Consumers play a crucial role in the economic system of a nation because in the absence of effective demand that emanates from them, the economy virtually collapses. Mahatma Gandhi said, “A consumer is the most important visitor on our premises. He is not dependent on us, we are dependent on him. He is not an interruption to our work; he is the purpose of it. We are not doing a favor to a consumer by giving him an opportunity. He is doing us a favor by giving us opportunity to serve him”. The consumer right is defined as the “the right to be informed about the quality , quantity, potency, purity , standard and price of goods and services, as the case may be so as to protect the consumer against unfair trade practices” in the consumer protection act , 1986 [1] . But unfortunately cheating by the way of overpricing, misleading advertisements, etc. has become a bandwagon among tainted sellers and manufacturers to make superfluous profits.
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Consumer exploitation refers to exploiting the consumers against anti – consumer trade practices adulteration of goods, offering spurious goods, unfair trade practices, etc by the producers or the sellers [2] . In other words Consumer exploitation means the deceiving the consumers by producers and distributers by demanding relatively high prices for ordinary or low-quality products, selling spurious goods etc.. Mostly consumers find out hidden cost, safety hazards and quality problems of the product only after they have purchased the product. The consumers have no other choice but to purchase these useless products and consequently they suffer at the hands of immoral sellers.
CAUSES OF CONSUMER EXPLOITATION
1. Illiteracy and Ignorance: illiterate and ignorant and understand their rights and thus get exploited by unscrupulous businessmen.
2. Unorganized Consumers: consumers are widely dispersed and are not unified. They are at the mercy of businessmen whereas producers and traders are organized and powerful (in the form of oligarchy etc.)
3. Spurious Goods: There is an increasing supply of duplicate products. It is very difficult for an ordinary consumer to distinguish between a genuine product and its counterfeit which definitely does not comply with prescribed norms of quality and safety.
4. Duping businessmen: Some businessmen give misleading information about quality, safety and utility of products. Consumers are misled by false and misleading advertisement and are ignorant of the real quality of advertised goods
5. Malpractices of Businessmen: Fraudulent, deceiving, unethical and monopolistic trade practices on the part of businessmen lead to exploitation who get defective, inferior and substandard goods and poor service.
Ás per consumer protection act, 1986 ” Unfair trade practice” means a trade practice which, for the purpose of promoting the sale,use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice ……”. [3]
FORMS OF CONSUMER EXPLOITATION
Practice in which for the purpose of promoting the sale, use or supply of any goods or the provision of any service, adopts any unfair method or deceptive practice. [4]
Selling at higher prices – The price charged for the product will not be proportionate to the quality;
Product risk – Drugs that are hazardous, banned or beyond expiry date, electrical appliances with inadequate safety precautions, etc;
Adulteration – Refers to mixing of other matter of an inferior quality and sometimes harmful quality with food or drinks intended to be sold [5] . This is very common in food items and could prove to be highly injurious to one’s health;
Sub-standard Products – Items whose quality is far below the required standard;
False Claims – Manufacturers make false representations about their products in the media with a view to mislead the consumers. Claiming that use of a particular oil will cure baldness, using a company’s fairness cream for a specific period will make one fair, etc., are all typical examples of exaggerated, misleading advertisements; and
Warranty/Annual Maintenance Contract – In many cases, though the product will have a warranty or will be under annual maintenance contract (AMC), when a problem arises, the consumer is told that certain parts will not be covered and they will have to pay.
Duplicate articles.
Rough behavior and undue condition
Unethical tactics
A business practice is considered unethical in the following:
When it has degraded or underestimated the substitute or rival’s product.
When it gives false or misleading information on the value of the product.
When it fails to give useful information o the possible reaction or side effects of the product.
When it is immoral.
Defaming any individual or class of people has been raised quite frequently.
Marketing communications that might hurt the personal feelings.
DECEPTIVE ADVERTISING
Deceptive advertising refers to “Any advertisement or promotion which misrepresents the nature, characteristics, qualities or geographic origin of goods, services or commercial activities” [6] .
Consumer normally gets information about goods and articles through two popular yet unreliable means namely word of mouth, hearsing and advertising. Some businessmen give misleading information about quality, safety and utility of products which mislead the consumers who are ignorant of the real quality of advertised goods.
In other words, the practices of making any statement, whether oral or written or by visible representation (which includes advertisement either in print or electronic media) which:
Falsely suggests that goods are of a particulars standards, quantity, grade, composition, style or model. [7] E.g. false claims to the effect that goods were created and recommended by a doctor or were based upon a scientific formula.
