Explained: ASCI Flags Honasa, FirstCry, Lenskart, Flipkart for Advertising Violations

Mamaearth parent company Honasa has emerged as the largest violator of advertising in FY24, with a total of 187 incidents of violation identified, as per the Advertising Standards Council of India's (ASCI) annual report for FY24. ASCI's list of advertising offenders also includes Honasa's other brands- Dr. Sheth's Skin and Hair Clinic, Aqualogica, The Derma Co., and Ayuga. 

Honasa was followed by the sports betting businesses WinDaddy and Fun88 India with 98 violations. Recently, Honasa also released their Q4 results. The company said on Thursday that its Q4 2024 net profit was Rs 30.4 crore. In the most recent quarter of the year, the company reported a loss of Rs. 161.7 million. Compared to the same period in the previous fiscal year, when revenue from operations was Rs 388 crore, there was a 21 percent YoY growth to Rs 471 crore in the fourth quarter. 

The beauty and personal care company has a diverse portfolio of several brands, including Mamaearth, The Derma Co., Aqualogica, and Ayuga. However, today we will talk not about Honasa’s financials but about the ASCI and the rise of misleading advertisements. 

Read: Honasa Consumer Posts Q4 Profit at Rs 30.47 Crore, Revenue up 21.5%

Before delving into the report, let's understand what the ASCI does. The Advertising Standards Council of India (ASCI), which was founded in 1985, is the industry's self-regulatory organization. ASCI addresses problems with deceptive or dishonest advertisements, provocative or indecent advertisements, and damaging advertisements that are unfair to other businesses. 

What did the ASCI report say? 

The Advertising Standards Council of India (ASCI) reviewed 10,093 complaints and investigated 8,299 advertisements. The most common violation was misleading claims, accounting for 81per cent, followed by ads promoting harmful situations or products at 34 per cent (an ad can be flagged for multiple issues). 

Digital advertisements made up 85 per cent of those processed, but their compliance rate was only 75 per cent, compared to 97 per cent for print and TV. This raises significant concerns about online consumer safety, as noted last year. ASCI initiated action on 94 per cent of the ads themselves. 

What were the violative categories? 

Talking about the violative categories, the ASCI said that healthcare topped the list with 19 per cent of the cases. It was followed by illegal offshore betting with 17 per cent cases, personal care with 13 per cent cases, conventional education with 13 per cent cases, and the list goes on. Interestingly, a new contender in the top violation category has been baby care, with 81 per cent of babycare cases coming from influencer promotions. 

Highlighting the increase in the number of cases of violations in healthcare, the ASCI said that at a time where there are many options for healthcare and information is easily available, it becomes critical to recognize the possible harm that can be caused by deceptive advertisements that prey on consumers' confidence and exploit their weaknesses. 

With the rise in internet users and the penetration of the internet, most ads are released on digital platforms. However, monitoring them comes with its own set of challenges, including shorter lifespans of ads, a rise in D2C digital brands every day, and more. 

Read: Supreme Court Refuses Patanjali's Apology Over Misleading Ads

What are the other companies that emerged as violators? 

IPO-bound FirstCry, Lenskart, Flipkart, and HealthKart by 1 MG are reportedly some of the companies that have been called out by the council. The list also includes Netflix India, Apple India, Zomato, Zoomcar, and others. To add to it, Ramdev’s Patanjali Ayurveda was also on the list with 28 ad violations. 

Discussions about misleading advertisements increased as the Supreme Court pursued contempt proceedings against Ramdev and his collaborator Acharya Balkrishna for distasteful and deceptive ads on their line of ayurvedic goods. Following it, the Supreme Court asked the Patanjali founders to issue a public apology for promoting misleading advertisements. 

Ramdev’s Patanjali had made claims that their products could cure diabetes and asthma without any sort of scientific backing. Amid the ongoing wave of misleading advertisements, a report by the Mint says that a task force will be created by three ministries to look into several aspects of social media advertising. The intent of the task force is to crack fraudulent schemes and misleading ads.