December 2, 2020

THE CONSUMER PROTECTION LAWS OF INDIA AND EUROPEAN LAWS: A COMPARATIVE ANALYSIS

We live in a time wherein marketing practices are focused on the consumers and their needs, wants, and desires. Our society has shifted from the doctrine of ‘Caveat Emptor’ (Let the buyers beware) to the doctrine of ‘Caveat Venditor’ (Let the sellers beware). Yet, to reach target markets and build brands advertisers sometimes overstep social and legal norms. The consumers, if not highly protected by law, will be exploited in the market. In such a case it is important that the consumer laws of a country are strict enough to ensure that the consumers are protected and aren’t helpless before false and misleading marketing practices.

This article focuses on comparing the Consumer Rights Directive of the European Union and India’s Consumer Protection Act 2019 and analyses the differences between the two in light of marketing practices. During the comparison, it was found that the Consumer Protection Act, 2019, did not cover several aspects in regards to the upcoming marketing and advertising trends. The analysis also reveals certain suggestions to tighten the consumer laws in India in order to further reduce the unfair trade practices.

Misleading advertisements


Misleading advertising is consistently the most complained about issue for European consumers. Consumers are bombarded with more than 1500 commercial messages a day. For most companies, the question is not whether to communicate but rather what to say, how to say it, to whom and how often. To reach target markets and build brand equity in the market advertisers sometimes overstep social and legal norms.

The first consumer protection efforts in the EU in the 1970s aimed at removing impediments to the integration of the internal market. The 1986 Single European Act explicitly recognised consumer protection as a policy aim within internal market policies. The 1992 Treaty of Maastricht elevated consumer protection to an independent policy area for the first time and obliged the Community to work on a high level of consumer protection without requiring a direct connection with single market integration. With the entry into force of the Lisbon Treaty in 2009, the Charter of Fundamental Rights of the European Union became legally binding, acknowledging the marketing dimension of consumer protection.

Certain laws are imposed by the European union to check the safety of consumers which are analysed and mentioned below:

· The information requirements under Article 7(4) of Directive 2005/29/EC include informing the consumer about the trader’s complaint handling policy. The Fitness Check of consumer and marketing law findings show that that information is most relevant at the pre-contractual stage, which is regulated by Directive 2011/83/EU and this thus prevents a consumer from getting deceived.[1][2]

· Directive 2005/29/EC does not prevent Member States from adopting provisions to protect the legitimate interests of consumers with regard to aggressive or misleading marketing or selling practices in the context of unsolicited visits by a trader to a consumer which thus leads to better understanding of the consumer about the product

· Article 6(2) states that any marketing of a good, in one Member State, as being identical to a good marketed in other Member States, while that good has significantly different composition or characteristics, unless justified by legitimate and objective factors is considered to be a malpractice. This provision doesn’t allow the customer to be tricked by the seller into buying their product by the appearance of their product.

· Article 9 lays down certain rules for the against the aggressive and misleading in-person selling which are justified on the grounds of consumer protection

The European Union also introduced DIRECTIVE 2006/114/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on 12 December 2006 in which provides the guidelines for the action taken by the European states for the protection of its citizens against Misleading advertisement: –

· Article 5 of the directive states that the member state (of the EU) should take some action to combat the problem of misleading advertisement, and it also laid down certain ways to do it: –

Ø Formation of legal provision or organization regarded under national law as having a legitimate interest in combating misleading advertising or regulating

Ø Taking legal action against such advertising

Ø bring such advertising before an administrative authority which is competent either to decide on complaints or to initiate appropriate legal proceedings.