Falsely suggest that the service of a particular standard or quality or grade.
Represents that the goods or services have sponsorship, approval, performance , characteristics, accessories, uses or benefits which such goods and services do not have. In proctor and gamble home products ltd., Hindustan lever ltd. [8] Rall claims about its ‘new ceramides sunsilk extra treatment shampoo’ were found to be highly exaggerating and misleading.
Makes a false or misleading representation concerning the need for or usefulness of any goods or services. In Hindustan oil co.Case [9] a claim that its cooking gas units through the use of kerosene saved 30% against the LPG system was held to be not proper therefore an unfair trade practice.
Gives a warranty or guarantee as to the durability performance or efficacy of the goods which is not based upon adequate or proper tests. Burden of proof lies on the plaintiff to show that the goods were adequately and properly tested.
Materially misleading the public about the prices at which such goods are available in the market.
FORMS OF DECEPTIVE ADVERTISING:
Deceptive advertising is seen as exploitative, esp if omitting a product’s drawbacks harms the consumer. Examples include a class action lawsuit filed by EXPERIAN co. in 2010 against LifeLock for overstating its level of identity protection–even after the chief executive/founder’s personal information had been stolen by 20 thieves [10] for which the co. was asked to pay a fine of $12 million by Federal Trade Commission (FTC).
Bait and Switch
Advertising products and services that become unavailable when the customer shows up are called a “bait and switch” tactic. Many complaints start at used car lots, where consumers are steered to more-expensive models after being informed that the one being advertised is unavailable.
“Going Out Of Business” Sales
“Going out of business” sales represents another form of exploitation as they are run by liquidators who are hired to get as much money as possible for the inventory. As an ABC News investigative team found in 2008, this phenomenon leads to fewer bargains and attempts to create excitement by selling products that were never offered at the original store.
Hidden Fees
Adding hidden fees and surcharges to the overall cost of a product or service has become increasingly common. This issue often occurs in the travel industry, where consumers may pay early return fees or extra charges for accepting services like frequent filler mileage.
Failure to Disclose
It is considered false advertising if a representation is “untrue as a result of the failure to disclose a material fact.” Therefore, false advertising can come from both misstatements and partially correct statements that are misleading because they do not disclose something the consumer should know.
American Home Products Corp. v. Johnson & Johnson [11] , is an example of how the courts use their discretion in determining when a disclosure is insufficient. In this case, Johnson and Johnson advertised a drug by comparing its side effects to those of a similar American Home Products drug, leaving out a few of its own side effects in the process. Although the Lanham Act does not require full disclosure, the court held the defendant to a higher standard and ruled the advertisement misleading because of the potential health risks it posed to consumers.
Flawed and Insignificant Research
Alpo Pet Foods v. Ralston Purina Co., [12] , shows how basing advertising claims on statistically insignificant test results provides sufficient grounds for a false advertising claim. In the following case, the Ralston Purina Company claimed that its dog food was beneficial for dogs with canine hip dysplasia, proving the claims with studies and tests. Alpo Pet Foods brought forward a claim of false advertising against Purina, saying that the test results could not support the claims made in the advertisements. Upon looking at the evidence and the way the tests were conducted by Purina, the court ruled not only that the test results were insignificant but also that the methods used to conduct the tests were inadequate and the results could therefore not support Purina’s claims.
Product Disparagement
Product disparagement involves discrediting and debunking a competitor’s product. In US the 1988 amendment to the Lanham Act extends claims for false advertising to misrepresentations about another’s products. [13] In Malusubramanium v. Jyothi laboratories, [14] the respondent’s advertisement that was telecast in Doordarshan, Madras Kendra was alleged to be calculated to disparage the complainant’s products and hence, it was an unfair trade practice.
DECEPTIVE ADVERTISING – UNETHICAL PROMOTION
FAIR LOVELY AND CONSUMER EXPLOITATION
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“Advertising to a great extent is a cultural phenomenon – it can shape a country’s popular culture whilst at the same time a host country’s culture may also influence the creation and effectiveness of a campaign.” As we see with the Fair & Lovely advertisements, the newest popular culture in India tends not to favor the stereotypical judgment of women based solely on their physical appearance.
