Leo Burnett, the creative genius behind generation defining ideas like “Tony the Tiger” and “The Marlboro Man” was once quoted saying:
“Advertising is the ability to sense, interpret . . .
to put the very heart throbs of a business into type, paper, and ink.”
Advertisements have long played a crucial role in shaping up businesses and their importance has only risen with the advent of the digital era. With the global market becoming increasingly competitive, the consumers have become more vulnerable to the dangers of predatory and misleading advertisements tactics than ever before. On the other hand, with respect to businesses, monetary investments into advertising and associated risks pertaining to goodwill have increased exponentially over the years making it crucial for them to safeguard their own interests.
Therefore, it is indisputable that the advertising sector has become a high-stakes field which merits a comprehensive and well-defined regulatory system to ensure that the interests of the all the relevant stakeholders are represented and cared for.
The status quo and the fragmented regulatory framework
Given the importance and the stakes associated with advertising, it is concerning that the Indian legal framework as on the publication of this Article, does not cater to the needs of the stakeholders involved and there is no comprehensive statutory framework regulating advertisements in India.
Consequently, advertisements are currently being governed by fragmented and often conflicting sector-specific regulations leaving both the businesses and the consumers exposed to several potential risks.
Some of the major legislations pertaining to advertisements in India at present include:
Consumer Protection Act, 1986 (“CP Act”): The CP Act defines the term “unfair trade practices” under Section 2(r), wherein it covers false and misleading representations and facts under the purview of unfair trade practices allowing consumers to file complaints against such representations being made by any trader or service providers. Also, The CP Act while enumerating the objects of Consumer Protection Council, requires them to ensure that, among other things, they protect the consumer’s right to be to be informed so as to protect the consumer against unfair trade practices along with the consumer’s right to the right to seek redressal against unfair trade practices (Section 6 of the CP Act). Additionally, the CP Act also provides District Forums the power to grant punitive damages to discontinue any unfair trade practices.
Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (“CTP Act”): The CTP Act prohibits the direct or indirect advertisement of cigarettes or any other tobacco products in all forms of audio, visual, and print media (Section 5 of the CTP Act) and provides that any person in contravention of such prohibition would be liable to be punished with imprisonment extending up to two (2) years or a fine extending up to INR. 1,000 (Rupees One Thousand Only) or both; which may be extended to a term of five (5) years or INR. 5,000 (Rupees Five Thousand Only) or both (Section 22 of the CTP Act). The CTP Act also provides authorised personnel, the power of search, seizure, forfeiture and confiscation in respect of any advertisement of cigarettes or any other tobacco products (Sections 12, 13, 14, and 23 of the CTP Act).
Cable Television Networks (Regulations) Act, 1995 (“CTN Act”): The CTN Act prohibits any person from transmitting or re-transmitting any programme (which includes advertisements as provided in Section 2(g) of the CTN Act) through a cable service unless the same is in conformity with the prescribed advertisement code (provided under the Cable Television Networks (Amendment) Rules, 2006) and also provides authorised personnel, the power to prohibit the transmission or re-transmission of any advertisements which are in violation of its provisions or if the same are likely to promote, disharmony, hatred or ill-will between different religious, racial, linguistic or regional groups on grounds of religion, race, language, caste or community or any other ground, or which are likely to disturb public tranquillity.
Consumer Protection Bill, 2018 (“CP Bill”): The currently pending CP Bill, as passed by the Lok Sabha on 20th December, 2018, is expected to make new progress in the area of consumer rights pertaining to advertisements by providing specific powers to the proposed Central Consumer Protection Agency who would be able to issue directions and penalties against false or misleading advertisements. It is noteworthy, that the CP Bill extends the liability of misleading advertisements on not just the manufacturer of the product or service in question, but also holds their endorsers liable. As per the CP Bill, a penalty of up to INR. 10,00,000 (Rupees Ten Lakhs Only) may be imposed on a manufacturer or an endorser for false or misleading advertisements, which may be increased up to INR. 50,00,000 (Rupees Fifty Lakhs Only) for a subsequent offense. Further, manufacturers can also be punished with imprisonment of up to two (2) years, which may extend to five (5) years in case of every subsequent offence. Additionally, endorsers of a misleading advertisement may be prohibited from endorsing any particular product or service for a period of up to one (1) year, which may extend to three (3) years for every subsequent offense.
But wait, there’s more! Other relevant legislations governing advertisements in India include, Drugs and Cosmetics Act, 1940, Drugs Control Act, 1950, Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954, Prenatal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994, Pharmacy Act, 1948, Prize Competition Act, 1955, Emblems and Names (Prevention of Improper Use) Act, 1950, Indecent Representation of Women (Prohibition) Act, 1986, and Code of Ethics for advertising in India (“ASCI Code”) issued by the Advertising Standards Council of India (“ASCI”), among others. It is pertinent to note that this list isn’t exhaustive and there are several other local, state, and central laws that touch upon the subject of advertising.
