Practices of Advertising Professionals- How Far they are Fair and ...

Proceedings of the Third Asia-Pacific Conference on Global Business, Economics, Finance

and Banking (AP15Singapore Conference) ISBN: 978-1-63415-751-3

17-19 July 2015 Paper ID: S532

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www.globalbizresearch.org

Practices of Advertising Professionals- How Far

they are Fair and Truthful?

T. Srinivasa Rao,

Professor of Commerce & Business Management,

SDLCE, Kakatiya University,

Warangal, India.

Email: [email protected]

____________________________________________________________________________

Abstract

In today's changing market economy, advertising play a powerful and constructive role for

any company to compete and survive. On the contrary, they also play a negative role in

projecting false claims of their products to the buyers and the society. Therefore, this paper

attempts to focuses on ethical practices in advertising arising out of exaggerated claims, false

promises and misinformation to the buyers thus leading to breach of laws of ethics and ethical

code. As an exploratory study a conceptual framework pertaining to the existing laws and

voluntary restrictions are presented as the background for this study. From this review and

analysis of various ads and judgments of the consumes forums advertisements are identified

which practice unethical and undesirable means with exaggerated claims, false promises and

misinformation to the buyers which reflect anti-consumer and are detrimental to the laws of

ethics and ethical code. Advertising has to strike a balance between the interests of the

consumers and the need of companies to make the public aware of the companies of products,

promotional efforts, pricing and distribution policies and its impact on the society to pursue

its business successfully. To protect consumer interest and the ethical values in the society the

government should establish an independent regulatory mechanism to draw up a strict code of

practice to ensure the honesty of representation and claims made by the advertisements.

Finally, an independent regulatory mechanism should ensure that advertisements adhere to

accepted “fair and truthful” practices in advertising. The most important thing is have better

laws in keeping relevance with the contemporary scenario, self-regulation by industry, and

independent regulator to regulate the unethical and misleading advertising. The mechanism

should be attentive to observe fairness in competition and comparative advertising so that

consumers are free to choose the products they prefer in the market place. Advertising claims

must be substantiated by evidence in possession of the advertiser and advertising agency,

prior to making such claims. Consumers should have the free choice and be free of

misleading facts.

____________________________________________________________________________

Key words: Ethical, false claims, misleading claims, exaggerated claims, detrimental results,

comparative advertising, regulatory mechanism, ethical code.

mailto:[email protected]




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1. Introduction

Ethics in advertising calls for a set of well-defined principles to govern the marketing

practices which is most important feature for the advertising industry. Indian advertisements

are expected to restore our culture, and heritage in view of our strong historical background in

terms of ethical and values. Therefore, advertising has to strike a balance between the interests

of the consumers and the need of companies to make the public aware of the companies of

products, promotional efforts, pricing and distribution policies and its impact on the society to

pursue its business successfully.

In to-day’s world marketing and advertising practices are changing both at domestic and

global levels. New media, new ideas, new products, and new cultural opportunities are

surviving around the industry and impacting the way business to new trends. Yet, marketers

need to conduct their business in a fair, and honest, manner to have a long standing reputation

in the marketing field. Therefore, there is a need to recognize the ethical standards and

acceptable behaviour to be profitable and also to serve the society well.

2. Basic Principles of Ethical Advertising

Marketers must recognize the viewpoints of three key player’s i.e, the company, the

industry and the society. Since these three groups almost always have different needs and

wants, ethical conflicts are likely to arise. Conflicts arise among these three groups when

differences exist between the needs and on the other side when one’s personal values

conflict with the organization.

In many instances advertisements could not be clear demarcated between what is true

and false in the claims and promises. If advertisements changes personal trait of

consumers and affects their desired buying behavior by misguiding, misinforming, then

advertisements are unethical. But some manipulations, slightly exaggerated claims and a

pinch of puffery in advertisements are permissible. It is not considered as unethical. So

products advertised as best, most often used, mostly recommended by doctors, long lasting

etc., are accepted and are ethical. So small manipulations, slightly exaggerated claims, pinch

of puffery etc are all lies but are accepted by the society because the demarcation is based

on relativity of ethics than ethical absolutism.