· Article 5(4) of the directive states that Member States may give the power to the courts or administrative authorities allowing them the power to bring to an end the advertisement which has been ordered by a final decision to eliminate the continuing effects of misleading advertising or unlawful comparative advertising by publication of the order or publication of the corrective statement

· Article 7 of the directive states that this directive shall not stop the Member States from retaining old provisions or adopting new provisions for ensuring protection of consumers, with regard to misleading advertising.[3]

It can be clearly seen from the above directive issued by the EUROPEAN UNION that the consumer protection is the primary concern for its government and thus the rights of the consumer should be protected. These directives were introduced by the EU in the year 2005 and 2006 whereas in India, law against misleading advertisement was launched in the year 2019 (Consumer Protection Act 2019) and this gap of 13-14 years has led to the countries which are member of the European union to develop authorities and legal provision in such a way that the consumer rights would flourish but on the other hand in India, this process has just started and it would take years for the consumer rights to develop.

Influencer Advertising

A new development in marketing on digital media is the rise of “influencer” advertising, where influential individuals with large followings advertise products through sponsored posts or videos on their respective platforms, such as Facebook or Instagram. These influencer posts blend in with the normal content created by these influencers, and it is therefore important that the influencer makes it clear whenever a post is an advertisement. This is in part because the consumers have the right to be aware of when a product is being advertised to them and when it is being recommended based on pure enjoyment with no financial or other consideration involved in the post.

The Indian Consumer Protection Act, 2019, does not have any sections that regulate this new, particular type of marketing.[4] The Advertising Standards Council of India (ASCI) was reported in October 2019 to have been in the process of framing regulations to govern influencers[5], however, at the time of writing this paper in February 2020, these regulations have yet to surface. These lacunae have major implications for Indian users of popular social media platforms. Indian influencers have no legal obligation as yet to disclose advertisements, affiliate links and sponsored content, and will continue in this vein until the regulations are made effective.

The European Union has left the topic of influencer advertisements in the hands of the nation-states’ legislatures and courts, resulting in different standards across the Union. Germany has some of the strictest regulations for influencers in the Union. Advertising disclosures are regulated by the Landesmedienanstalten, or the State Media Authorities, which uses Germany’s strict advertising legislation to regulate influencers just as they would companies.

There are 2 statutes which are used to regulate influencer advertising in Germany–

· Section 5a (2) of the Act Against Unfair Competition, 2019(Gesetz gegen den unlauteren Wettbewerb) which forbids omission of material information, ambiguous provision of material information and untimely disclosure thereof. [6]

Failing to disclose sponsored content and affiliate links can completely change the opinion that the consumer may have had of the content. They are misled to believe that the opinions stated in the content was the genuine opinion given by the influencer, without any monetary or other kind of consideration backing up said opinion. This is thus interpreted under Section 5a (2) to be an omission of material information.

· Section 6 of the Telemedia Act 2007, (Telemediengesetz) directs that commercial communications must be clearly identifiable as such, and that the entity that directs such communications must be identifiable as well. Promotions and discounts offered and their conditions must also be clearly indicated and accessible.[7]

This Section is used in conjunction with the Unfair Competition Act to enforce the disclosure of sponsored content as advertisements. It also forces influencers to disclose the commission they would receive from their affiliate links and discount codes.Influencers can face fines up to fifty thousand Euros if they fail to comply with the Telemedia Act. [8]

Additionally, in Germany, the Federal Court of Justice (Bundesgerichtshof), the country’s equivalent of a Supreme Court, noted that the standard practice to mark sponsored posts and content with the phrase “sponsored by”, may not work well in Germany, as the average German would probably not understand what the phrase means.[9]

To aid influencers in the quest to disclose all their sponsored content, the Landesmedienanstalten created an infographic that simplify and consolidate the requirements laid down by the Unfair Competition and Telemedia Acts, as well as some rules created by the authority itself. The infographic instructs influencers on how to mark their content if they purchased the product themselves, were sent the product by the company, include affiliate links in their content, and if they were paid money or other forms of consideration by the company to promote the product. This step was taken to simplify the process of becoming compliant with Germany’s strict advertising laws and help influencers avoid hefty fines.[10]

Therefore, it can be said that India has a long way to go in the area of influencer marketing regulations, until it catches up with other countries of the world that already have substantial legislation in place to regulate the activities of so-called internet influencers. There is, without a doubt, a need for strict regulation and sanctions that serve as deterrents to influencers.

