Liability for Misleading Advertisements – Key Features of Consumer Protection Bill Recently Passed 1.Law passed 2. Its liablities 3. Reaction of the population 4. Future strategies 5. Critical analysis 6. conclusion

1. PGDM 2018-20
Term – IV
Course Title – Integrated Marketing Communication
Topic: Liability for Misleading Advertisements – Key
Features of Consumer Protection Bill Recently Passed
Submitted by –
Akanksha Gohil
Akshay N – 201812060
Aditya Nigam – 201812057
Anaha Pandey – 201812064
Simran Madaan – 201832094
(Section ABC1)
Course Faculty
Prof. M. M. Fadnavis

2. Introduction
Advertisements and consumer culture have become a part and parcel of our lives today. In the
present globalised era, advertising plays an important role in developing a strong brand name
of the corporation or products. In general, advertising is used to inform, persuade, and remind
consumers about the products or services. Advertising is believed to enhance buyers’
responses to products or services offered by a firm, thus enabling possibilities of increased
profitability. Hence the purpose of advertising is to create awareness of the advertised product
and provide information that will assist the consumer to make informed-purchase decision.
With the growth of internet and advent of a global economy, the world has become one big
marketplace and all of us are 'consumers' in some sense or the other. The definition of the
term "consumer" has also shifted drastically and we have entered into an era of 'fast
consumer ship' where each moment we need to enter into new contractual relationships with
varied sellers for the provision of goods or services. This has resulted in the creation of a
cluster of rights and liabilities between the consumer and the sellers and has also created the
need to protect the interests of both the parties simultaneously. Where consumers enter into
such relationships every second, the chances of the being duped by the sellers has grown
exponentially, where the seller might out rightly deny the consumer his rights or, circumvent
the provisions of law to pocket undue gains at the expense of the consumer.
To prevent this, the Indian government had enacted the Consumer Protection Act, 1986 in
order to protect the rights and interests of the consumer but as time has flown by, the
varieties of rights of consumers have evolved, types and modes of businesses have
changed and the volume of transactions has increased manifold. In order to gauge this
change, the regulations have to change too, in furtherance of which the Parliament first
proposed the Bill in 2015 and then amended the same on recommendations of a
Parliament Standing committee and has moved the Consumer Protection Bill, 2019 which
presently has been passed by the Lok Sabha and Rajya Sabha.
The Consumer Protection Bill, 2019 was introduced in Lok Sabha by the
Minister of Consumer Affairs, Food and Public Distribution, Mr. Ram Vilas
Paswan on July 8, 2019. The Bill replaces the Consumer Protection Act, 1986.
According to the new act, a consumer is defined as a person who buys any good or avails a
service for a consideration. It does not include a person who obtains a good for resale or a

3. good or service for commercial purpose. It covers transactions through all
modes including offline and online.
Deceptive advertising, also known as false advertising, refers to a
manufacturer's use of confusing, misleading, or blatantly untrue statements
when promoting a product. Advertising law will protect consumers from
deceptive advertising through the enforcement of specific legislation.
The problem of misleading ads is getting worse day by day. Advertising today is giving rise to
negative attributes like creating class consciousness, materialism, conspicuous consumption
and other values which are not universally accepted. Though illegal in its most blatant forms,
deceptive advertising can occur in subtle ways that are difficult to establish as outright
deception. Thus consumer deception from misleading advertisements and strategies to
counteract it are important issues in today’s marketplace. For building effective defence
against misleading ads not only tighter controls on the media are required; but also there is
need to educate and develop more critical judgment among media consumers. People must
make the effort to step back and judge the value advertisements, and master the skills
required to separate spin from substance.
Consumer Protection Act is the only law that gives the consumer, the right to seek redress
against such advertisements, including compensation for any loss or injury caused as a result
of such advertisements. The law provides for redress against unfair trade practices and a false
or misleading advertisement becomes an unfair trade practice under the provisions of the law.
Salient Features of the Bill
Central Consumer Protection Authority (CCPA): Executive Agency to provide
relief to a class of consumers will be empowered to:
Conduct investigations into violations of consumer rights and institute
complaints or prosecution
Order recall of unsafe goods and services
Order discontinuance of unfair trade practices and misleading advertisements
Impose penalties on manufactures/ endorsers / publishers of misleading advertisements

