CCPA Slaps Penalty on Rapido for Misleading Ads

Syllabus: GS4/ Ethics

In News

• The Central Consumer Protection Authority (CCPA), India’s apex consumer watchdog, has imposed a penalty of ₹10 lakh on bike-taxi aggregator Rapido for running misleading advertisements and engaging in unfair trade practices.
  • CCPA took suo motu cognisance of two of Rapido’s campaigns — “Guaranteed Auto” and “AUTO IN 5 MIN OR GET ₹50” and found them to be false and misleading.

Misleading Advertising

• Misleading advertising is the use of false, deceptive, or unsubstantiated claims to promote a product or service. The deception can be intentional, or it can be a result of negligence or omission.

Ethical Frameworks

• Deontology (Duty-Based Ethics): From a deontological perspective, misleading advertising is inherently immoral because it violates the duty of honesty. An advertiser has a moral obligation to provide accurate and truthful information to consumers. It doesn’t matter if the deception leads to increased sales or happy customers; the act of violating the duty to be truthful makes it unethical.
• Utilitarianism: From a utilitarian perspective, the fine is a positive step. The misleading ads caused a net negative outcome: consumers were deceived, lost trust, and experienced financial harm (even if small).
• Virtue Ethics: This framework assesses the character of the moral agent. Rapido’s behavior demonstrates a lack of key virtues like honesty, integrity, and fairness. Instead of building a relationship of trust with its customers, the company prioritized short-term gains through deception.

Legal Aspects

• Consumer Protection Act, 2019 empowers CCPA to take action against misleading advertisements and unfair trade practices.
  • Section 20: Allows the authority to pass directions, including stopping unfair practices and refunding money.
  • Section 21: Specifically deals with misleading advertisements, allowing penalties against endorsers, manufacturers, and service providers.

Way Ahead

• Stricter Penalties: For repeated violations, introduce higher fines and temporary bans.
• Consumer Awareness Campaigns: Educate citizens on digital consumer rights.
• Collaboration with ASCI (Advertising Standards Council of India): Joint monitoring of misleading advertisements across digital and regional platforms.
• Use of AI and Data Analytics: For early detection of misleading claims in advertisements.

Source: IE