False claims – comprising of miraculous “scientific formula” :
The cream is technically called a “skin lightening cream”. As the fair and lovely website points out: “Our fairness products are based on Unilever’s Patented Skin Lightening technology that comprises of a synergistic combination of Vitamin B3 (Niacinamide) with UVA and UVB sunscreens which work together to protect the skin from darkening and gently, safely lightening the skin.” [15]
There is some very interesting research on all these fancy terms that companies use while marketing their beauty products (Patented skin lightening technology, UVA and UB sunscreens in this case etc)Do most consumers understand what do these terms mean? The answer in most cases would be no. But do these terms matter to consumers when they make a buying a decision? Yes, they most certainly do
The whitening effect is reversible. The skin will return to its original tone in a few weeks, once you discontinue using the product.
Duping consumers by the means of misleading advertisements ( kale ko gora bana de)
Fair & Lovely, one of the leading products in the skin whitening sector, are allegedly using photo touch-up techniques to justify claims of desired results. Created by Unilever’s research laboratories, Fair & Lovely claims to offer dramatic whitening results in just six weeks. A package of the cream displays one face six times, in a skin whitening progression, and includes” ‘before” and “after” photos of a woman who presumably used the product. On its website, the company calls its product “the miracle worker” or “the complete fairness treatment” which is “proven to deliver one to three shades of ch However, industry experts said: “Images conveying the same message on the box and in the advertisements are touched up using software.”
Since Fair & Lovely is not categorized as a pharmaceutical product, Unilever has not been required to prove efficacy” [16]
Unethical practices encouraging stereotypical mindset.
The UNILEVER Corporation took advantage of the general belief of benefits and beauty of fair skin and used it for marketing. They portrayed the young woman who, after using Fair and Lovely becomes attractive and therefore lands a job suggested that the main qualification for a woman to get a job is the way she looks. Most of their advertisements focused on the theme “fairer girl gets the boy “.Many people were offended by this advertising campaign as they felt it degraded women. The Women’s Association pointed out that “the way they portrayed young women who , after using Fair & Lovely , became attractive and therefore landed a job suggested that the main qualification for a woman to get a job is the way the looks.”
The unethical in fair & lovely advertising-C:UsersDEEPESHDocumentsBluetooth Exchange FolderNew_Fair_Lovely_Advanced_Multivitamin.jpg
Television ads overstate the product benefits.
Face skin problems after the usage of fairness creams.
Potentially reinforcing and raising negative values in the society.
Show stereotype roles of the women and hurt self esteem of women.
Showing the superiority
Deceptive advertising. [17]
HLL’S RESPONSE –
As a result of the backlash against HLL’s Fair & Lovely campaign, the company discontinued the ads in March 2003. Shortly after it pulled the ads off the air, HLL launched a new charitable cause called the Fair & Lovely Foundation, which vowed to “encourage economic empowerment of women across India.” The foundation now provides resources in education and business to millions of women who use or support Fair & Lovely. Efforts have included:
HLL sponsored career fairs in over 20 cities across India
Counseling in over 110 careers
Supported 100 rural scholarships for women students
Created a professional course for aspiring beauticians
Created a three-month Home Healthcare Nursing Assistant course open to women from ages 18-30 years
Honoring women across India that have achieved greatness and set good examples for others to follow
Hindustan Lever Ltd and Fair & Lovely was forced to respond to the negative reactions to their advertisements by generating ample and positive publicity. The creation of a charitable foundation was a smart and beneficial move by the company after their reputation in the public was tarnished
Will HLL’s Fair & Lovely Foundation be enough to counter charges made by AIDWA?
Though Move by the company to launch a new charitable organization named Fair and Lovely Foundation to encourage economic empowerment of women across the country is appreciable but is it any good to the allegations made on the company by AIDWA. It’s so called charitable move does not cater to its false claims and misleading advertisements, the company is still blatantly promoting its “kale ko gora bane de” motto. The stereotypical role of women in Indian society as portrait by the company in its ads still encourages anachronistic beliefs , the company still manages to allure people to buy its products by saying that it contains some miraculous scientific formula which would turn their skin white , the company is still misleading people and society by depicting that when a dark – skinned lass uses fair and lovely , she moves towards success thereby making them believe that light skij is a pre- requisite for a fortunate career.
Thus the FAIR AND LOVELY case still leaves certain question unanswered:
Is the advertising of Fair & Lovely demeaning women?
Is it ethical to take advantage of cultural norms and values to promote a product? Discuss
Is it Ethical to sell a product that is, at best, only mildly effective. Discuss
Exercising a sense of social responsibility and good ethics in your company is largely reflected in how you promote your products and services. Ethical standards vary by country; Many believe that HLL demonstrated poor ethical practices by exploiting the use of existing cultural norms in India to promote their products. In relation to global marketing, know that accepted practices may vary and must be identified.
