Thursday, 18 July 2013

Social, Ethical and Legal Aspect of Advertising,

Legal Aspects of Advertising

Unfortunately despite several laws meant to protect consumers against such unfair trade practices, false and misleading advertisements continue to exploit the consumer. A number of institutions are involved in regulating advertising. These are:

1. Self regulation by the industry

2. Regulation by the Government 




In India the government assumes the role of regulating the business activity by bringing a number of laws, regulations and codes. The following laws have been enacted by the government, which contain provisions that regulate advertising in India.

These laws can be divided into two categories.

I. Laws having horizontal application on advertising

II. The Consumer Protection Act, 1986.

III. The Emblems and Names (Prevention of Improper Use) Act, 1950

IV. Trade and Merchandise Marks Act, 1958.

V. Cable Television Networks (Regulation) Act, 1995

VI. Indecent Representation of Women (Prohibition) Act, 1986.

VII. Monopolies and Restrictive Trade Practices Act, 1969.

VIII. Motor Vehicles Act, 1988

IX. Laws having vertical application on advertising

X. Section 58 Companies Act, 1956

XI. Drugs and Cosmetics Act, 1940.

XII. Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954.

XIII. Pre-natal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994.

XIV. Prevention of Food Adulteration Act, 1954/ Food Safety and Standards Act, 2005.

XV. Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

XVI. Prize Competition Act, 1955

XVII. The Infant Milk Substitute, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992 and Amendment Act, 2002.

XVIII. Transplantation of Human Organs Act, 1994

XIX. The Young Persons (Harmful Publications) Act, 1956

XX. The following Regulatory authorities have power to regulate advertising in their respective domain.

o Insurance Regulatory Development Authority

o Telecom Regulatory Authority of India

o Securities and Exchange Board of India

o Reserve Bank of India

o Medical Council of India

Some of the important features of various laws concerning advertising are:

1. The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 prohibits advertisements for products and services claiming to cure certain medical conditions. As per the law, no advertisement should promise magical cure for any ailments or disease and the rules specify the diseases and ailments that cannot be advertised promising cure or remedies. However, the enforcement of the Act by the state authorities is poor because one finds a number of advertisements in the print media. The Act also does not cover advertisements that appear in various media pertaining to health gadgets of unproven efficacy, like tummy trimmers, bands for blood pressure control, and gadgets to increase height. This Act does not provide for issuing corrective advertisements.

2. The Monopolies and Restrictive Trade Practice act, 1969: It had been the most effective Act in the eighties and nineties to regulate undesirable advertising. In the year 1984, the government brought, through an amendment, "unfair trade practices" under the purview of the MRTP Commission and the Office of the Director General (Investigation and Registration). However, this Act is being replaced by the Competition Act, 2002 but the cases pending under the MRTP Commission are still being heard. Moreover, a Competition Commission has been set up under the Competition Act to deal with monopolies and restrictive trade practices. The complaints pertaining to unfair trade practices are still being handled by the MRTP Commission or the consumer courts. The MRTP Act has been very effective in hauling a number of advertisers to stop advertisements which are prejudicial to consumer interest through its 'cease and desist orders'.

3. The Consumer Protection Act, 1986: The Consumer Protection Act, 1986, applies to advertisements for all products in the market place. A consumer may file a complaint related to false and misleading advertisements, which are included under the definition of unfair trade practice (Section 2 (r) The law mentions seven classes of unfair trade practices in six subsections of this section of the law. The consumer courts can however, take the following actions under section 14 of the Consumer Protection Act, 1986:

" Issue interim orders stopping such advertisements pending disposal

" To pass cease and desist orders.

" Award compensation for loss or suffering, punitive damages and cost of litigation to the affected party.

" Direct the advertiser to issue corrective advertisement

4. Cable Television Networks (Regulation) Act, 1995: This law lays down the procedure for registration of a cable television network and also regulates the programmes and advertisements transmitted on cable network in India. The registering authority is the Head Post Master of a Head Post Office of the area within whose territorial jurisdiction the office of the cable operator is situated.

5. Drugs and Cosmetics Act, 1940

This law regulates the production, manufacture and sale of all drugs and cosmetics in the country. The Act prescribes a fine of up to Rs. 500 for any person using any report or extract of report of a test or analysis made by the Central Drugs Laboratory or a government analyst for advertising of a drug or cosmetic.

6. Section 292 and Section 293 of the Indian Penal Code, 1860, prohibits the dissemination of any obscene matter. The Indian Post Office Act, 1898, imposes a similar prohibition on the transmission of obscene matter through the post. The Customs Act, 1962, allows the detention and seizure of any obscene matter sought to be imported into the country.

7. The Children's Act, 1960, prohibits the disclosure of names and address and other particulars of any child involved in any proceedings.

8. The Indecent Representation of Women (Prohibition) Act, 1986 forbids the depiction of women in an indecent or derogatory manner in the mass media. No person shall publish, or cause to be published, or arrange or take part in the publication or exhibition of, any advertisement which contains indecent representation of women in any form.

9. The Emblems and Names (Prevention of Improper Use) Act, 1950, prohibits the use by any private party of certain names, emblems, etc.

10. Motor Vehicles Act, 1988: This law affects outdoor advertisements, like bill boards, posters, neon signs, etc. The Act, grants powers to remove such advertisements which may distract drivers and have the potential of causing road accidents.


