The Role Of Online Platforms In Regulating Deceptive Advertisements
Author: LawSphereX
Category: Technology, Cyber & Privacy
Published:
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THE ROLE OF ONLINE PLATFORMS IN REGULATING
DECEPTIVE ADVERTISEMENTS K. Jaiadithya, BBA LLB [Hons], School of Excellence in Law, The TamilNadu Dr.
Ambedkar Law University, Chennai, Tamil Nadu Dr. S. Maruthavijayan, Assistant Professor, School of Excellence in Law, The TamilNadu Dr. Ambedkar Law University, Chennai, Tamil Nadu N. Harisudhan, BBA LLB [Hons], School of Excellence in Law, The TamilNadu Dr.
Ambedkar Law University, Chennai, Tamil Nadu
ABSTRACT
E-Commerce is an electronic platform where the transactions between consumers, who consume the product and the producers, who sell the product take place over the internet, virtually. With more technological advancements, from the food we eat, till the relationships we make, everything below the Sun is made handy for everyone, through buying and selling of products and services over the internet. Over 2. 14 billion people worldwide buy and sell products online, which depicts the growing trend of this field, enabling people- sellers as well as buyers to reach out globally standardized products.
People have greater expectations in the quality of products and services they demand, also much higher expectation on the way they are sold, the benefits they receive, thus triggering the sellers to advertise and market in such a way to lure the consumers1 and gain maximum profits, which induces the sellers or the advertisers to take in framing effect where they depict the positive aspects like ‘One plus one offers,Gain, Get a cashback’, etc. This might have an negative impact on the consumers in different forms such as loss of trust,loyal customers tarnishing the brand image. This study explores the various consumer protection laws and the regulatory bodies setup to address the disputes of the consumers. Keywords: E-commerce, Sales Promotion, Framing Effect, Consumer Protection 1 Li, X. , & Wenquan, L. (2015). How framing effect impact on decision making on internet shopping.
Open Journal of Business and Management. https://doi. org/10. 4236/ojbm. 2015. 31010
INTRODUCTION
With the advent of technology globally, there have been significant changes in the global standards of market, where people’s demand has increased invariably, and the companies have also invested more on satisfying such growing demand. There is more investment in the electronic mode of selling and purchasing products and services due to the adaptation of the population to the electronic world during lockdown period. E-commerce has played a very significant role in making the products and services available to the doorstep of every household, hence focusing on such products like groceries and necessities, exploring on major online platforms used by the consumers. An empirical study shows how companies make recommendations more effectively through framings, specifically through user-based framing method and item-based framing method influence the consumers’ decision making behaviour2 .
Six experiments were conducted (two field experiments) in a mobile app, which found that consumers tend to decide the products chosen by others with the same interests. Another field study focuses on how framing effect used in sales promotion impacts the composition and the size of the shopping basket3. Cues play a significant role in inducing the buyer to even buy unrelated products in stores and also focuses on the managerial implications. E – Commerce plays a very significant role in trust and satisfaction of the consumers, in how the past purchases by the celebrities, impact the future and the present purchases of the consumers and the services rendered also enhances the consumer experiences in buying such products4. The past purchases might also make consumers redundant towards buying such products or services, while it deteriorates the consumers’ experiences.
Framing effect is defined as the effect of framing on consumers, that is, the way the choices and alternatives are presented to the consumers, consumers take decisions keeping them as reference points, even if the same choice is presented in two different ways the choices of the consumers change distinctively. In the book, Nudge written by Richard Thaler and Cass R. Sunstein, the two systems of the brain – reflective and automatic systems are being identified and explained and their roles in 2Gai, P. J. , & Klesse, A. (2019),” Making recommendations more effective through Framings”Journal of Marketing, 83(6), 61–75. https://doi. org/10. 1177/0022242919873901 3 Ramanathan, S. , & Dhar, S. (2010). The Effect of Sales Promotions on the Size and Composition of the Shopping Basket: Regulatory Compatibility from Framing and Temporal Restrictions. Journal of Marketing Research, 47(3), 542–552.