2.1 Respect Truthfulness (deception objection) a. Never directly intend to deceive

b. Never use simply untrue advertising

c. Do not distort the truth by implying things that are not so or withholding relevant facts

d. "Puffery" is acceptable where it is consonant with recognized and accepted rhetorical and

symbolic practice

2.2 Respect the Dignity of Each Human Person (attacks autonomy objection)

(i) Do not exploit our "lower inclinations" to compromise our capacity to reflect or decide




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either through its content or through its impact: using appeals to lust, vanity, envy and greed,

and other human weakness.

(ii) Give special care to the weak and vulnerable: children, young people, the elderly,

the poor, and the culturally disadvantaged

2 . 3 Respect Social Responsibilities (promotes consumption, empties communication,

objections)

a. Concern for the ecology—advertising should not favor a lavish lifestyle which wastes

resources and despoils the environment

b. Advertising should not reduce human progress to acquiring material goods and

cultivating a lavish lifestyle.

3. Ethical Code for Advertising in India Advertisers should ensure that their ads are not offensive or violating the laws of the land.

Ads should not violate the basic standards of decency, morality and religious beliefs of

viewers. In India, certain ethics must be followed while creating ads.

Legal actions can be taken against advertisements that

Ridicule caste, race, nationality, colour and creed.

Goes against any provision of the Indian Constitution.

Incite people towards criminal activity, provocative, cause disorder and/or violence in

the country.

Breach laws and/or glorify obscenity or violence in any form.

Glorify terrorism, communal massacres, and criminality and so on.

Ridicule the father of the nation, the national emblem, part of Constitution or the

image of a national leader or a state dignitary.

Depict women in a deprecating manner. Females should not be portrayed in a manner

that is obscene, exploitative or vulgar.

Display distasteful visual content that goes beyond the established norms of good taste

and decency.

Exploit and encourage social evils like child marriage, bride burning and dowry

system.

4. Role of Regulatory Bodies in Advertising Industry

Advertising regulation refers to The laws and rules defining the ways in which

products can be advertised in a particular region. Rules can define a wide number of

different aspects, such as placement, timing, and content.

There is no single regulatory body in India for regulation of advertisements.

Depending on the nature of the case, the power to regulate advertisements may be

exercised by a vast amount of authorities- the courts, Central and State Governments,

tribunals, police authorities etc. in addition to these authorities the Press Council of India

http://en.wikipedia.org/wiki/Law

http://en.wiktionary.org/wiki/rule

http://en.wikipedia.org/wiki/Advertising




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established under Press Council of India Act 1978, is empowered to regulate advertisements.

Absence of a single comprehensive legislation had created a lot of confusion in

the advertising industry. In 1985, a self-regulatory mechanism of ensuring ethical advertising

practices was established in the form of the Advertising Standards Council of India (ASCI), a

non-statutory tribunal. It is an independent body under the aegis of Advertising Agencies

Association of India (AAAI) ASCI entertained and disposed of complaints based on its Code

of Advertising Practice (ASCI Code). Gradually, the ASCI Code received huge recognition

from the advertising industry.

4.1 Advertising Laws of India

As mentioned earlier the Government of India has not set up a regulatory body in India to

regulate advertisements. But as in due course depending on the nature of the grievances, the

power to regulate advertisements may be exercised by a vast variety of authorities, including

the courts, Central and State Governments, tribunals or the police authorities. In addition to

that numerous legislations also deal with advertisement provisions in part not in full

unfortunately.