4. Simplified Dispute Resolution process
i) Pecuniary Jurisdiction enhanced to:
District Commission up to Rs. 1 crore
State Commission between Rs. 1 crore and Rs. 10
crores National Commission above Rs. 10 crores
ii) Deemed admissibility after 21 days of filing
iii) Empowerment of Consumer Commission to enforce their orders
iv) Appeals only on question of law after second stage
v) Ease of approaching consumer commission
Filing from place of
residence E-filing
Video conferencing for hearing
Mediation
Alternate Dispute Resolution (ADR) mechanism
Reference to Mediation by Consumer Forum wherever scope for early
settlement exists and parties agree for it.
Mediation cells to be attached to Consumer Forum
No appeal against settlement through mediation
Product Liability
A manufacturer or product service provider or product seller to be responsible
to compensate for injury or damage caused by defective product or deficiency
in services. The basis for product liability action will be:
Manufacturing
defect Design defect
Deviation from manufacturing specifications
Not conforming to express warranty
Failing to contain adequate instruction for correct use
Services provided are faulty, imperfect or deficient

5. New Bill - Benefit to Consumers
Presently consumers only have a single point of access to justice, which is
time consuming. Additional swift executive remedies are proposed in the Bill
through Central Consumer Protection Authority (CCPA)
Deterrent punishment to check misleading advertisements and adulteration of products
Penalties for Misleading Advertisement
Manufacturers, service providers and celebrity endorsers face fines and jail terms for making
misleading claims in advertisements, under the terms of a Bill passed in the Lok Sabha. The
Consumer Protection Bill 2019 seeks to penalize misleading ads placed on virtually any
medium, including television, radio, print, outdoor ads, e-commerce, direct selling and
telemarketing. The Bill, which is not yet law, plugs a yawning gap in the advertising industry,
monitored by the self-regulatory watchdog Advertising Standards Council of India (ASCI).

6. Under the Bill, a misleading ad is defined as promotions across platforms that
“falsely describes a product or service; or gives a false guarantee to, or is likely to
mislead the consumers as to the nature, substance, quantity or quality of such
product or service; or conveys an express or implied representation which, if
made by the manufacturer or seller or service provider thereof, would constitute
an unfair trade practice or deliberately conceals important information".
The Central Consumer Protection Authority (CCPA) may impose a penalty on a
manufacturer or an endorser of up to Rs. 10 lakh and imprisonment for up to two
years for a false or misleading advertisement. In case of a subsequent offence,
the fine may extend to Rs. 50 lakh and imprisonment of up to five years.
It can issue directions to the concerned trader or manufacturer or endorser or advertiser
or publisher, to discontinue such advertisement or to modify the same in such manner
and within such time as may be specified in that order. It can also prohibit the endorser of
a false or misleading advertisement from making endorsement of any product or service
for a period which may extend from one to three years.
CCPA can also prohibit the endorser of a misleading advertisement from endorsing
that particular product or service for a period of up to one year. For every subsequent
offence, the period of prohibition may extend to three years. However, there are
certain exceptions when an endorser will not be held liable for such a penalty.
Endorsers won’t be liable if they can prove that they have done due diligence to verify
claims made in the ads. The authority will only penalize manufacturers or endorsers if
they fail to discontinue the false advertisements or to modify them.
Critical Analysis
The first issue is that of the clash that might occur within the ‘to be established CCPA’ and the
prevailing consumer forums in cases of a certain class of consumers or subject matter which may
be taken up by both the bodies. There must have been a prescribed hierarchy or creation of
separate class in order to avoid such conflict. Further, Section 99 of the Bill directs the CCPA to act
according to the directions of the central government thereby restricting its autonomy.

