Consumer Protection Act Section 21 — Power of Central Authority to issue directions and penalties against false or misleading advertisements
CHAPTER III CENRAL CONSUMER PROTECTION AUTHORITY
Civil
Summary
Sub-section (1) explains that after investigating, if the Central Authority finds an advertisement is false or misleading, harms consumer interests, or violates consumer rights, it can order the trader, manufacturer, endorser, advertiser, or publisher to stop the advertisement or change it in a specific way and within a specific time.
Sub-section (2) states that even after issuing such an order, if the Central Authority thinks a penalty is needed, it can fine the manufacturer or endorser up to ten lakh rupees. The proviso adds that for every later repeat offence by a manufacturer or endorser, the penalty can go up to fifty lakh rupees.
Sub-section (3) says that regardless of any order under sub-sections (1) and (2), if the Central Authority considers it necessary, it can ban the endorser of a false or misleading advertisement from endorsing any product or service for up to one year. The proviso adds that for every later repeat offence, this ban can extend to three years.
Sub-section (4) provides that after investigation, if the Central Authority finds any person published or helped publish a misleading advertisement, it can impose a penalty on that person of up to ten lakh rupees.
Sub-section (5) states that an endorser will not be liable for a penalty under sub-sections (2) and (3) if they took due care to check that the claims in the advertisement about the product or service were true.
Sub-section (6) says a person will not be liable for a penalty if they prove they published or arranged the advertisement in the normal course of their business. The proviso adds that this defence is not available if the person already knew about the Central Authority's order to withdraw or modify the advertisement.
Sub-section (7) lists the factors to be considered when deciding the penalty amount: the population and area affected by the offence, how often and for how long the offence happened, how vulnerable the affected people are, and the gross revenue earned from sales due to the offence.
Sub-section (8) requires the Central Authority to give the person a chance to be heard before passing any order under this section.
Official Text
(1) Where the Central Authority is satisfied after investigation that any advertisement is false or misleading and is prejudicial to the interest of any consumer or is in contravention of consumer rights, it may, by order, issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such advertisement or to modify the same in such manner and within such time as may be specified in that order.
(2) Notwithstanding the order passed under sub-section (1), if the Central Authority is of the opinion that it is necessary to impose a penalty in respect of such false or misleading advertisement, by a manufacturer or an endorser, it may, by order, impose on manufacturer or endorser a penalty which may extend to ten lakh rupees:
Provided that the Central Authority may, for every subsequent contravention by a manufacturer or endorser, impose a penalty, which may extend to fifty lakh rupees.
(3) Notwithstanding any order under sub-sections
(1) and (2), where the Central Authority deems it necessary, it may, by order, prohibit the endorser of a false or misleading advertisement from making endorsement of any product or service for a period which may extend to one year:
Provided that the Central Authority may, for every subsequent contravention, prohibit such endorser from making endorsement in respect of any product or service for a period which may extend to three years.
(4) Where the Central Authority is satisfied after investigation that any person is found to publish, or is a party to the publication of, a misleading advertisement, it may impose on such person a penalty which may extend to ten lakh rupees.
(5) No endorser shall be liable to a penalty under sub-sections
(2) and
(3) if he has exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by him.
(6) No person shall be liable to such penalty if he proves that he had published or arranged for the publication of such advertisement in the ordinary course of his business:
Provided that no such defence shall be available to such person if he had previous knowledge of the order passed by the Central Authority for withdrawal or modification of such advertisement.
(7) While determining the penalty under this section, regard shall be had to the following, namely: —
(a) the population and the area impacted or affected by such offence;
(b) the frequency and duration of such offence;
(c) the vulnerability of the class of persons likely to be adversely affected by such offence; and
(d) the gross revenue from the sales effected by virtue of such offence.
(8) The Central Authority shall give the person an opportunity of being heard before an order under this section is passed.