https://doi. org/10. 1509/jmkr. 47. 3. 542 4 Fang, Y. , Qureshi, I. , Sun, H. , McCole, P. , Ramsey, E. , & Lim, K. H. (2014). Trust, Satisfaction, and Online Repurchase Intention: The Moderating Role of Perceived Effectiveness of E-Commerce Institutional Mechanisms. Trust, Satisfaction, and Online Repurchase Intention, 38(2), 407–427. https://doi. org/10. 25300/misq/2014/38. 2. 04 consumer decision making decisions rather than the reflective system which helps to understand that the result of the choices are the same but the way they are presented is different. This implies that frames are strong nudges, and must be selected with more precision. Framing effect, like above, is the impact on the decision making behaviour of the consumer.
This will lead to an increase in the consumer experience in whether to buy a product or reject it depending upon either the past purchase or the reviews and ratings available on the internet. It also makes the whole choices available all over the globe in one place such as online shopping, which makes a market available for those sellers, in the crisis of worse or no sales. Framing effect will positively impact the consumers’ risk taking behaviour and strengthens their knowledge about various financial policies. As the choices are presented as less negative and more positive framing, which induces a psychological aspect of making positive decisions and looking at the positive aspects in decision making as well in life5 What if this positive sphere is shaded by negative or lucrative motives?
That is the reality today, in this growing world, sellers want to make higher profits and grow to heights. Sales Promotion is done by advertising their products with entice people to buy their products without actually knowing the real facts, and reality which is latent, and are realised only either when they either decide and plan to buy their product or even after buying or sometimes using the product for a long time period. This article focuses on such scenarios where people are mostly lured by tactics used by the sellers and advertisers and tend to make decisions being proved qualitatively from the responses from a questionnaire. The researcher prepared a questionnaire and it was circulated among various primary and secondary social groups, collecting 150 responses. Out of these, the majority of 65% belonged to the age group of 18- 30, and 21. 1% from the age of above 40 years.
A proportion of 53. 8% of females and 46. 2% of males answered this questionnaire. Since most of the population was from the 18-30 age group, 65% were pursuing their under-graduation, 19. 6% were pursuing post-graduation whereas, 11. 2% doing their schooling and the rest working on PhD.
5 Thaler, R. H., & Sunstein, C. R. (2012). Nudge
The Final Edition. Penguin UK SOURCE: Computed by the Researcher from Primary Data, Questionnaire Most of the respondents were unemployed (54. 5%) as they were in their graduation and the rest 16. 8% and 28. 7% were self-employed and employed respectively. Given the responses, when people were asked how often they purchase from online, 51% purchase rarely say once in two months, 30. 8% purchase monthly, 14% purchase weekly, and the rest purchase daily. Among them, 26. 6% buy clothing and apparels, 23. 8% buy electronic gadgets like mobiles, laptops, air-pods, etc. , and 14% buy groceries and necessities. SOURCE: Computed by the Researcher from Primary Data, Questionnaire When the sample size was asked about the most used online platform, 108 are using Amazon, which constitutes 73. 5% followed by Flipkart 36. 7% and other platforms like Dunzo, Big Basket, and Nykaa etc.
This data depicts the dominance of Amazon over other platforms, their products and services have reached the consumers in a better way, even the incentives given by Amazon is found to be the prime reason for such popularity. Platforms like Amazon, Flipkart provide holistic and a wide range of products to all kinds of consumers from children to the elders, thus luring consumers to a great extent. Other platforms evolved with time, with the success of earlier ones being remarkable. When people were asked to the rate of satisfaction from using the products purchased through online platforms, 38. 5% have rated 4 on a scale of 5, followed by 32. 2% have rated 3 on a scale of 5, 20. 3% have rated 5 on 5, which depicts that the most of the consumers were satisfied with the products purchased from online, most of them using platforms like Amazon, Flipkart.