DECEPTIVE ADVERTISING – FALSE CLAIMS
Federal Trade Commission, Plaintiff v. Reebok International Ltd., doing business as Reebok, Defendant.
(United States District Court for the Northern District of Ohio) [18]
September 28, 2011
Recently Reebok had to refund millions of customers who had bought “toning shoes” to strengthen and tone their bodies. The settlement came after US consumer watchdog the Federal Trade Commission ruled that Reebok’s claim in its ad that its EasyTone or RunTone shoes could strengthen hamstrings, calves and buttocks “just by walking” was unsubstantiated.C:UsersDEEPESHDocumentsBluetooth Exchange FolderReebokREETONE-1F.jpg
The trainer manufacturer had to shell out $25m (£16m) to settle false advertising charges. Reebok’s advertisements said the shoes strengthened hamstrings and calves by up to 11% more than regular trainers, and toned the buttocks by up to 28%.David Vladeck, head of the FTC’s consumer protection bureau said “There is no such thing as a no-work, no-sweat way to a fit and healthy body.” [19]
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The market for toning shoes has exploded in recent years. Toning shoes are designed to be slightly unstable. Manufacturers often claim that this instability requires wearers to work harder when walking, thereby strengthening their muscles. Toning shoe sales in the US increased from $17m in 2008 to nearly $1bn last year. Reebok’s EasyTone and RunTone running shoes have sold for around $80 to $100 (£51-£64) a pair, Ads for the shoes claimed that sole technology featuring pockets of moving air created “micro instability” that toned and strengthened muscles .
“The shoe proven to work your hamstrings and calves up to 11 percent harder and tone your butt up to 28 percent more than regular sneakers,” a narrator said in ad “Just by walking.”
“In truth and in fact,” the settlement agreement reads, “laboratory tests do not show that when compared to walking in a typical walking shoe, walking in EasyTone footwear will improve muscle tone and strength by 28 percent in the gluteus maximus, 11 percent in the hamstrings and 11 percent in the calves.” [20]
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“The consumers expected to get a workout. Not to get worked over,” David Vladeck, director of the FTC’s Bureau of Consumer Protection, told reporters. “Advertisers cannot make claims about their products, particularly not objective claims like this, without having some basis for it. That’s the law.”
The ads ran in 2009 and 2010, but Reebok pulled them off the air and out of magazines after the FTC began its investigation.
Reebok pulled off the advertisements during the FTC investigation and is barred from repeating the claims. The refunds to customers will be made available either directly from the FTC or through a court-approved class-action lawsuit.
“The FTC wants national advertisers to understand that they must exercise some responsibility and ensure that their claims for fitness gear are supported by sound science,” said Vladeck. Despite the settlement, Adidas, which owns Reebok, said it disagreed with the FTC and stood behind the claims made about its toning shoes. [21]
But the US settlement follows a similar case in the UK where the Advertising Standards Authority banned a magazine advert about Reebok EasyTone Curve trainers and barred a TV advertisement from being broadcast again without substantial revisions.
In a ruling last December, the ASA said the claims in both advertisements were unsubstantiated and misleading. It said that Reebok had not provided “robust, scientific evidence” to support the claims, which were based on the results of an unpublished study carried out on behalf of the trainer manufacturer.
The ASA also upheld a complaint against Trimsole shoes, sold by Direct Beauty Products Ltd, over unsubstantiated claims that the footwear could “turbocharge your toning” to give you “slim and slender legs” just by strolling. [22]
FALSE ADVERTISING – DISPARAGEMENT AND COUNTER ADVERTISEMENT
COLA WARS
Advertising confronts consumers on a daily basis Businesses spend billions each year to promote their goods and services to consumers. But in the current scenario, businesses apart from promoting their own product have also undertaken the job of demeaning and debunking the products of their arch competitors which indirectly affects consumer preferences as they are befuddled as to which product they should buy and in order to supersede their competitors, companies start making false claims and assurances to allure the consumers towards their brand. One such case is Pepsi vs. Coca cola.C:UsersDEEPESHDocumentsBluetooth Exchange Foldercoke-vs-pepsi.jpg
Disparagement means “to speak of slighting, undervalue, to bring discredit or dishonor upon, the act of depreciating, derogation, a condition of low estimation or valuation, a reproach, disgrace, an unjust classing or comparison with that which is of less worth, and degradation.” [23] The practice of disparaging competitor’s products, rather than informing consumers, actually manipulates their preferences, molding customer bases to serve businesses’ sales needs.
