10. Civil and Criminal Liability and Penalties for Misleading Advertisements

This is the 10th post in Law of Torts, Unit 5 — The Consumer Protection Act, 2019. This post explains how the Act combines ordinary civil remedies with distinct criminal penalties, and examines in detail the dedicated punishment the 2019 Act created for false or misleading advertisements.

The Problem This Topic Solves

Every remedy discussed so far in this unit — compensation for a defective product, an order discontinuing an unfair trade practice, a recall ordered by the CCPA — is fundamentally civil in character: it compensates the consumer or corrects the market, but it does not punish the wrongdoer as a matter of public law. Yet some conduct under the Act is serious enough that Parliament has chosen to attach criminal consequences as well, over and above any civil liability. This topic explains how civil and criminal liability operate side by side under the Act, and focuses in particular on the penal provision for false and misleading advertisements — a genuinely new feature of the 2019 Act, introduced in overview in the post on the Act's salient features.

Civil Liability Under the Act — A Recap

Civil liability under the Consumer Protection Act is compensatory: a Commission that finds a defect, a deficiency, or an unfair or restrictive trade practice can order the opposite party to remove the defect, replace the goods, refund the price, pay compensation for loss or injury suffered, discontinue the offending practice, and pay costs — all designed to place the consumer, as far as money can do so, in the position they would have been in had the wrong not occurred, rather than to punish the wrongdoer as such. This is the same compensatory logic that underlies tort law generally, discussed in the first post of this unit.

Criminal Liability Under the Act

Criminal liability, by contrast, is punitive: it exposes a wrongdoer to imprisonment and fine as punishment for conduct Parliament considers serious enough to treat as an offence against the public, not merely a private wrong against one consumer. The Act creates several distinct offences, including manufacturing or selling adulterated or spurious goods (with penalties scaled to the severity of harm caused, including enhanced punishment where the adulteration results in grievous hurt or death), non-compliance with directions issued by the CCPA, and, most relevantly to this post, the making of false or misleading advertisements.

Civil and Criminal Liability Can Arise From the Same Facts

A crucial point students often overlook is that civil and criminal liability under the Act are not mutually exclusive alternatives — the same underlying conduct can attract both simultaneously. A manufacturer who sells an adulterated food product can be ordered by a Commission to pay compensation to the specific consumers harmed (civil liability) and can, independently, be prosecuted and punished with imprisonment and fine for the offence of selling adulterated goods (criminal liability) — the consumer's compensation and the state's punishment serve different purposes and proceed through different processes, one before a Commission, the other before a criminal court.

Section 89 — Punishment for False or Misleading Advertisement

Section 89 of the Consumer Protection Act, 2019 provides that any manufacturer or service provider who causes a false or misleading advertisement to be made, which is prejudicial to the interest of consumers, shall be punished with imprisonment for a term which may extend to two years and with fine which may extend to ten lakh rupees; and for every subsequent offence, shall be punished with imprisonment for a term which may extend to five years and with fine which may extend to fifty lakh rupees. This is the first time Indian consumer legislation has created a dedicated criminal offence specifically targeting misleading advertising, rather than treating it only as a civil unfair trade practice remediable by compensation or a discontinuation order.

What Makes an Advertisement "Misleading"

An advertisement is treated as misleading where it falsely describes a product or service, gives a false guarantee, or is likely to mislead consumers as to the nature, substance, quantity, or quality of the product or service, conveys an express or implied representation that would itself amount to an unfair trade practice, or deliberately conceals important information relevant to the consumer's decision. This overlaps deliberately with the definition of "unfair trade practice" examined in the sixth post of this unit — a misleading advertisement is, in substance, one specific and particularly serious form of unfair trade practice, now singled out for a dedicated criminal penalty in addition to the ordinary civil consequences.

Liability Beyond the Manufacturer — Endorsers and Publishers

As already noted in the posts on the Act's salient features and the CCPA, the 2019 Act extends potential liability beyond the manufacturer or service provider to endorsers and, in certain circumstances, publishers of a false or misleading advertisement. This reflects a considered legislative judgment that celebrities and public figures who lend their credibility to a product's promotion, often for substantial fees, cannot disclaim all responsibility for the truthfulness of what they endorse, particularly where they failed to exercise due diligence to verify the claims made in the advertisement they agreed to feature in.

The CCPA's Role in Enforcing Section 89

While Section 89's imprisonment and fine are ultimately imposed through the ordinary criminal justice process, the Central Consumer Protection Authority, examined in the previous post, plays the central investigative and preventive role: it identifies and investigates misleading advertisements (often suo motu), directs their discontinuation or modification, and can itself impose penalties within its own regulatory powers, in addition to the CCPA's role in triggering the criminal process where the conduct is serious enough to warrant prosecution under Section 89.

• Civil liability under the Act is compensatory (removal of defect, refund, compensation, discontinuation order); criminal liability is punitive (imprisonment and fine for offences against the public).
• The same conduct can attract both civil liability (before a Commission) and criminal liability (before a criminal court) simultaneously — they are not alternatives.
• Section 89 punishes a manufacturer or service provider causing a false or misleading advertisement prejudicial to consumers: up to 2 years' imprisonment and ₹10 lakh fine for a first offence; up to 5 years' imprisonment and ₹50 lakh fine for a subsequent offence.
• A misleading advertisement is, in substance, a particularly serious form of unfair trade practice, now attracting a dedicated criminal penalty under Section 89.
• Liability for a misleading advertisement can extend beyond the manufacturer to endorsers and, in appropriate cases, publishers.

• Enhanced criminal punishment applies for adulteration offences that result in grievous hurt or death, scaling penalties to the severity of the harm.
• Section 89 is a genuinely new provision compared to the 1986 Act, which had no dedicated criminal penalty specifically targeting misleading advertisements.
• The CCPA's investigative and regulatory role, and the criminal prosecution process under Section 89, operate as complementary, not competing, enforcement mechanisms.

A Practical Example

A cosmetics manufacturer runs a national advertising campaign falsely claiming its cream permanently reverses skin ageing, a claim with no scientific basis, and the product causes some purchasers to develop skin irritation. Affected consumers can file individual complaints before the appropriate Commission seeking compensation for the injury caused (civil liability). Separately, and regardless of whether any consumer files a complaint at all, the manufacturer can be prosecuted and punished under Section 89 for causing a false and misleading advertisement prejudicial to consumers' interests (criminal liability) — facing up to two years' imprisonment and a ten lakh rupee fine for a first offence. If a well-known actor knowingly endorsed the product's false claims for a fee without verifying them, that endorser too could face liability and be prohibited by the CCPA from endorsing the product further.

Quick Revision Points

• Civil liability = compensatory (defect removal, refund, compensation, discontinuation); criminal liability = punitive (imprisonment + fine).
• Civil and criminal liability can arise from the same facts simultaneously — not mutually exclusive.
• Section 89 — false/misleading advertisement prejudicial to consumers: up to 2 years + ₹10 lakh (first offence); up to 5 years + ₹50 lakh (subsequent offence).
• A misleading advertisement = a particularly serious form of unfair trade practice, now separately criminalised.
• Liability for misleading advertisements can extend to endorsers and publishers, not just the manufacturer.
• CCPA's investigative/regulatory role and Section 89's criminal process are complementary enforcement mechanisms.