Another key difference between India and the European Union lies in the forum of redressal of consumer grievances. The European Union, keeping in mind its size and the transnational nature of transactions within its boundaries, established an online dispute resolution platform to allow consumers to address grievances against online sellers. This forum is used to resolve consumer disputes related to online purchases in a quick, efficient manner. India does not, at this juncture, have such a forum. It only has a system in place to log complaints online that will be addressed in a physical Consumer Dispute Redressal Forum, and a private, online mediation forum. This can prove inefficient in India as the number of online consumers increases year by year.[11][12]

A lacuna in the Consumer Protection Act, 2019 exists in the fact that it does not specify that traders need to make easily available and accessible their complaint handling policy. This was addressed in European Union Directive 2011/83/EU. If a consumer cannot see how a trader will process their complaints, they will have no guarantee that the trader will even process their complaints at all. The Consumer Protection Act of 2019 thus fails to protect consumers in this regard.

Conclusion

In the 21st century, marketing practices occur all around us. With a growing number of buyers and sellers in the market, the rights and interests of the consumer must be protected. The new Consumer Protection Act, 2019 covers more aspects than its predecessor i.e., Consumer Protection Act, 1986, specifically in regards to the inclusion of provisions that need to be followed by e-commerce platforms such as Alibaba, Amazon, and eBay, etc. as well as laws regarding false and misleading marketing and advertising practices, however, this act does not have any provisions to deal with the new Influencer Advertising concept which is growing extremely fast and though The Advertising Standards Council of India (ASCI) has reported in October 2019 to have been in the process of framing regulations to govern influencers, but, at the time of writing this paper in February 2020, these regulations are yet to surface. It is currently quite important to ensure that consumers are made aware of their rights, privileges and that businesses and vendors are made aware of the repercussions of indulging themselves in unfair trade practices.

REFERENCES

1. The Consumer Protection Act, 2019

2. Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’)

3. Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council Text with EEA relevance

4.https://mediawrites.law/new-decision-on-german-influencer-marketing-courts-in-berlin-require-disclosure-as-advertisement-even-for-non-sponsored-posts/#page=1

5.https://mediawrites.law/international-influencer-marketing-in-germany-ad-might-not-be-enough/#_ftnref1

6.http://juris.bundesgerichtshof.de/cgi bin/rechtsprechung/document.py?Gericht=bgh&Art=en&sid=5face552033cf2c8f62d7fdcb5dc679c&nr=68421&pos=0&anz=2

7.https://www.osborneclarke.com/wp-content/uploads/2018/08/OSB100253_Influencer-Marketing_v4.pdf

8.https://www.gesetze-im-internet.de/englisch_uwg/englisch_uwg.html#p0058

9.http://www.gesetze-im internet.de/tmg/BJNR017910007.html#BJNR017910007BJNG000100000

[1] Directive 2005/29/EC

[2] Directive 2011/83/EU

[3] DIRECTIVE 2006/114/EC

[4] The Consumer Protection Act, 2019

[5]https://www.businesstoday.in/current/corporate/social-media-influencer-to-be-soon-on-advertising-regulators-radar-asci-advertising-standards-council-of-india/story/383739.html

[6] Act Against Unfair Competition 2019, Section 5a (2)

[7] Telemedia Act 2007, Section 6

[8] Id at Section 16 (3)

[9] BGH I ZR 2/11 (6th February 2014)

[10]https://www.die-medienanstalten.de/fileadmin/user_upload/Pressemitteilungen/KEK/Dokumente/FAQ-Flyer_Werbung_Social_Media_02.pdf

[11]https://ec.europa.eu/consumers/odr/main/?event=main.complaints.screeningphase

[12]https://onlinemediationcenter.ac.in/online-services/

Author Details:
Harshita Pareek is a student at OP Jindal Global University.
Gautam Narayan Pareek is a student at School of law, CHRIST (deemed to be university).

Source: Jus Weekly, May 20202, Issue 1

#page

Leave a Reply

Your email address will not be published. Required fields are marked *