The rules, regulations and legislations include the following:-

1. Advertising Standards Council of India (ASCI)

2. Constitution of India

3. Consumer Protection Act, 1986

4. Information Technology Act, 2000

5. Indian Penal Code, 1860

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

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

8. The Cigarettes and other Tobacco Products (Prohibition of Advertisement and

Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003

9. The Cigarettes (Regulation of Production, Supply and Distribution) Act, 1975

10. The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1955

11. The Drugs and Cosmetics Act, 1940

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

13. Securities and Exchange Board of India (SEBI) (Stock-brokers and Sub-brokers) Rules,

1992 - Code of Conduct for Stock-brokers

14. Securities and Exchange Board of India (SEBI) (Prohibition of Fraudulent and Unfair

Trade Practices relating to Securities Market) Regulations, 1995

15. Securities and Exchange Board of India (SEBI) (Mutual Funds Regulation), 1996: SEBI

Guidelines for Advertisements by Mutual Funds

16. Securities and Exchange Board of India (SEBI) (Disclosure and Investor Protection

Guidelines), 2000




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17. The Prenatal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994

18. The Transplantation of Human Organs Act, 1994

19. The Representation of the People (Amendment) Act, 1996

20. The Lotteries (Regulation) Act, 1998

21. The Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of

Production, Supply and Distribution) Act, 1992

22. The Competition Act, 2002

23. The Contract Act, 1872

24. The Civil Defense Act, 1968

4.2 Fundamental Principles of the ASCI Code are:

1. To ensure the truthfulness and honesty of representations and claims made by

advertisements and to safeguard against misleading advertisements.

2. To ensure that advertisements are not offensive to generally accepted standards of

public decency.

3. To safeguard against the indiscriminate use of advertising for the promotion of

products which are regarded as hazardous to society or to individuals to a degree or of

a type which is unacceptable to society at large?

4. To ensure that advertisements observe fairness in competition so that the consumer’s

need to be informed on choices in the marketplace and the cannons of generally

accepted competitive behavior in business is both served.

4.3 Laws to Protect the Activities of Anti-consumer Practices

A number of laws, regulations and codes regulate advertisements and protect the interests

of consumers, but only two laws –the Consumer Protection Act and the Monopolies and

Restrictive Trade Practices Act- provide for compensation to the consumers affected by false

and misleading advertisements. In fact under both the laws, false and misleading

advertisements are defined as “unfair trade practices”.

i) Unfair trade practice under consumer protection act

“Unfair trade practice” means a trade practice which, for the purpose of promoting the sale,

use or supply of any goods or for the provision of any service, adopts any unfair method or

Unfair or deceptive practice including any of the following practices:

The practice of making any statement, whether orally or in writing or by visible

representation which,

Falsely represents that the goods are of a particular standard, quality, quantity, grade,

composition, style or model

Falsely represents that the services are of a particular standard, quality or grade;




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Falsely represents any re-built, second-hand, renovated, reconditioned or old goods as

new goods;

represents that the goods or services have sponsor-ship, approval, performance,

characteristics, accessories, uses or benefits which such goods or services do not have;

represents that the seller or the supplier has a sponsorship or approval or affiliation

which such seller or supplier does not have;

Makes a false or misleading representation concerning the need for, or the usefulness

of, any goods or services;

Gives to the public any warranty or guarantee of the performance, efficacy or length

of life of a product or of any goods that is not based on an adequate or proper test

thereof;

Gives false or misleading facts disparaging the goods, services or trade of another

person.

ii) Monopolies and Restrictive Trade Practices Act

There are several laws, regulations and codes to tackle false and misleading

advertisements. But one law that really made an impact in the eighties and the nineties was the

Monopolies and Restrictive Trade Practices Act. In the year 1984, the government brought,

through an amendment, “unfair trade practices” under the purview of the Monopolies and

Restrictive Trade Practices Commission. And thereby brought Advertisements under the

scanner of the investigative wing the Office of the Director General, (Investigation and

Registration) as well as the MRTP Commission.

iii) Cable Television Network Regulation Act

The cable Television Network Regulation Act mandates that all advertisements transmitted

through the cable television network adhere to the Advertising Code formulated under it.

