Rs 10 lakh fine for companies over misleading advertisements and unfair business practices

NEW DELHI: Financial notices and penalties amounting to Rs 10 lakh are among multiple actions taken by the Central Consumer Protection Authority (CCPA) against offending companies under different sections of the Consumer Protection Act, the government announced on Friday.

The CCPA initiated 113 actions, including 57 opinions for misleading advertising, 47 opinions relating to unfair commercial practices and nine for violation of consumer rights.

“Following the notice, 14 companies had taken down their advertising, most of which had claimed over 99% effectiveness against Covid/germs,” said Additional Secretary, Consumer Affairs Nidhi Khare.

“Three companies released corrective ads after this.”

A company has changed its refund/replacement policy for the benefit of consumers and has also provided criminal penalties for its sellers in the event of a defect.

Three companies were fined Rs 10,00,000 each for their misleading advertisements while three others were given similar penalties for unfair business practices.

Well-known brands that have received CCPA notices include Naaptol for its misleading advertisements and unfair marketing practices, Khare said.

Naaptol, through its Live TV and YouTube broadcast, used unfair methods to promote its products by falsely stating that “the product is available for a limited time to pressure consumers into making an immediate decision and deprive consumers of sufficient time to make an informed decision”. .

Another ad that made false claims about their product without any credibility/scientific report includes magnetic ad for instant knee pain relief, acupressure yoga slippers/acupressure massage slippers and even gold jewelry for Rs 200, tricking consumers into buying “Rs 200 gold jewelry” and misleading by name.

“The company’s response was that the price (of this jewelry) itself is enough for lay customers to understand that it’s not real gold, in a way, to say that they are not misleading,” Khare added.

These were fined Rs 10 lakh each while three advertisers were ordered to halt the advertisements as the quality of the product was unclear and the claims could not be proven.

The CCPA has also asked industry associations to advise manufacturers/traders to refrain from publishing misleading Covid-19 protection advertisements.

He also said he issued new guidelines late Thursday evening and come into effect from the same Friday, which clearly defined 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 advertising. For subsequent offences, he can impose a penalty of up to Rs 50 lakh.

The Authority can ban the endorser of a misleading advertisement from making an endorsement for up to a year and in the event of a subsequent violation, the ban can extend for up to three years, she said.