Supreme Court's Mandate On Self-Declaration: An Added Compliance Challenge For Advertisers?

On May 7, 2024, the Hon'ble Supreme Court of India issued an Order in the case of Indian Medical Association & Anr. v. Union of India & Ors.¹, mandating that advertisers and advertising agencies submit a self-declaration before any advertisement is published, aired, or displayed.

This Order was passed in the background of the alleged deceptive and misleading advertisements by Patanjali promoting its product 'Coronil' and making false claims about curing diseases related to COVID-19.

The Hon'ble Court was of the view that there is an absence of any robust mechanism to ensure compliance with the current applicable laws in relation to misleading advertisements and therefore mandated the aforesaid self-declaration in exercise of its powers under Article 32 of the Constitution of India for enforcement of the fundamental right to health².

Notably, the language of the Order is extremely broad and does not appear to be restricted to only products affecting health³. Rather, it seems to include all advertisements that are published on any platforms, i.e., print, digital or broadcast media. Therefore, all advertisers are arguably now required to submit a self-declaration before their advertisements are published/ aired/ displayed.

• A. Mechanism of Submission of Self-Declaration:

  The Order mandates that self-declaration has to be uploaded by the advertiser on the Broadcast Sewa Portal run under the aegis of the Ministry of Information and Broadcasting ("MIB"). In relation to advertisements in the Press/Print Media/Internet, the MIB has been directed to create a dedicated portal. The advertisers are required to upload a self-declaration before any advertisement is issued on any platform. Proof of uploading the self-declaration has to be made available by the advertisers to the concerned broadcaster/printer/ publisher/ electronic media platform, for records. No advertisements shall be permitted to be run without uploading the self-declaration.

  On June 3, 2024, the MIB issued a Press Release¹ stating that a new feature on the Broadcast Seva Portal and on Press Council of India's portal has been introduced for print and digital/internet advertisements which will be activated on June 4, 2024. A period of two weeks has been provided to all stakeholders to familiarize themselves with the process of self-certification. Advertisements issued on or after June 18, 2024 are required to comply with the mandate of self-declaration. Notably, the MIB has also issued detailed Guidelines for using the Broadcast Seva Portal/ Press Council of India portal².

  Unsurprisingly, given its ramifications for the advertising industry, the Order has caused widespread concern across the industry owing to the heavy reliance of companies on advertisements in today's world for promoting their various products and services. While the intent behind this Order is to protect consumer rights and ensure the quality of advertised products, it raises several concerns regarding its implementation and potential impact on the advertising industry. In this article, we analyse the need for imposition of such an onerous requirement on advertisers and whether the existing legal framework is inadequate to address the issue of false and misleading advertisements.

• B. Existing Regulatory Framework:

• • General Regulations:

  • The Consumer Protection Act, 2019 ("CPA") provides a comprehensive legal framework to protect consumers from unfair trade practices, including misleading advertisements. It empowers the Central Consumer Protection Authority ("CCPA") to take action against false or deceptive advertising and imposes penalties on violators. The CCPA can exercise its powers either suo moto or on a complaint made by any person.

    In 2022, the CCPA, in exercise of its powers under the CPA released the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 ("Guidelines"). These Guidelines expand the scope of the existing provisions of the CPA by setting out detailed parameters of advertisements that are permissible or prohibited. They prohibit misleading claims, bait advertisements, surrogate advertisements, and deceptive endorsements.

    In case of non-compliance with the Guidelines, Section 21 of the CPA empowers the CCPA to impose a penalty of up to INR 10 lakh on manufacturers, advertisers, and endorsers. For any subsequent contraventions, CCPA may impose a penalty of up to INR 50 lakh. Further, the CCPA can also prohibit the endorser of a misleading advertisement from making any endorsement for up to 1 year and for subsequent contravention, prohibition can extend up to 3 years.

  • Sector-Specific Regulations:

  • In addition to the general framework, there are specific regulations to prevent misleading advertisements for FMCG and pharmaceutical sectors which have a direct bearing on right to health of consumers:

    • Food Safety and Standards Act, 2006 ("FSSA"):

    • The FSSA is a comprehensive law enacted to consolidate various regulations related to food safety and standards in India. The FSSA aims to ensure the availability of safe and wholesome food for human consumption. One of the critical areas under this Act is the regulation of advertisements related to food products to prevent misleading claims.

      The FSSA, along with the Food Safety and Standards (Advertisements & Claims) Regulations, 2018 ("Advertising Regulations"), sets stringent guidelines to prevent false or exaggerated claims about food products. It mandates that all health claims and advertisements must be scientifically substantiated. Specifically in relation to claims for reduction of disease risk, a prior approval of the FSSAI³. Misleading advertisements are considered offences and can attract penalties, including fines up to INR 10 lakhs and other severe punishments like suspension or cancellation of FSSAI licenses for repeated offences⁴​.

      The Food Safety and Standards Authority of India (FSSAI) is the statutory body established under the FSSA to oversee and ensure compliance with these standards. The FSSAI monitors and scrutinizes food advertisements to identify misleading claims and takes necessary actions against violators. Recent reports indicate a crackdown⁵ on numerous misleading advertisements by Food Business Operators in various sectors, including health supplements and organic products.

