Introduction
Deceptive and false advertising isn't just morally wrong; it also disrupts fair competition and impacts consumers' ability to make informed choices. An Ad is considered misleading or false when it promises something it doesn't deliver. For instance, if a water purifier ad suggests it provides 100% safe water but only filters bacteria and not viruses then it's making a false claim. Similarly, if a face cream Ad asserts it can eliminate dark spots and prevent their return, the manufacturer must substantiate this claim with evidence. Otherwise, it's deceptive advertising as it misleads consumers about the product's capabilities.
On April 10th, 2024, the Supreme Court of India issued a strict ruling regarding misleading advertisements by Patanjali Ayurved, a prominent Ayurvedic company. The court criticized both the company and the Uttarakhand government for their handling of the situation.
Relevance of advertisement and what's exactly a misleading advertisement?
The importance of advertising is growing over time. In the context of print media, advertising is divided into two main categories: classified and display. Classified ads are priced based on the number of words they contain, categorised under specific headings in the newspaper. On the other hand, display ads are priced according to their size in column centimetres and they are not restricted by word count or headings. Typically, advertising agencies handle the planning of advertisements, leveraging their specialized expertise in the field. When crafting advertisements, agencies primarily consider the allocated publicity budget and the target audience for the campaign. Their planning process commences based on the available budget and working on the publicity efforts accordingly.
Effective advertising plays a crucial role in marketing as it is instrumental in helping products or services gain market share. However, current trends often emphasize elaborate descriptions and highlight features that may be lacking in the actual offerings. This can lead to consumer dissatisfaction and even legal action as customers may seek redress through consumer protection mechanisms when advertisements misrepresent products or services. The cost of advertising is directly proportional to its effectiveness with both factors influencing each other. As advertising has become an integral component of business operations, specialized professionals are increasingly dedicated to this field, striving to deliver impactful campaigns. The potential for advertising in India is significant as it has the power to evoke emotional responses and shape consumer behaviour.
Commercial Interests vs. Public Health: Patanjali Ayurved's Ethical Quandary
Patanjali Ayurved, which is a prominent player in the Indian market had found itself in trouble due to its misleading advertising practices. Despite assurances to the Supreme Court, the company continued to breach regulations. Resulting in the Court issuing contempt notices and even threatening misrepresentation proceedings against its co-founder, Baba Ramdev.
The issue gained prominence when Patanjali began promoting its products notably Coronil as a cure for COVID-19. Failure in compliance with the Drugs and Magic Remedies (Objectionable Advertisements) Act. The government's apparent inaction only led to doubts regarding its complicity. Even prominent figures like Harsh Vardhan then Union Health Minister, provided credibility to Patanjali's claims by attending promotional events.
Due to the lack of any actions taken against the company then Patanjali expanded its advertising efforts to include claims of curing various diseases while disparaging evidence-based medicine. Despite warnings and penalties levied by the Court, Patanjali persisted, even holding press conferences to defend its products. The company's consistent actions raise questions about the no penalties imposed till now which was possibly supported by government authorities.
The absence of government intervention to curb Patanjali's misleading advertisements provided concerns about favouritism and the potential danger of prioritising commercial interests over public health and safety. In the realm of health and medicine, such negligence can have severe consequences. This led to defeating the ultimate purpose or need for stringent regulation and accountability.
Unproven claims and inaction by Uttarakhand Government
A bench of Justices Hima Kohli and Ahsanuddin Amanullah questioned the Uttarakhand government's lack of action against Patanjali Ayurved despite complaints about misleading advertisements. The court expressed concern for consumers who might have taken the company's products based on false claims which led to potentially harming their health. The court highlighted the government's responsibility in regulating the Fast-Moving Consumer Goods (FMCG) industry and preventing misleading advertising practices.
Supreme Court's Disapproval of Patanjali Ayurved's Apology
The court rejected the apologies submitted by Baba Ramdev and Acharya Balkrishna, co-founders of Patanjali Ayurved. The court viewed the apologies as an act of publicity and a deliberate violation of previous promises made to the court. The judges noted a discrepancy between the apologies and Patanjali Ayurved's continued publication of misleading advertisements.
Scrutiny of Uttarakhand State Licensing Authority
The court criticized the Uttarakhand State Licensing Authority for failing to take any substantial action against Patanjali Ayurved despite receiving complaints. The court observed a lack of investigation and reports from licensing officers regarding the misleading advertisements. The court ordered a response from all District Ayurvedic and Unani Officers regarding actions taken since 2018.
Message to society and potential consequences
The court emphasized the need to deter future violations of its orders by companies and government bodies. The court suggested potential consequences for the inaction of the Licensing Authority including suspension of involved officers.
Targeting misleading ads is the main aim and not the FMCG sector: Supreme court
The Supreme Court emphasized that its focus is on safeguarding the health of ordinary individuals who often become victims of deceptive advertising tactics employed by FMCG (Fast Moving Consumer Goods) companies. It clarified that its objective is not to target any specific entity but to convey a strong message that breaking the law, particularly in the realm of advertising will not be tolerated.
During a hearing related to a contempt petition against Patanjali Ayurved and its founders, Ramdev and Balkrishna, Justices Hima Kohli and Amanullah highlighted the importance of addressing misleading advertisements. Especially, those related to healthcare products. They highlighted the vulnerability of consumers who, influenced by such advertisements may believe that these products can cure diseases. The reference to the Drugs and Magic Remedies (Objectionable Advertisements) Act of 1964 explains the legal framework in India aimed at regulating drugs and medicines advertising to protect consumers from false or exaggerated claims.
Legal implications in the case
Section 2(1) (r) of the Consumer Protection Act, 1986 outlines what constitutes 'unfair trade practices.' Essentially, these practices involve using deceptive or unfair methods to promote the sale, use, or supply of goods or services. Examples include false advertising, misleading promotions, and bait-and-switch tactics. The Monopolies and Restrictive Trade Practices Act of 1969 aimed to prevent the concentration of economic power but lacked specific provisions against misleading advertising. However, in 1984, amendments were made to incorporate regulations against unfair trade practices.
To address broader issues in advertising and protect consumer rights in June 2022, the CCPA ( Central Consumer Protection Authority ) introduced the Guidelines on Prevention of Misleading Advertisements and Endorsements. These guidelines establish clear rules for advertisements to ensure they are not misleading and protect consumers' rights. They cover aspects such as disclaimers, endorsements, and restrictions on certain types of advertising like those targeted at children or using surrogate methods.
The guidelines also specify penalties for violating advertising regulations, with fines ranging from INR 10 lakhs to 50 lakhs for manufacturers, advertisers, and endorsers. Additionally, the CCPA has the authority to prohibit an endorser from making endorsements for a period of up to one year for initial non-compliance, extending to three years for subsequent violations.
Conclusion
The Supreme Court's ruling sends a strong message to both companies and regulatory bodies regarding the importance of truthful advertising and responsible governance. The court's next hearing on April 16th will likely determine further actions against Patanjali Ayurved and the Uttarakhand government.
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