Briefly, the code stipulates that all advertisements should conform to the laws of the country,

the product advertised should not suffer from any defect or deficiency as mentioned in the

Consumer Protection Act, 1986.

iv) Drugs and Magic Remedies (Objectionable Advertisements) Act

The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954, basically

prohibits four kinds of advertisements pertaining to drugs and magical cures. Section 3 of the

Act says that no person shall take any part in the publication of any advertisement promoting

a drug or leading to the use of a drug for

a. The procurement of miscarriage in women or prevention of conception in women

b. The maintenance or improvement of the capacity of human being for sexual

Pleasure

c. Correction of menstrual disorders in women.

v) The Infant Milk Substitute, Feeding Bottles and Infant Foods (Regulation of

Production, Supply and Distribution) Act, 1992 and The Infant Milk Substitute, Feeding




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Bottles and Infant Foods (Regulation of Production, Supply and Distribution)

Amendment Act, 2002

This law is also against misleading advertisements. It prohibits advertisements and

promotion of infant milk substitutes, feeding bottles, and infant foods because their promotion

creates a misconception and thereby misleads consumers into believing that infant foods or

milk substitutes sold in the market are as good as or better than mother’s milk.

vi) 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 advertisers do not mislead

consumers through their publicity material, including advertisements.

vii) Telecom Regulatory Authority of India

The Telecom Regulatory Authority of India Act, refers to the powers and functions of the

Authority to serve as the protector of the interest of consumers of telecom service. It ensures

the compliance of terms and conditions of license and conditions for effective services to its

customers.

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 service providers,

as it may consider necessary.

viii) Insurance Regulatory Development Authority

The Insurance Regulatory and Development Authority’s (IRDA) regulation on

advertisements lays down strict guidelines not only on the content of the advertisements issued

by insurers and their intermediaries, but also on their compliance. Besides stipulating that all

advertisements follow the code formulated by ASCI, the regulation mandates that the

advertisements related to insurance policy should not in any way be unfair or misleading.

ix) Guidelines for Financial Institutions through RBI

As a regulator and supervisor of the financial system, the Reserve bank of India too

exercises its power to curb false and misleading advertisements by various financial

institutions. It has notified detailed directions on advertisements issued by non-banking

financial companies, miscellaneous non-banking companies and residuary non-banking

companies. As per these guidelines, besides complying with the Non-banking Financial

Companies and Miscellaneous Non-banking companies (Advertisement) Rules, 1977, they

also have to give certain information specified by the RBI, when they issue advertisements

calling for deposits.

x) Regulations of Prevention of Food Adulteration Act

There are also certain restrictions on advertisements under various consumer protection

laws. Section 43 A. of the Prevention of Food Adulteration Act, for example, regulates food

advertisements. It says:




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Restriction on Advertisement: - There shall be no advertisement of any food which is

misleading or contravening the provisions of prevention of Food Adulteration Act, 1954 (37of

1954) or the rules made there under.

xi) Code for Commercial Broadcasting, All India Radio

All India Radio and Doordarshan have their own code for advertising. Some excerpts from

the General Rules of Conduct in Advertising under the Code for commercial Broadcasting, All

India Radio:

The items advertised shall not suffer from any defect or deficiency as mentioned in

Consumer Protection Act 1986.

4.4 Advertisements with Unsubstantiated Claims

Even today, some advertising is simply and deliberately untrue. It is not that advertising say

what is overtly false, but that it can distort the truth by implying things that are not so or

withholding relevant facts.. Although most false advertising claims brought against advertisers

are by competitors, consumers can also file such claims. No hard-and-fast rules exist for all

consumer-initiated cases; courts deal with claims brought by consumers on more of a case-by-

case basis than they do with claims brought by competitors. We can find numerous examples

where the advertisements are not according to the prevailing ethical standards.