This depicts the satisfaction level of the consumers, they are very much satisfied that 49% of the respondents would suggest these products to their peers. This depiction of consumers’ suggestion to their peers marks the experience level of the consumers, moreover their influence from other peers who would have suggested them the same. This cycle continues thus making the purchase and sales a never ending game, which makes the whole population be aware of such products and services. Had these companies displayed the true messages and facts, they wouldn’t have reached such a large target population. Their primary focus was on bringing awareness amongst people and to achieve this goal, they invested in advertisements and marketing. Advertising through echannels like websites, online portals, and through mass communication like television, radios, newspaper etc.
Marketing strategies were the greatest move by such companies, which involved framing effects, played tactics on consumers’ psychology on how these representations of choices would influence the consumer behaviour in choosing different products6. The consumers were shown only with the positive aspects which were attractive for the consumers and lucrative for the producers. The following are the areas upon which the respondents were tested on how the representation of positive aspects to consumers, impact their decision making behaviour. Domino’s has seen 63% hike in the revenue which is just driven by mobile advertisements, also simplified online order placement which boosted the revenue of Domino’s. It has more than 6 million followers and more than 5 million followers on Facebook and YouTube respectively. The large target audience is the young teens, adults and even senior citizens.
It is making use of the digital platforms very effectively, and focuses on all small, rural and 6 Tversky, A. , & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211(4481), 453–458. https://doi. org/10. 1126/science. 7455683 metropolitan areas. More than half of the sample size would have chosen the products being attracted by the price stated saying “Starting at Rs. 59”, but ignored the fact that the delivery option for this super value menu is available with any pizza but not the pizza mania7, which is actually given in the advertisement. It also stated that the minimum bill value should at least be Rs. 300. Now, is it the negligence of the consumers or the motive of the seller or the advertiser to display the message in the same way as representing the starting price of Rs. 59?
Here the framing effect is used by the sellers by representing only the positive price and statement in bold and attractive way, thus inducing the consumers be noticed only of the positive message but not the real fact of minimum bill of Rs. 60. SOURCE: Domino’s The most important field in which people are more concerned about is how to make their life secure, moreover to create a better future for their families, hence they seek for insurance policies for ever assets like, vehicles, house, and for the greatest asset that is life. The respondents were asked to choose whether they will prefer the given insurance policy of Bajaj
7 Domino’s Ad
Allianz Life Guaranteed Pension Goal, a non-linked, non-participating and a deferred and immediate annuity plan, where the total benefits received will be Rs. 2.11 Crore, where Rs. 4 lakhs per annum will be given and Rs. 51.33 lakhs will be given to the beneficiaries of the insured when dead. Nearly 60% of the respondents were preferring this plan, the rest rejected because they were not needed of it right now. Whereas the insured must pay a premium of Rs.
5.13 lakh per annum for 10 years which is the deferred period. The ad states that the insurance
will be taken at the age of 50 and paid till the age of 60 and the repayment will be at the age of
100 that is when the policy holder dies, and he/she gets Rs. 4 lakhs per annum till the
repayment. However this only suits for the male given in the advertisement who is 50 years old. For any consumer in reality this differs, say a consumer 30 or 35 years old might have changes in the repayment and premium payment periods, moreover, when they a premium of Rs. 5. 13 lakhs which is 10% of the repayment amount at the time of death, is more than the guaranteed life-long income which is only Rs. 4 lakhs, moreover this insurance doesn’t involve any medical tests or conditions, there might be cases where the insured might lose his/her life during the premium of 10 years, will they be to get the insurance is still questionable, also the policy in the last line states that all charges or taxes will be borne by the policyholder, which is uncertain with the tax policy in the country.