It all started in 1993, when Coca Cola decided to re-enter the market for the second time (the brand had exited India in 1977, when the government wanted Coca Cola India to hand over the control to its Indian subsidiary, which implied that the company would have to reveal its secret recipe – or do away with it altogether). [24]
Both were known for global advertisement wars.. PEPSI relied on advertisement featuring film stars, pop stars and cricket stars and cricket players. COKE initially focused on Indian culture and music.
When coke bagged the official sponsorship rights to the 1997 world cup , Pepsi launched a campaign ‘nothing official about it’
Against coke’s ‘EAT SLEEP DRINK’ , Pepsi made an ad opposite to it.
To counter this , coke made a print ad in which it shows ‘CHALO KHA LIYA’
Another coke ad showed 2 apes copying Pepsi’s Azhar and Jadeja with the ‘DONT BE A BUNDER ‘, Taste the thunder .
Coke launched sprite and made an ad ‘baki all bakwas ‘which clearly targeted Pepsi.
Against Pepsi’s ‘Sachin ala re’, Coke responded with the song ‘coke ala re’ Pepsi moved to AAAI against Coke.
Coke launched Thumbs Up and telecasted an advertisement that shows Salman Khan asking “Kyu Dil Mange No More?” clearly mocking the catch phrase exclusively associated with Pepsi,”Wrong choice, baby.” which is also is a rip off from “Yehi hai right choice, baby.”In another ad Salman Khan while conducting a Grow up to Thumbs Up, asks a boy to give his preference of a cola drink. He choses a bottle but the crowd boos the drink (referring Pepsi) as it is “sweet” and a “kids drink” [25]
In Pepsi Co. v. Hindustan Coca Cola [26] , the Division Bench of Delhi High Court laid down the tests for disparagement 1) Intent 2) Manner .If the manner is ridiculing or the condemning product of the competitor it amounts to disparaging.
In this Case plaintiff claimed disparagement of Trademark and copyright in two of the defendant’s advertisements. Coca Cola telecasted an ad claiming that “Pappi”, a thinly veiled substitute for Pepsi as “bacchon vali drink” (kids drink) as opposed to Thumbs Up(a Coca Cola brand), a grown up drink while mocking Pepsi’s ad slogan by saying “Yeh Dil Mange No More”
The Court held that when puffing or taking pot shots amounts to denigrating the goods of the competitor, it is actionable. The Division Bench of Delhi High Court issued a permanent injunction restraining its telecast holding that the ad depicted Pepsi product in a ‘derogatory’ and a ‘mocking’ manner.
GLOBAL SCENARIO
In the United States, false and deceptive advertising has been excluded from the constitutional protection of the First Amendment. Hence, advertisements of such nature may be banned, or advertisers may be asked to alter the same so as to include warnings, disclosures and corrections. [27] The leading regulatory body in the states is the Federal Trade Commission (‘FTC’), a five member body which defines not only the scope of federal regulation but also determines the standards for state and industry specific bodies. The primary object of the FTC is to protect consumers from unfair or deceptive market practices and promote healthy competition. [28] The source of the Commission’s regulatory authority is in its ability to require that advertisers substantiate the accuracy of their assertions. [29] . The Lanham (Trademark) Act [30] is the primary federal trademark statute of law in the United States. The Act prohibits false advertising trademark infringement and trademark dilution.
As part of its ongoing efforts to stop over-hyped advertising claims, in August 2012, FTC had filed false advertising charges against the marketers of Your Baby Can Read! [31] – a program that was widely touted in infomercials and on the Internet. The program uses videos, flash cards, and pop-up books that supposedly teach children as young as nine months old how to read. The settlement prohibits the further use of product name Your Baby Can Read! and also imposed a $185 million judgment, which equals the company’s gross sales since January 2008.
While setting in place an effective mechanism for protecting consumer interests, the FTC offers little immediate relief to a competitor who may be hurt by false and misleading comparative advertising. [32] Hence, aggrieved parties have to take direct recourse to the courts in order to obtain injunctive relief against deceptive advertisements. The competitor may seek an injunction under 43(a) of the Lanham Trademark Act, 1946. The legislation prohibits any person’s “false or misleading representation of fact” in “commercial advertising or promotion” that “represents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities.” The courts have generally restricted action under the Act to those who have suffered ‘competitive injury’, ruling that consumers may not sue under the same for false advertising. Competitors may proceed with an action for both injunctive relief and monetary damages. [33]
The initiation of the self-regulatory approach in Bri
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