7. Secondly, in case of product liability, it can be anticipated that there may be frivolous
claims solely on the basis of discrepancy in designs, even when it results in no actual
damage to the consumer or is done in order to improve functionality.
Thirdly, in case of misleading advertisements where even the endorsers may be held
liable, the Bill has provided merely one straitjacketed punishment for different classes of
endorsers where they may vary in terms of remunerations as well as social reach. Also
creating a confusion, the Section 79 of the IT Act, 2000 defines ‘intermediary’ as any
person who on behalf of another person stores or transmits that message or provides any
service with respect to that message and includes the telecom service providers, internet
service providers, web-hosting service providers, search engines, online-payment sites,
online auction sites, online marketplaces and cyber cafes and such intermediaries are not
liable for any third party information, data or communication which consequently gives e-
commerce platforms a glorious defence against selling fake or sub-standard products
and then claiming the excuse of being ‘mere intermediaries’ and evading strict liability
under the product liability clause. The new Bill has been unable to address this because
Section 100 of the new Bill clearly states that ‘the provisions of this Act shall be in
addition to and not in derogation of the provisions of any other law for the time being in
force’ and the IT Act, 2000 being a special act, shall continue to remain in force.
Fourthly, in case of Consumer Protection Councils that are to be setup at the district state
and national level which will be headed by the Ministers as advisory bodies. It is however
not clear from the Bill that the minister will advise to whom and in what capacity.
Fifthly, the Bill has proposed to empower the Central government to appoint remove
and prescribe conditions of service for members of District, State and National
Consumer Disputes Redressal Commissions, however the Bill has failed to specify
the composition of the board and whether a judicial member will be onboard or not.
Composition is left completely to the discretion Central government; there are
chances of independence of the commission being jeopardized.
Though there are a few ambiguities and issues with the Bill, not everything are flaws.
One endearing feature of the Bill is that previously, under the Act, consumer forums would
cause substantial delays in resolving consumer disputes, the average time for a dispute being
about a year. The Bill seeks to improve the condition by providing that endeavor shall be made
to dispose of a dispute within three months, however, the same may be extended to five
months if the dispute requires any kind of analysis, investigation, testing of the product etc.

8. Another endearing feature of the Bill is that it seeks to impose strict liability on the endorsers of
harmful products. As a result, celebrities can be brought to book for endorsing harmful products,
especially those that are consumable and directly affect the health of the purchasers. The
legislature was especially keen on introducing these after the Maggi noodles controversy and was
thus quick enough to provide for it the same in the 2015 Bill itself, which has rightfully been
retained by the Standing Committee of the Parliament in the 2018 Bill as well. Clause 21 of the Bill
provides that the liability of the endorser is at par with that of the manufacturer, that is, up to Rs. 10
lakh rupees, which may extend to Rs. 50 lakhs in case of subsequent faults. The authorities may
even restrain them from being involved in the endorsement of any product until one year after the
first fault, and up to three years for subsequent faults. This is appreciated since as of now there
exist only sparse and scattered provisions across the 1986 Act, the Indian Penal Code, 1860 and
the Food Standards and Safety Act.
The most promising change that the Bill seeks to bring about is to extend its scope, by express
mention, to online modes of transactions such as teleshopping and electronic commerce. The
provision shows the inclination of the legislators to make the subsequent enactment
accommodative of contemporary trends in consumer behavior. With the growing popularity of e-
commerce websites, it is only essential that the central legislation dealing with consumer grievance
take into account all possible modes through which a consumer may be wronged.
Conclusion
The Consumer Protection Bill, 2018 certainly envisions to update the consumer protection
policy according to the needs of the present day consumer and the prevailing business
atmosphere and it must be applauded for the futuristic approach it has taken. The changes
that have been proposed will most certainly ensure a safer and fairer market for the
consumers to interact with the providers, but to what extent, only time will tell. Until then
certain discrepancies and confusions such as conflict of jurisdiction between parallel judicial
bodies, independence of regulators, and other such issues that have been highlighted must be
addressed in order to ensure a smooth sail on a seemingly long journey, the Bill has to make.
This Bill covered most aspects basic rights of consumers concerning right to be protected
against unfair trade practices in times of digital shopping. This Bill has put an end to the
practice of not issuing Bill or cash memo or receipt for the goods sold or services and
refusing, after selling goods or rendering services, to take back. It is believed without any
further amendments, if this Bill becomes an act it will put the consumer in strong position.