The need for change!
As evidenced by the current statutory framework governing advertising in India, there is no central statutory agency or uniform legislation regulating the advertising industry at present. As a result. the advertising sector is left to scrounge through sector specific legislations to identify relevant provisions that require compliance by them, while the consumers are either left exposed or are mostly unaware of their rights due to the inefficiency of the current system.
The closest that this sector has in terms of a ‘regulatory body’ is the ASCI, which is a “non-statutory body” and is merely a “voluntary self-regulatory council” established in 1985 to promote ethical advertising practices. And while the ASCI has been recognised by several legislations, including a partnership with the Department of Consumer Affairs to address all complaints pertaining to misleading advertisements received on the Grievances Against Misleading Advertisements portal.
However, It is vital to note that the ASCI Code specifically states that:
“The code is not in competition with law. Its rules, and the machinery through which they are enforced, are designed to complement legal controls, not to usurp or replace them.”
As such, the ASCI and ASCI Code lacks the required teeth to actually regulate the advertising sector. Further, instead of consolidating the fragmented legislations on the subject or addressing the conflicts caused by the lack of a uniform legislation, all that the ASCI Code does is provide a mechanism to support the current system as it stands without addressing any deficiencies therein. Furthermore, given the complexities and the resources involved in the advertising sectors, it is naïve to think that a self-regulated body without any statutory might can sufficiently answer the growing concerns of consumer rights and business requirements in the present age.
Therefore, the need for comprehensive regulation of the sector has become more urgent than ever.
What the future should be?
Advertising Expenditure Forecasts, March 2018 as published by Zenith Media predicts that the global advertising expenditure is set to increase by $77,000,000,000/- (Seventy-Seven Billion United States’ Dollars Only) between the years 2017 to 2020 and that India will be the fourth largest contributor to the same.
Further, with the growing influence of internet, mobiles, and digital media; the traditional means of advertising are changing rapidly. Therefore, any legislation pertaining to advertising would have to ensure that it addresses the changing trends advertising and accommodate the needs of the dynamic new-age communication channels. For instance, Indian lawmakers would be wise to take a leaf from the FTC Endorsement Guidelines promulgated by their counterparts in the United States of America to address the newly-found trend of subtle advertisements through Instagram profiles where celebrities ‘innocently’ suggest that they use certain products.
And while the challenge may seem to be daunting, there are several points of references for the legislators to commence the journey towards comprehensive advertising regulations. For instance, the provisions of the proposed CP Bill seem to address the long-standing question with respect to the liability of an endorser featured in an advertisement. More often than not, most endorsers receive considerable amounts of money in exchange of endorsing a product or service. It is noteworthy that, these endorsers tend to have an immense hold over public perception, especially when they are well-recognised members of the society and most people not only look up to them, but also tend to take their spoken word as gospel. Therefore, it is a welcome move that the legislators intend to put the onus of due diligence on the endorsers before they endorse a product, so as to ensure that the public isn’t intentionally mislead by anyone who has influence over them.
Furthermore, as discussed above, the advertising sector finds itself in a unique position where while there is no uniform law on the subject matter, however at the same time, there are ‘far too many laws’ on each sector therein for the relevant stakeholders to be sufficiently informed.
Thus, we posit that the pressing need from the industry is for the law makers to consolidate these fragmented regulations and implementing agencies into ‘one’ body of law.
Conclusion
With the ever-growing influence of advertisements in our society and the rapidly changing trends in the industry, the current system of patchwork regulation is no longer sufficient to effectively regulate the advertising sector.
With advertisements ranging from blinged-up billboards to subtle Instagram posts, Consumers are more vulnerable than they ever have been. Traditional issues of advertising such as misleading prices, deceptive representations, and labelling issue etc. have now joined hand with modern day troubles of ‘sponsored’ movie shots or even paid social media posts.
On the other hands for businesses, the increasing stakes associated with advertisements have made it crucial that they have requisite clarity as to what they can or cannot do. Further, with growing competition, most businesses entities themselves need protection from their contemporaries disparaging their products or otherwise indulging in unfair trade practices.
Consequently, the nation’s advertising laws have to stay synchronised with the rhythm of the dynamic and innovative advertising industry. The need for a uniform statutory framework regulating advertisements has become more urgent than it ever was, and the hope remains that the prayers for such codification of advertising laws would soon be answered by the nation’s legislature.
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Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.