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Abstract

Advertisement is an age old practice and currently part and parcel of commercial marketing strategy. It is used by producers to drive consumer behavior to its commercial offering and increase consumption of their product. But when these advertisements are false or intend to deceive consumers, they impair the economic behavior of the consumers; cause injury to their rights to exercise informed choice; result in information asymmetry and also harm the interests of competing commercial brands. They are unethical and are regarded as a social and commercial ill, but more significantly in economic terms the resulting information asymmetry due to such advertisements causes “market failure.” The article, after briefly discussing the ineffectiveness of the current Indian legal and regulatory framework to deal with the challenges posed by the menace of false and misleading advertisement, argues that India requires a complete overhauling. It further argues that a large number of jurisdictions had strengthened their legal and regulatory framework governing advertisements in the last decade. Thus, there is a global consensus that a comprehensive legal and regulatory framework is required to curb the problem of false and misleading advertisements to check the “market failure.” The article concludes that India requires adopting a more effective regulatory model to curb false and misleading advertisements. It recommends that the model needs to be aligned with global experiences and advance consumer interest, but not in a manner more extensive than is necessary to correct the market failure.

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