Self regulation by the advertising industry

With the increasing criticism of advertising, advertisers have devised self regulation to ensure true and accurate messages. Moreover, with the advent of new communication and information technologies, the national policy makers have also become less willing and less able to intervene. Since print and audio-visual media exercise the essential freedom of speech and they are financed by advertising revenues, media has always resisted curbs thereby constraining the capacity of national governments to influence media. Further, the business also realizes that the long term profitability of the organisation depends upon acting responsibly.

Agencies involved in self regulation

A number of agencies are involved. These can be classified into the following:

" Advertising trade associations

o Advertising Standards Council of India (ASCI)

o Advertising Association of India (AAAI)

o Press Council of India

o Prasar Bharti

" Individual media and media groups

o Code for commercial advertising on Doordarshan

o All India Radio Code for commercial advertising

ASCI's code of Self Regulation says: "Advertisements should be truthful and fair to consumers and competitors within the bounds of generally accepted standards of public decency and propriety. Not used indiscriminately for the promotion of products, hazardous or harmful to society or to individuals particularly minors, to a degree unacceptable to society at large".

Unfortunately despite several laws meant to protect consumers against such unfair trade practices, false and misleading advertisements continue to exploit the consumer. Outdated laws, poor enforcement of them are some of the lacunas in order to control advertising. The need of the hour is better laws in keeping with the times, better enforcement, corrective advertisements, better self-regulation by industry independent regulator to regulate health and children -related advertisements. 

Social and Economical Aspects of Advertising

 

Economic role of Advertising

Value of Products:
The advertised products are not always the best products in the market. There are some unadvertised products also present which are good enough. But advertising helps increase value for the products by showing the positive image of the product which in turn helps convincing customers to buy it. Advertising educates consumers about the uses of the products hence increasing its value in minds of the consumers. For e.g. mobile phones were first considered as necessity but nowadays the cell phones come with number of features which makes them mode of convenience for consumers.
Effect on Prices:
Some advertised products do cost more than unadvertised products but the vice versa is also true. But if there is more competition in the market for those products, the prices have to come down, for e.g., canned juices from various brands. Thus some professional like chartered accountants and doctors are not allowed to advertise.
But some products do not advertise much, and they don’t need much of it and even their prices are high but they are still the leaders in market as they have their brand name. e.g., Porsche cars
Effect on consumer demand and choices:
Even if the product is heavily advertised, it does not mean that the demand or say consumption rates will also increase. The product has to be different with better quality, and more variety than others. For E.g., Kellogg’s cornflakes have variety of flavors with different ranges to offer for different age groups and now also for people who want to loose weight thus giving consumers different choices to select from.
Effect on business cycle:
Advertising no doubt helps in employing more number of people. It increases the pay rolls of people working in this field. It helps collecting more revenues for sellers which they use for betterment of product and services. But there are some bad effects of advertisements on business cycle also. Sometimes, consumer may find the foreign product better than going for the national brand. This will definitely effect the production which may in turn affect the GDP of the country.
The economic aspects are supported by the Abundance Principle which says producing more products and services than the consumption rate which helps firstly keeping consumers informed about the options they have and secondly helps sellers for playing in healthy and competitive atmosphere with their self interest.

Social role of Advertising:

There are some positive and some negative aspects of advertising on the social ground. They are as follows.
Deception in Advertising:
The relation between the buyers and sellers is maintained if the buyers are satisfied with what they saw in advertise and what they got after buying that product. If seller shows a false or deceptive image and an exaggerated image of the product in the advertisement, then the relation between the seller and buyers can’t be healthy. These problems can be overcome if the seller keep their ads clean and displays right image of the product.
The Subliminal Advertising:
Capturing the Minds of the consumers is the main intention of these ads. The ads are made in such a way that the consumers don’t even realizes that the ad has made an impact on their minds and this results in buying the product which they don’t even need. But “All ads don’t impress all consumers at all times”, because majority of consumers buy products on basis of the price and needs.
Effect on Our Value System:
The advertisers use puffing tactics, endorsements from celebrities, and play emotionally, which makes ads so powerful that the consumers like helpless preys buy those products.
These ads make poor people buy products which they can’t afford, people picking up bad habits like smoking and drinking, and buy products just because their favorite actor endorsed that product. This affects in increased the cost of whole society and loss of values of our own selves.
Offensiveness:
Some ads are so offensive that they are not acceptable by the buyers. For example, the ads of denim jeans showed girls wearing very less clothes and making a sex appeal. These kinds of ads are irrelevant to the actual product. Btu then there is some ads which are educative also and now accepted by people. Earlier ads giving information about birth control pills was considered offensive but now the same ads are considered educative and important.
But at the last, there are some great positive aspects which help
  • Development of society and growth of technologies
  • Employment
  • Gives choices to buyers with self interest
  • Welcomes healthy competition
  • Improving standard of living.
  • Give information on social, economical and health issues. 

Ethical Issues in Advertising

Puffery & Hype: Exaggerated by legal claims (Hallmark cards: “When you want to send the very best.” Everready Batteries: “Nothing outlasts an Eveready battery”
Good Taste: Stereotyping (gender, race, ethnicity, age, lifestyle, handicaps, religion)
Stealth Advertising: Promotional messages embedded in a story line but not explicitely presented as advertising
Advertising to Children: Congtroversial products (alcohol, tobacco, gambling)
Gratuitous Sexual Content: Using nudity, sexual imagery, and sex appeal, both explicitely and by innuendo, for the purpose of attracgting attention, despite little or no inherent seual aspects of the product/service/idea being advertised
Negative Content: Fear appeals, guilt appeals, threats

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