIA: EXTRAORDINARYTHE GAZETTE OF INDIA: EXTRAORDINARYTHE GAZETTE OF INDIA: EXTRAORDINARY[P[P[P[P[PART III —SEC. 4]ART III —SEC. 4]ART III —SEC. 4]ART III —SEC. 4]ART III —SEC. 4]

INSURANCE REGULAINSURANCE REGULAINSURANCE REGULAINSURANCE REGULAINSURANCE REGULATTTTTORORORORORY AND DEVELY AND DEVELY AND DEVELY AND DEVELY AND DEVELOPMENTOPMENTOPMENTOPMENTOPMENTAAAAAUTHORITYUTHORITYUTHORITYUTHORITYUTHORITY, NEW DELHI, NEW DELHI, NEW DELHI, NEW DELHI, NEW DELHI

NONONONONOTIFICATIFICATIFICATIFICATIFICATIONTIONTIONTIONTION

New Delhi, the 14th July, 2000Insurance Regulatory and Development Authority (Insurance

Advertisements and Disclosure) Regulations, 2000F.No.IRDA/Reg./7/2000.—In exercise of the powers conferred by section 26 of the

Insurance Regulatory and Development Authority Act, 1999 (41 of1999), the Authority in consultation with the Insurance AdvisoryCommittee, hereby makes the following regulations, namely:-

1. Short title and commencement -1. These regulations may be called the Insurance Regulatory

and Development Authority (Insurance Advertisements andDisclosure) Regulations, 2000.

2. They shall come into force on the date of their publication inthe Official Gazette.

Definitions - Unless the context otherwise requires, -

a. “Authority” means the Insurance Regulatory and Develop-ment Authority established under sub-section

(1) of section 3 of The Insurance Regulatory and Develop-ment Authority Act, 1999 (41 of 1999);

b. “insurance advertisement” means and includes any com-munication directly or indirectly related to a policy andintended to result in the eventual sale or solicitation of apolicy from the members of the public, and shall includeall forms of printed and published materials or any ma-terial using the print and or electronic medium for pub-lic communication such as:


i. newspapers, magazines and sales talks;ii. billboards, hoardings, panels;iii. radio, television, website, e-mail, portals;iv. representations by intermediaries;v. leaflets;vi. descriptive literature/ circulars;vii. sales aids flyers;viii. illustrations form letters;ix. telephone solicitations;x. business cards;xi. videos;xii. faxes; orxiii. any other communication with a prospect or a policy-

holder that urges him to purchase, renew, increase, re-tain, or modify a policy of insurance.Explanation: The following materials shall not be con-sidered to be an advertisement provided they are not usedto induce the purchase, increase, modification, or reten-tion of a policy of insurance:- (i) materials used by an in-surance company within its own organization and notmeant for distribution to the public; communicationswith policyholders other than materials urging them topurchase, increase, modify surrender or retain a policy;materials used solely for the training, recruitment, andeducation of an insurer’s personnel, intermediaries, coun-selors, and solicitors, provided they are not used to inducethe public to purchase, increase, modify, or retain a policyof insurance

iv) any general announcement sent by a group policyholderto members of the eligible group that a policy has beenwritten or arranged.

c. “ intermediary or insurance intermediary includes insurancebrokers, reinsurance brokers, insurance consultants, survey-ors and loss assessors, or any other person representing orassisting an insurer in one or more of the following :

i. soliciting, negotiating, procuring, or effectuating an insurancecontract or a renewal of an insurance contract;

Pushpa Girimaji 45

ii. disseminating information relating to coverage or rates;iii. forwarding an insurance application;iv. servicing and delivering an insurance policy or contract;v. inspecting a risk;vi. setting a rate;vii. investigating or assessing a claim or loss;viii. transacting a matter after the effectuation of a contract;

orix. representing or assisting an insurer or other person in

any other manner in the transaction of insurance withrespect to a subject of insurance resident, located or to beperformed in India.

x. servicing a policy or contract.

