Rs 10 Lakh Penalty for Misleading Ads and Unfair Trade Practices

Notices and financial penalties amounting to Rs 10 lakh are among the multifold actions taken by the Central Consumer Protection Authority (CCPA) against the erring companies under the various sections of the Consumer Protection Act, the government said.

The CCPA has taken 113 actions, of which 57 are notices for misleading advertisements, 47 notices relate to unfair trade practices and nine are for violation of consumer rights.

"Subsequent to notice, 14 companies had withdrawn their advertisement, of which maximum companies had claimed more than 99 per cent efficacy against Covid/germs," Additional Secretary, Consumer Affairs, Nidhi Khare said.

"Three companies have issued corrective advertisements after this."

One company changed its refund/replacement policy for the benefit of consumers and also made penal provisions for its sellers in case of any deficiency found.

Three companies were imposed a penalty of Rs 10,00,000 each for its misleading advertisements while three others were imposed similar penalties for unfair trade practice.

The known brands that received notices from CCPA include Naaptol for its misleading advertisements and unfair trade practice, Khare said.

Naaptol, through its Live TV and YouTube broadcast, was using unfair methods to promote its products by falsely stating that "the product is available for a limited time to pressurise consumers to make an immediate decision and depriving consumers sufficient time to make an informed decision".

Another advertisement that made false claims regarding their product without any scientific credibility/reports include magnetic knee support ad for instant pain relief for knees, acupressure yoga slippers/acupressure massage slippers and even some gold jewellery for Rs 200, making consumers purchase "Gold jewellery of Rs 200" and misleading by its name.

"The company's response was that the price (of that jewellery) itself is enough for layman customers to understand that it is not real gold, in a way, to say, they are not misleading," Khare added.

These were imposed a penalty of Rs 10 lakh each while three advertisers were ordered to discontinue advertisements as product quality was unclear and claims could not be proved.

The CCPA also asked the industry associations to advise the manufacturers/traders to desist from issuing misleading advertisements about protection from Covid-19.

It also said it issued new guidelines late Thursday night and are effective from Friday itself which has clearly outlined the penalty for violating the guidelines. The CCPA can impose a penalty of up to Rs 10 lakh on manufacturers, advertisers and endorsers for any misleading advertisements. For subsequent contraventions, it may impose a penalty of up to Rs 50 lakh.

The Authority can prohibit the endorser of a misleading advertisement from making any endorsement for up to one year and for subsequent contravention, prohibition can extend up to three years, it said.