Caution by RBI on Loan Waiver Advertisements

Caution by RBI on Loan Waiver Advertisements

Subject : Economy

Section: Monetary Policy

The Reserve Bank of India (RBI) issues a caution to the public.

• Misleading Advertisements:
  • RBI notices misleading ads on loan waiver offers in print and on social media.
  • Entities actively promoting such campaigns.
• Service Fee Scam:
  • Reports of entities charging service or legal fees for issuing ‘debt waiver certificates’ without authority.
• Undermining Banks’ Efforts:
  • Individuals running campaigns undermining banks’ efforts to enforce rights over securities.
• False Representation:
  • Entities misrepresenting that dues to financial institutions need not be repaid.
• Consequences:
  • Such activities undermine financial institutions’ stability and depositors’ interests.
  • Associating with such entities can result in direct financial losses.

Other Laws/Agencies to Curb Unfair Advertisements in India:

Advertising Standards Council of India (ASCI):

• Self-regulatory voluntary organization founded in 1985.
• Objective: Maintain and enhance public confidence in advertising.

Mandate:

• Advertising material must be truthful, legal, and honest.
• Must be decent, not objectify women.
• Should be safe for consumers, especially children.
• Should be fair to competitors.

Composition of ASCI:

• Board of Governors:
  • 12 members representing key sectors (Advertisers, advertising agencies, media, allied professions).
• Consumer Complaints Council (CCC):
  • Currently has about 21 members.
  • 9 from the industry, 12 from civil society (doctors, lawyers, journalists, consumer activists, etc.).
  • CCC’s decision on complaints is final.
• Secretariat:
  • Independent Secretariat with 5 members.
  • Headed by the Secretary General.

• Complaint Process:
  • If an ad in India seems objectionable, a person can complain to ASCI.
  • CCC deliberates on the complaint after due process for the advertiser to defend.
  • Decision based on ASCI code and the law of the land.
  • If upheld, the ad is voluntarily withdrawn or modified.
  • Government amendment in 2007: Ads violating ASCI code not permitted on TV under Cable TV Network Rules’ Advertising Code.

Central Consumer Protection Authority (CCPA):

• Establishment:
  • Regulatory body founded in 2020 under the Consumer Protection Act, 2019.
  • Works under the Ministry of Consumer Affairs.
• Objectives:
  • Promote, protect, and enforce consumer rights.
  • Conduct investigations into consumer rights violations.
  • Order recalls of unsafe goods, stop unfair trade practices, and prevent misleading advertisements.
  • Impose penalties on those responsible for misleading ads.

Central Consumer Protection Authority Guidelines: Guidelines issued by CCPA in 2022 to prevent false or misleading advertisements.

Guidelines Overview:

• Non-Misleading Advertisements: Advertisements must contain true and honest representations without exaggeration. Even unintentional lapses are acceptable if promptly communicated to consumers.
• Surrogate Advertisements: Prohibits surrogate or indirect ads for goods or services restricted by law.
• Advertisements Targeting Children: Prohibits ads that condone, encourage, or exploit behavior dangerous for children. Aims to prevent influencing children’s buying behavior negatively.
• Disclaimers in Advertisements: Introduction of disclaimers to clarify claims, make qualifications, or resolve ambiguities. Advertisers must not hide material information likely to make the ad deceptive.
• Duties Imposed: Manufacturers, service providers, and advertising agencies: Should not make claims or comparisons related to objectively ascertainable facts and advertisements must gain consumer trust and avoid exploiting their lack of experience or knowledge.

Cable Television Networks (Regulation) Act: Regulates content on cable TV, prohibiting misleading, indecent, or offensive ads.

Consumer Protection Act: Provides legal recourse for consumers affected by unfair advertising practices. And Allows consumers to file complaints against companies and seek compensation.

Drugs and Magic Remedies (Objectionable Advertisements) Act: Prohibits advertising drugs or remedies claiming miraculous or supernatural properties.

Food Safety and Standards Act: Regulates advertising of food products, prohibiting false claims about nutritional value.

Press Council Act: Regulates ad content in newspapers, prohibiting false, misleading, or offensive advertisements.

Facts for Prelims

What are Dark Patterns?

• Deceptive design techniques in user interfaces to manipulate or deceive users online.
• Unethical designs exploiting cognitive biases and behaviors for the benefit of the platform or business.
• Types include urgency, basket sneaking, confirm shaming, forced action, nagging, subscription traps, etc.

How Companies Use Dark Patterns: Social media and Big Tech firms like Apple, Amazon, Google use dark patterns for their advantage. Examples include Amazon’s confusing cancellation process, YouTube’s pop-ups for YouTube Premium, and LinkedIn’s unsolicited messages.

Basket Sneaking –

Sneaking products into users’ shopping baskets to trick them into purchasing more than intended. Il-legalized by the European Commission under the consumer rights directive.

Confirm Shaming –

A manipulative tactic in UI design or online interactions using guilt or social pressure. Occurs when users are presented with a choice, and emotionally manipulative language induces guilt or embarrassment for declining or opting out.

Surrogate Advertising:

Marketing technique indirectly promoting products or services restricted from direct advertising and common in industries like alcohol, tobacco, and gambling with strict advertising regulations. Example: Alcohol brand advertises mineral water with the same logo to create brand awareness without mentioning the alcohol product.