Moreover, even if the beneficiary, in India mostly the next generation gets the payment at 100 years, would probably be in their 60s, taking a lifetime to seek the returns. In India , a set of rules and regulations that are coined to ascertain a fair-minded and genuine advertisement is done considering the welfare of the public or consumers. These regulations are followed by the organisations to advertise their commodities in a fair and efficient manner. There are some regulatory bodies such as Advertising Standards Council of India [ASCI]8 ,Ministry of Information and Broadcasting [MIB] which oversees whether the organisation abide by the regulations of the standards. The regulation followed at recent times is Consumer Protection Act,2019.
This Act is to formed to protect the customer’s interests , set up administrative authorities for speedy and efficient administration so that the consumer’s disputes9. The endorsement in advertisement should be clear ,true and specific about the goods they sell. The customers should be well informed about the quality, quantity, price and all the details of the goods. This act has been amended in different ways such as Central Consumer Protection Authority [CCPA] established in the year 2020 which regulates the impartial commercial practices, deceptive
8 https://www.ascionline.in/
9 https://consumeraffairs.nic.in/acts-and-rules/consumer-protection
advertisements, violations of consumer rights , consumer Protection[E-Commerce],2020 to regulate the practices in e-commerce platform, Consumer Protection rules [2021] revised the regulations related to jurisdiction of various commissions of district, state and the nation, Alternative dispute resolution mechanisms set up to render fast and unbiased redress of complaints of the consumers. Some of the self regulating codes of ASCI are safeguard against the misuse of advertisements for products termed to be hazardous, ensure truth, fair and honest advertisements are made and also not offensive against the regulatory standards to safe guard the public. If in case the consumers or any governing body or agency finds the advertisement to be false, misleading, unethical then compliant can be sent to ASCI to correct it right.
On the receiving the complaint the ASCI expects the concern advertiser to respond for the misleading advertisement within a fort night time. The response and the complaint is presented before the Consumer Complaint Cell which analyses and finds any violation of rules and regulations then it makes the adviser to withdraw or correct the advertisement. There are many regulatory authority bodies or agencies to regulate the advertisements and the advertisers such as Insurance regulatory development authority, Telecom regulatory authority of India, Reserve Bank of India, Medical council of India10 etc. If an advertisement is not framed in India but it is published in India either in audio, video or written format then it should abide the rules and regulations of ASCI since the consumers are being the public of India.
So there should be an code of conduct to be followed in this advertising field since if it affects directly the public who buys the product or the commodity based on the details given in the advertisements. As per the annual complaints report 23-2411 , the year wise complaints report shows that there is a reasonable increase in the complaints filed against the misleading advertisements in online platforms. TABLE NO 1: NUMBER OF ADS AND COMPLAINTS FILED AGAINST ADS 22-23 23-24 Source: Annual Complaints Report 23-24 - ASCI Figure No 1. NUMBER OF ADS AND COMPLAINTS FILED AGAINST ADS Source: Computed by researcher based on data from Annual Complaints Report 23-24 - ASCI It is found that in the year 23-24 ,there is an increase of 3. 8% in Advertisements and 12. 75% increase in complaints registered when compared to the previous year.
The complaints increasing in a rapid manner proves that the misleading advertisements have increased and affected the public both economically and mentally. Many cases are being registered in recent past by the affected public against the advertisers for claiming their rights. In NSE India vs Meta Platforms Inc. Case, NSE claimed that the Meta platforms have created many advertisements in different names resembling NSE and circulated in online social media such as Facebook, Instagram etc. The immoral advertisements leading to illegal business platform deteriorates the brand name of NSE and also causes unwanted stress to the public. In this regard Bombay high court12 asked the Meta platform to get back all the misleading advertisements posted in the social media.