    • Drugs and Magic Remedies (Objectionable Advertisements) Act, 1955 ("DMRA"):

    • The DMRA is another crucial legislation aimed at regulating the advertising of pharmaceuticals and certain other products. The primary focus of the DMRA is to curb the proliferation of misleading advertisements that make false claims about the efficacy of drugs and magical remedies. The Act prohibits advertisements that make false claims about the effectiveness of drugs in diagnosing, curing, or preventing any disease or condition. It also restricts the advertisement of drugs that purport to have magical properties. It covers all forms of media, including print, electronic, and digital platforms, ensuring that misleading claims are not propagated through any medium. Violations of the DMRA can lead to significant penalties, including fines and imprisonment. The DMRA empowers authorities to take legal action against individuals and companies that disseminate such misleading advertisements.

      A combination of general and sector-specific regulations provides a comprehensive framework to prevent misleading advertisements. This integrated regulatory framework imposes sufficient obligations on all advertisers, that all advertisements, are truthful and not misleading, thereby safeguarding consumer interests effectively.

• C. Self-Regulatory Mechanism of the Advertising Standards Council of India ("ASCI"):

• The ASCI is a self-regulatory voluntary organization of the advertising industry in India. Its primary role is to ensure that advertisements conform to its code for self-regulation, which lays down guidelines for fairness, honesty, and truthfulness in advertising. It plays a pivotal role in regulating misleading advertisements in India. Here's how ASCI functions in regulating misleading advertisements:

  • Code of Self-Regulation: ASCI has formulated a comprehensive code for self-regulation in advertising, which covers various aspects such as product claims, comparative advertising, and endorsements. Advertisers are expected to adhere to these guidelines while creating and disseminating advertisements.
  • Monitoring and Complaints Redressal: ASCI monitors advertisements across various media channels, including print, television, radio, and digital platforms. It encourages consumers and competitors to lodge complaints against misleading advertisements. Upon receiving a complaint, ASCI investigates the matter and takes necessary actions, such as asking advertisers to modify or withdraw the misleading content.
  • Guidance and Advisory: ASCI provides guidance and advisory services to advertisers, helping them understand the nuances of ethical advertising practices. It conducts workshops, seminars, and training programs to promote responsible advertising.
  • Collaboration with Regulatory Authorities: ASCI collaborates with government bodies, such as the MIB, CCPA and the FSSAI, to ensure effective regulation of advertisements. It works closely with these authorities to address issues related to misleading claims.
  • Public Awareness Campaigns: ASCI engages in public awareness campaigns to educate consumers about their rights and responsibilities concerning advertisements. It empowers consumers to identify and report misleading advertisements, thereby fostering a culture of responsible advertising.

• D. A Case Of Regulatory Inaction As Opposed to Inadequate Legal Framework?

• It is the view of the authors that the mandate of self-declaration by advertisers has added another regulatory compliance layer to the existing framework regarding misleading advertisements. There seems to be no deficiency in the law, the legal landscape in India is robust, with comprehensive frameworks and regulations in place to address deceptive and misleading marketing practices.

  The challenge lies in the implementation and enforcement of these regulations. Regulatory bodies often face constraints in monitoring and taking action against misleading advertisements, leading to gaps in enforcement and instances of non-compliance. One such challenge is that the enforcement mechanisms outlined in the CPA or the FSSA, and other regulations rely heavily on complaint-based systems. This means that regulatory action often occurs in response to consumer complaints, leaving room for misleading advertisements to persist until brought to the attention of authorities.

  Further, even though the authorities have the power to take suo moto action, millions of advertisements are disseminated across various media platforms every day. As a result, regulatory bodies face a daunting task in monitoring and scrutinizing the content for compliance with established regulations. The lack of adequate funding and resources poses a significant obstacle in the effective regulation of misleading advertisements, exacerbating the challenges faced by regulatory authorities in safeguarding consumer interests.

  The authors are of the view that the requirement for self-declaration may not adequately safeguard consumer interests and could potentially exacerbate the challenges faced by advertisers in navigating the complex regulatory landscape. Instead of relying on self-declaration, efforts could focus on strengthening regulatory capacity, improving enforcement mechanisms, and fostering collaboration between regulatory bodies and industry stakeholders.

Footnotes

1 The authors are Senior Associates at Saikrishna and Associates.

2 Writ Petition (Civil) No. 645 of 2022.

3 The Order states that the direction of self-declaration shall be treated as law as under Article 141 of the Constitution of India. Pertinently, the power to do complete justice is available to the Supreme Court under Article 142 of the Constitution of India.

4 It is arguable that since the Supreme Court has passed the Order for enforcement of fundamental right to health, its scope is limited to products affecting health. However, the broad language of the Order, the Press Release, and Guidelines issued by MIB makes its scope unclear and further clarity on this issue is needed.

5 https://pib.gov.in/PressReleasePage.aspx?PRID=2022649.

6 https://cbcindia.gov.in/cbc/uploads/mandate/Self_Declaration_Portal_Guidelines.pdf.

7 Regulation 11 and 12 of the Advertisement Regulations.

8 Rule 13 of the Advertisement Regulations read with Section 53 read with Section 64 of the FSSA.

9 FSSAI Press Release available at:

https://fssai.gov.in/upload/press_release/2023/04/644cce8e880a5FSSAI_Press_Note_28042023.pdf.

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