The Dettol Soap TV commercial (TVC) had said that their product “eliminates the

organisms [of cough and cold] ten times faster than other soaps” and that it also eliminates

“organisms that cause gastrointestinal diseases”. Neither of these claims could be

substantiated by the company and they were forced to modify their ad.

The VLCC Shape Up Anti-Cellulite Oil and Gel made the unsubstantiated claim that “It

reduces flab and firms skin. Beautiful arms and Legs in just 14 days.” By the time the

ASCI demanded that the ad be withdrawn, the ad campaign had already concluded (July

2008)!

Olay’s (Procter & Gamble) Total Effects Cream, which claimed to be India’s “best Anti-

Ageing cream” in a TVC had to be withdrawn as the company could not substantiate its

claim.

The Ponds Flawless White TVC had claimed that “only the Ponds Flawless White cream

can make your skin flawless in 7 days of usage.” This had to be withdrawn due to similar

reasons.

The Garnier Light Fairness and Dark Spots Prevention daily moisturizer commercial

claimed that anyone using the product can get “2 times fairer in just 7 days.” The ASCI

concluded that this was impossible, and the commercial had to be modified, even though

there was a qualification in the ad that “individual results may vary.”




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Henkel’s Mr. White detergent had claimed that it was better than other detergents but

could not produce any evidence of it, and the ad had to be modified.

Haier ACs had a print ad which claimed that their AC’s provided “51% power

savings”, along with other product claims, but the ASCI asked them to modify the ad as their

claims were thought to be incorrect.

4.5 Advertisements with False Claims

False advertising or deceptive advertising is the use of false or misleading statements in

advertising. The growing competitiveness amongst the big market players has leaded them to

mislead their customers in the form of false advertising.

In an ad for Hyundai Verna which appeared on the company’s website, it was claimed that

the car’s diesel variant “CRDI VGT” had a fuel economy of 32.8Kmpl! This wild claim

could not be substantiated and in fact a customer claimed that he had not got more than 11

kmpl! This ad had to be discontinued.

A print ad for Nai Dunia claimed that it was the “No.1 in Indore City” and the source

mentioned was an unnamed “Private Survey.” But when in truth, the IRS (Indian

Readership Survey) and the NRS (National Readership Survey) both showed that it was

the Dainik Bhasker which was far ahead of NaiDunia. The ad had to be modified by the

advertiser.

Sanjeevan Retinopathy Clinic actually advertised that their “treatment” cures blindness,

besides other things. The advertiser had to modify the advertisement.

Another much publicized case was that of Tata Sky. They claimed that it was now

offering its supersaver pack at Rs 200/- instead of Rs 300/- This was found to be an

outright lie as the new, cheaper, package came without some premium channels! So all

that the company was actually doing was offering a cheaper option. The company had to

withdraw their TVC.

4.6 Advertisements with Misleading Claims

Misleading ads are one of the greatest banes of modern society, which depends heavily on

media for information as well as entertainment. It is a matter of grave concern that

advertisements regarding magical cures for life-threatening diseases, weight-reduction etc. In

India the Advertisement Standards Council of India (ASCI) is not able to control misleading

advertising effectively because it neither has will nor means to do so. An effective

independent regulatory mechanism to protect consumers in India from misleading ads is the

burning need of the hour. This body should be vested with powers of suo moto action to

protect interests of consumers from misleading ads, unethical medical practices and all other

unfair trade practices.

http://kunaljanu.wordpress.com/2008/05/15/another-bad-experience-with-tatasky-no-more-cheers/




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Alapatt Jewellers which was advertising its 16 Gold & Certified Diamonds in a print ad,

stated that “916 Purity should be there not only in the advertisement but also in the gold

ornament”. This was considered to be vague and confusing and the advertiser had to

withdraw this line. Their other claims that “Without hall marking there is no purity and

will not get good price when exchanged” was considered misleading as 916 hall marked

gold is sold by almost all jewellers! And in any case, the exchange price is at the

discretion of the jeweller and also depends on the market price.