Health sector is staging first in misleading advertisements where there is abundant choices in order to harm the trust owned by the customers. In the year 2024, 1575 ads13 were given under health sector. Among this, as per ACSI, 1560 ads need modification, 1249 ads comes under
12 Times of India dated 22nd July 2024
13 Annual Complaints Report - ASCI 23-24
violation say not upto the standards set by the ACSI. Also the sectors such as Child care, Education, Beauty Care products occupies a major part in this action of deceptive ads. In order to lower these complaints ACSI took an Suo Moto initiative meaning taking actions against no complaints. This council has an internal monitoring team to monitor the ads posted in various online platforms and if there is any deviation from the regulatory standards then it will be intimated to the advertiser to take back or modify the ad. In spite of all the necessary steps taken there are many ads that are broad casted only for lesser time a day or two so that they are scanned and missed out of focus.
CONCLUSION
Latent reality literally means the hidden facts within how framing effect is used in e-platforms by various companies to increase the target base and their profits and also the influence the consumers experience over using such products and services, various categories like necessary goods, groceries and insurance policies. This involves the role of psychological factors like the personality traits of the consumers, which are significant in deciding the trust and satisfaction levels of the consumers. This framing effect can be used in government fields on how policies made can attract the population to the benefits of such policies. This framing effect can also be used in healthcare facilities and centres through framing the threats, efficacy and other facts. The role of advertisements is inevitable in online commercial platform as nowadays people likes to shop from their place itself.
Many advertisements related to gifts, offers are seen more in the social medias by the sellers in order to promote their product in wide range and gain more profit within a snort span of time. Many short time deals in online shopping applications paved way to achieve sales promotion and achieve the top brand name by which they gain more sales profit. These advertisements when done morally doesn’t cause any illegal activities affecting the customers. In Some advertisements the details of the product are not depicted clearly misleading the customers to buy the products without knowing the full details. This leads to dissatisfaction of the customers and many cases being filed to fulfil their rights.
Awareness about the misleading advertisements, the outcome of such advertisements should be well informed and disseminated among the public such that they will be safe guarded from the unfair and fraudulent messages which affects them mentally and economically. It ruins the individual as well social life of the customers. Necessary acts and laws are enacted by the concern government agencies to deal with the rules and regulatory standards of the advertisements.
REFERENCES
1. Li, X., & Wenquan, L. (2015). How framing effect impact on decision making on internet
shopping. Open Journal of Business and Management. https://doi.org/10.4236/ojbm.2015.31010
2. Gai, P. J., & Klesse, A. (2019),” Making recommendations more effective through
Framings”Journal of Marketing, 83(6), 61–75. https://doi.org/10.1177/0022242919873901
3. Ramanathan, S., & Dhar, S. (2010). The Effect of Sales Promotions on the Size and
Composition of the Shopping Basket: Regulatory Compatibility from Framing and Temporal Restrictions. Journal of Marketing Research, 47(3), 542–552. https://doi.org/10.1509/jmkr.47.3.542
4. Fang, Y., Qureshi, I., Sun, H., McCole, P., Ramsey, E., & Lim, K. H. (2014). Trust,
Satisfaction, and Online Repurchase Intention: The Moderating Role of Perceived Effectiveness of E-Commerce Institutional Mechanisms. Trust, Satisfaction, and Online Repurchase Intention, 38(2), 407–427. https://doi.org/10.25300/misq/2014/38.2.04
5. Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of
choice. Science, 211(4481), 453–458. https://doi.org/10.1126/science.7455683
6 Schramm-Klein, H., & Wagner, G. (2014). Broadening the Perspective on E-Commerce
A Comparative Analysis of Mobile Shopping and Traditional Online Shopping.
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7 Thaler, R. H., & Sunstein, C. R. (2012). Nudge
The Final Edition. Penguin UK
8. Advertising Council Standards of India, https://www.ascionline.in/
9. Consumer
Protection Act, https://consumeraffairs.nic.in/acts-and-rules/consumerprotection
10. Pushpa Girimaji, “Consumer Education Monograph Series 2”
11. Annual Complaints Report - ASCI 23-24
12. Times of India dated 22nd July 2024