d. “unfair or misleading advertisement” will mean and include anyadvertisement:

i. that fails to clearly identify the product as insurance;ii. makes claims beyond the ability of the policy to deliver or

beyond the reasonable expectation of performance;iii. describes benefits that do not match the policy provi-

sions; uses words or phrases in a way which hides or mini-mizes the costs of the hazard insured against or the risks in-herent in the policy; omits to disclose or discloses insufficiently,important exclusions, limitations and conditions of the con-tract; gives information in a misleading way; illustrates futurebenefits on assumptions which are not realistic nor realisablein the light of the insurer’s current performance; where thebenefits are not guaranteed, does not explicitly say so as promi-nently as the benefits are stated or says so in a manner orform that it could remain unnoticed; implies a group or otherrelationship like sponsorship, affiliation or approval, that doesnot exist; makes unfair or incomplete comparisons with prod-ucts which are not comparable or disparages competitors.

e. “prospect” means any party that enters or proposes to enter intoan insurance contract directly, or through an insurance intermedi-ary.


Words and expressions used and not defined in these regulationsbut defined in the Insurance Act, 1938 (4 of 1938), or the LifeInsurance Corporation Act, 1956 (31 of 1956) or the GeneralInsurance Business Nationalisation) Act, 1972 (57 of 1972), orInsurance Regulatory and Development Authority Act, 1999 (41of 1999) shall have the meanings respectively assigned to them inthose Acts or the rules as the case may be.

3. Compliance and control -1. Every insurer or intermediary or insurance agent shall -

i. have a compliance officer, whose name and official posi-tion in the organisation shall be communicated to theAuthority, and he shall be responsible to oversee the ad-vertising programme;

ii. establish and maintain a system of control over the con-tent, form, and method of dissemination of all advertise-ments concerning its policies.

iii. maintain an advertising register at its corporate officewhich must include:

a. a specimen of every advertisement disseminated, or is-sued or a record of any broadcast or telecast, etc.;

b. a notation attached to each advertisement indicatingthe manner, extent of distribution and form number ofany policy advertised, and

iv. maintain a specimen of all advertisements for a mini-mum period of three years.

v. file a copy of each advertisement with the Authority assoon as it is first issued, together with information:

a. an identifying number for the advertisement;b. the form number(s) of the policy(ies) advertised and

when the product/s were approved by the Authority;c. a description of the advertisement and how it is used.d. the method or media used for dissemination of the ad-

vertisement.vi. file a certificate of compliance with their annual state-

ment stating that, to the best of its knowledge, advertise-ments disseminated by the insurer or by its intermediaries during

Pushpa Girimaji 47

the preceding year have complied with the provisions of theseregulations and the advertisement code as stated in regulation12.

2. The advertisement register shall be subject to inspection andreview by the Authority for content, context, prominence andposition of required disclosures, omissions of required infor-mation, etc.

4. Changes in advertisement -0. Any change in an advertisement would be considered a new

advertisement.1. All the provisions of regulation 3 shall apply mutatis mutan-

dis to an advertisement referred to in sub regulation (i).2. The Authority shall be informed at the time of filing the

advertisement the extent of change the original advertise-ment

5. Insurance company advertisements -0. Every insurance company shall be required to prominently

disclose in the advertisement and that part of the advertise-ment that is required to be returned to the company or in-surance intermediary or insurance agent by a prospect or aninsured the full particulars of the insurance company, andnot merely any trade name or monogram or logo.

1. Where benefits are more than briefly described, the formnumber of the policy and the type of coverage shall be dis-closed fully.

6. Advertisements by insurance agents -0. Every advertisement by an insurance agent that affects an

insurer must be approved by the insurer in writing prior toits issue;

1. It shall be the responsibility of the insurer while grantingsuch approval to ensure that all advertisements that per-tain to the company or its products or performance complywith these regulations and are not deceptive or misleading.

Explanation: An agent shall not be required to obtain writ-ten approval of the company prior to issue for: -


(i) those advertisements developed by the insurer and providedto the agents; generic advertisements limited to informationlike the agent’s name, logo, address, and phone number; andadvertisements that consist only of simple andcorrectstatements describing the availability of lines of insur-ance, references to experience, service and qualifications ofagents; but making no reference to specific policies, benefits,costs or insurers.

