CORPORATE RESPONSIBILITY IN ADVERTISING, PRODUCT SAFETY AND LIABILITY Presented By: Akrit Mehta, Ankita Ghosh, Donald White, FarhanaChoudhury, Harish Dalwaipattan, NiyatiGauba
Agenda • What is Corporate Responsibility ? • Corporate Responsibility • Advertising • Product Safety • Product Liability
What is Corporate Responsibility ? Corporate Responsibility is an expression used to describe what some see as a company's obligation to be sensitive to the needs of all of its stakeholders or even to society as a whole in its business operation
Advertising • Can be defined as a form of communication between buyer and seller • Provides consumers with information about the goods & services • Its goal is to persuade
Deceptive Techniques in Advertising • Ambiguity • Concealed facts • Exaggeration • Psychological Appeals
Deception- example • Ads for diet products and services sold each year often include misleading and exaggerated claims that promise rapid, effortless weight loss and unachievable goals • At least 40 percent of the 300 ads reviewed in the two- year study made at least one false representation, such as 'can eat as much as you want and still lose weight‘ • Other ads made unproven claims about safety and effectiveness, when there was little to support that claim.
Ads directed at Children • Significant consumer group • Low resistance to deception/manipulation • Problem – gullible / naïve • Example : The Centre for Science in the Public Interest announced legal action to try to stop the Kellogg Co from aggressively marketing high-sugar, low-nutrient foods to kids
Corporate Responsibility in Advertising Advertising needs to ensure • Are the public welfare and good taken into consideration for the effects as well as the intention of advertisements? • Has anyone been harmed? • Whose rights are being protected or violated intentionally and inadvertently? • Are consumers being justly and fairly treated?
Corporate Responsibility and Government Enforcement • Government , at times bans or restricts commercial speech to obtaining a public policy goal Example : The basic argument for restrictions on tobacco advertising stems from the belief that tobacco advertising leads to an increase in overall consumption and also that this advertising contributes to minors smoking
Product Safety • Refers to measures undertaken by manufacturers against unreasonable risks of injuries associated with consumer products. • The responsibility of manufacturers to consumers concerning: • Product quality • Prices • Labeling • Packaging
Need for Product Safety • Increased dependence of consumers on manufactured goods • Informed consumers • Prevention of consumer exploitation • Potential hazards associated with consumer products
Product Safety Issues • Injuries from product use • Safety manuals • Statutory warnings • Costs from deceptive selling practices • Emotional costs • Loss of goodwill
Product Safety Issues • Costs from defective goods • Physical damage • Collateral damage • Adherence to societal and consumer norms • Disclosure of confidential information • Doctor/Lawyer client relation
What is Product Liability ? • This is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause. • Encompasses a number of legal claims that allow an injured party to recover financial compensation from the manufacturer or seller of a product
Product Liability • Claims are associated with : • Negligence, • Strict liability • Breach of warranty • Various consumer protection claims
Types of Product Liability There are three major types of product liability claims: • Manufacturing defect • Design defect • A failure to warn
Legal Liability of Manufacturers Provide customers with a product that lives up to the claims the firm makes about the product • Due-care theory of the manufacturer’s duties to consumers • Caveat emptor • Strict Liability
Due Care Theory • Due care is the idea that consumers and sellers do not meet as equals and that the consumer's interests are particularly vulnerable to being harmed by the manufacturer, who has knowledge and expertise the consumer does not have. • According to the due care view, the manufacturers have an obligation above and beyond any contract, to exercise due care to prevent the consumer from being injured by defective products.
Caveat Emptor • “Let the buyer beware” • The law now requires that goods must be of “merchantable quality” • CE also applies to the return policy • There is no legal requirement for the vendor to provide a refund or exchange
Caveat Emptor • According to the doctrine of caveat emptor, consumers were held to the ideal of being knowledgeable, shrewd and skeptical in their purchases. • It meant that the consumer was entirely responsible if harmed by a purchased product.
Product Liability Law in India • The Consumer Protection Act, 1986 • The Sales of Goods Act, 1930 • The Monopolies and Restrictive Trade Practices Act, 1969 (“MRTP Act”)
Cases • Stella Liebeck vs. Mc.Donald's Corporation • Smt. Uma Deepak v. MarytiUdyog Ltd. & Ors • Wheels World Vs. Pradeep Kumar Khurana