How will the Consumer Protection Act 2019 affect the ASCI?

The new Consumer Protection Act was enforced on July 20 (Monday). There is much curiosity around the development, what it means, and how it might affect the Advertising Standards Council of India (ASCI).

The ASCI expects the Act to have a significant impact in the control of misleading advertisements, especially among genres like teleshopping, education and healthcare products/services. The ASCI’s role would be complementary. It would guide marketers and celebrities according to the Code for Self-Regulation in Advertising and Guidelines.

The Council was set up in 1985 as a self-regulatory body for the advertising industry to maintain the profession’s best traditions. Its job is just to monitor misleading advertising. The scope of the Consumer Protection Act is much greater – from product liability, unfair trade practices, consumer protection, celebrity endorsement, to misleading advertising.

Also, it does away with the need for a consumer to have a lawyer, since a consumer can directly send his complaint to the Department of Consumer Affairs (Ministry of Consumer Affairs, Food and Public Distribution), or the local collector, as the case may be.

Product Liability

The bill is tough on defective products. If a product has a manufacturing defect, or a defect in the design, or deviates from manufacturing specifications, both the manufacturer, and/or the seller, could become liable. The Act takes a dim view of adulteration, and imposes both imprisonment and a fine for storing, selling, or distributing, or importing products that might have adulterants.

The Act also protects the consumers against the marketing of goods and products which might be hazardous to life and property. Section 9 (ii) says:

“The right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be, so as to protect the consumer against unfair trade practices.”

Additionally, under section 84, a manufacturer is liable if a product contains a manufacturing defect, defective design, or the product doesn’t conform to express warranty, or if the products fails to contain adequate instructions of correct usage. It also protects the consumer against unfair trade practices on e-commerce.

The Act has substantial reach for Indians because it provides for a National Commission, a State Commission and a District Commission.

Consumer Protection Authority

The Act looks at the creation of a central Consumer Protection Authority to address false, or misleading, advertisements. The Authority can impose a penalty of up to Rs 10 lakh, and a further penalty of up to Rs 50 lakh, for every subsequent contravention. A misleading advertisement could attract a two-year imprisonment sentence, and a further term of five years for every subsequent violation.

Now this is where it differs from the ASCI, which, at the most, can request a marketer to withdraw a misleading advertisement. That, too, if the marketer is an ASCI member.

The Act defines a misleading advertisement as:

"Misleading advertisement" in relation to any product, or service, means an advertisement, which:

(i) Falsely describes such product or service; or

(ii) 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

(iii) 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

(iv) Deliberately conceals important information.

Celebrity Endorsement

The bill has provided for a fine of up to Rs 50 lakh for celebrities appearing in misleading advertisements, which, of course, is unlikely to bother the top celebrities since it represents only a fraction of their earnings through endorsements. What might seem harsh is that celebrities could face up to three years imprisonment for appearing in misleading advertisements. The agents of celebrities will, no doubt, seek clarification on what exactly is misleading advertising.

Again, while the ASCI can ask the marketer to withdraw a misleading ad which has a celebrity endorsement, the Act takes a tough stance and a fine.

So, ASCI or Consumer Protection Authority?

One is not quite sure what processes the government and ministry will follow to settle disputes. The government is generally known to move slowly on most matters. While the Consumer Protection Act is a move in the right direction, one is not quite sure if the government has the expertise, or the speed, with which disputes need to be addressed in the real world.

The ASCI might not have the power to impose fines, but is disposing off more than 1,000 cases every quarter. Plus, the Consumer Complaints Council is a carefully selected team of expert from every field, including advertising, marketing, legal, engineering, journalism, and the sciences.

Most misleading advertisements need to be deliberated by a combination of experts. Some product claims are purely technical and, therefore, need to be checked by an expert.

Whether the government machinery will allow for such expertise to decide the fate of misleading advertisements is uncertain. While the Act has officially come into force, one is not sure if the machinery required to deal with the Act is in place.

A more sensible procedure might be for the government to outsource its advertising disputes to the ASCI, since it already has the expertise developed over the last 35 years, and is run by the marketing and advertising industry.