A TVC by Tata Teleservices showed film star Kajol helping three girls to connect to the

internet by plugging in her own USB modem into their laptop and this gave the impression

that this modem could connect to the internet anywhere. But the false impression given

was that this modem was a “plug and play device” which it was not. There is an

“installation procedure” which needed to be followed. The company was forced to

withdraw this ad.

The TVC of Gilette Victor Plus Blade was so misleading as to border on a total lie. It said

that the blade lasted for 3 weeks but the fine print (which appeared too briefly on the

screen to be read) said that “on the basis on one shave every 3 days.”This TVC had to be

withdrawn.

4.7 Advertisements against the sensibilities of people

The Sisley Fall Winter Collection promotional e-mailer was found to be offensive by

some. The headline said: – “You’ll melt once inside” and this was accompanied by a

picture of a woman in a seductive pose. This, a complainant said, was nothing but

pornography. The advertiser had to withdraw this mailer.

A television ad of the ING Vysya Life Insurance showed the father of a young girl

distressed at the cost of the higher education of his daughter. Visually this was shown by

the ground breaking beneath him! In another scene, a father was shown to be distressed by

the birth of a baby girl because of the financial cost involved…and again the ground was

shown to be breaking underneath him. This ad was considered anti-women…but even

though the ad was asked to be withdrawn, by that time the ad campaign had already

ended, in February 2008.

Parle Agro had a TV ad for Mintrox Mint in which mentally challenged people were

shown in a bad light and this television commercial had to be withdrawn by the company.

The AXE deodorant (Dark Temptation) TVC which showed a man covered with chocolate

being licked and bitten by girls. This ad had to be modified. Several complaints were

received against this commercial.




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Advertisements with Dangerous effects

Godrej’s television commercial showed a person happily inhaling the fumes of Good

Knight Maha Jumbo Mosquito Coil! This ad was considered harmful for public health as

these fumes contain insecticide. This TVC was withdrawn.

There were some TV commercials which came under fire for showing dangerous driving,

with warnings too fine to be noticed by consumers. One was for Thums Up, one for

Kentucky Fried Chicken and one for Bajaj Pulsar. All these TVC’s had to be modified by

the advertisers.

5. Conclusion

The ethical aspect of Indian advertisement has to strike a balance in the restoration of

our Indian culture and business ethics. Indian culture is getting diluted by the western culture

which influences our country to a great extent. Telecasting and publication of obscene,

indecent advertisements clearly shows the percolation of western culture in India so, to

save our culture, norms and ethics regulations of such unethical advertisements is the

need of the hour. It is unethical that marketers are targeting children and women who are

vulnerable as consumers. They are not well informed and are taken advantage for

manipulating for the marketers advantage.

In order to protect consumer interest and the ethical values in the society the government

should establish an independent regulatory mechanism to draw up a strict code of practice to

ensure the truthfulness and honesty of representation and claims made by the advertisements

and finally to ensure that advertisements are into offensive to generally accepted standards of

public decency. The mechanism should also be attentive to observe fairness in competition

and comparative advertising so that consumers are free to choose the products they prefer in

the market place. Advertising claims must be substantiated by evidence in possession of the

advertiser and advertising agency, prior to making such claims. Advertising should refrain

from making false, misleading, or unsubstantiated statements or claims about a competitor or

a company’s own products or services. Advertising should avoid price claims which are

false or misleading, or saving claims which do not offer provable savings. The most

important thing is have better laws in keeping relevance with the contemporary scenario,

better enforcement of the legislations, self-regulation by industry, and independent regulator

to regulate the misleading advertising.

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Education, New Delhi, chapter 20.




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