7. Advertisements by insurance intermediaries- Onlyproperly licensed intermediaries may advertise or solicitinsurance through advertisements.

8. Advertising on the Internet -0. Every insurer or intermediary’s web site or portal shall -i. include disclosure statements which outline the site’s spe-

cific policies vis-á-vis the privacy of personal information forthe protection of both their own businesses and the con-sumers they serve.

ii. display their registration/ license numbers on their web sites.1. For the purposes of these regulations, except where oth-

erwise specifically excluded or restricted, no form or policyotherwise permissible for use shall be deemed invalid orimpermissible if such form or policy accurately reflectsthe intentions of the parties in such form or policy aspublished electronically or transmitted electronicallybetween parties.

9. Identity of advertiser - Every advertisement for insuranceshall

. state clearly and unequivocally that insurance is the subject matterof the solicitation; and

i. state the full registered name of the insurer/ intermediary/insurance agent.

10. Endorsements and other third-party involvement

(1) A third party, group or association shall not: - . distribute information about an insurance policy, intermediary or

insurer on its letterhead.

Pushpa Girimaji 49

i. allow an insurance intermediary or insurer to distribute informa-tion about an insurance policy, insurance or insurance companyon its letterhead.

ii. distribute information about an individual insurance policy,or about an intermediary or insurer in its envelopes, unless-

a. the third party is providing only a distribution service forthe insurance advertisement and is not itself solicitingthe coverage, and

b. the insurance information is a piece separate from anyother information distributed by the third party andclearly indicates its origin.

iii. recommend that it’s members purchase specific insuranceproducts.

iv. imply that a person must become a member of it’s organiza-tion in order to purchase the policy.

v. imply that a purchaser of a policy by becoming a member ofa limited group of persons shall receive special advantagesfrom the insurer not provided for in the policy.

Provided that a third party, group or association may:-(i) endorse an insurance company or insurance

intermediary’s product and provide truthful statements,quotes, and testimonials endorsing the insurance prod-ucts to the insurance company for use in the company’sadvertisements, so long as the language does not conveydirectly or indirectly a recommendation that membersof the organisation purchase the products.

(ii) provide an insurance company with information about itsmembership and collect compensation based upon sales forthat information.

11. Procedure for action in case of complaint - (1) If anadvertisement is not in accordance with these regulations theAuthority may take action in one or more of the following ways:

. issue a letter to the advertiser seeking information within a specifictime, not being more than ten days from the date of issue of theletter;

i. direct the advertiser to correct or modify the advertisement al-ready issued in a manner suggested by the Authority with a stipu-


lation that the corrected or modified advertisement shall receivethe same type of publicity as the one sought to be corrected ormodified;

ii. direct the advertiser to discontinue the advertisement forth-with;

iii. any other action deemed fit by the Authority, keeping in viewthe circumstances of the case, to ensure that the interests ofthe public are protected.The advertiser may seek additional time from the Authorityto comply with the directions justifying the reasons there-for. The Authority, may, however, refuse to grant extension oftime if it feels that the advertiser is seeking time only to de-lay the matters.Any failure on the part of the advertiser to comply with thedirections of the Authority may entail the Authority to takesuch action as deemed necessary including levy of penalty.

12. Adherence to advertisement code - Every insurer orintermediary shall follow recognised standards ofprofessional conduct as prescribed by the AdvertisementStandards Council of India (ASCI) and discharge its functionsin the interest of the policyholders.

13. Statutory warning - . Every proposal for an insurance product shall carry the fol-

lowing stipulation, as prescribed in section 41 of the Insur-ance Act, 1938 (4 of 1938):- “No person shall allow or offer toallow, either directly or indirectly, as an inducement to anyperson to take out or renew or continue an insurance in respect ofany kind of risk relating to lives or property in India, any rebate ofthe whole or part of the commission payable or any rebate of thepremium shown on the policy, nor shall any person taking out orrenewing or continuing a policy accept any rebate, except suchrebate as may be allowed in accordance with the published pro-spectus or tables of the insurer.”

i. If any person fails to comply with sub regulation (1) above, heshall be liable to payment of a fine which may extend torupees five hundred.

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