 "The year was a mixed bag for the real estate industry as housing supply slowed down but record investments came in. Industry experts believe that demand will stabilise as sales are likely to be lower compared to 2023.")
The Forum for People’s Collective Efforts, a nationwide homebuyers’ advocacy group, has approached the Ministry of Consumer Affairs to address the growing concern about misleading advertisements in the real estate sector. The organisation has called for targeted guidelines to protect homebuyers and ensure stricter penalties for erring developers, according to a report by The Economic Times.
Alarming findings on misleading ads
The Forum for People’s Collective Efforts (FPCE) plea highlights the findings from a recent Advertising Standards Council of India (ASCI) report, which revealed that 34 per cent of advertisements analysed in Maharashtra’s real estate sector between April and September violated existing regulations.
While these findings are Maharashtra-specific, FPCE asserts that the issue is widespread across the country and requires immediate regulatory intervention under the Consumer Protection Act, 2019. Misleading advertisements, the body claims, are often the initial step in trapping homebuyers and exploiting their life savings.
Insufficient penalties encourage non-compliance
Despite ASCI flagging 628 non-compliant advertisements to the Maharashtra Real Estate Regulatory Authority (MahaRERA), the penalties imposed averaged just Rs 14,000–15,000 per developer. FPCE argues that such negligible fines fail to deter developers, effectively incentivising them to continue the practice.
“Developers benefit significantly from luring unsuspecting buyers while facing minimal financial consequences,” said Abhay Upadhyay, FPCE president to The Economic Times. Although 59 per cent of flagged advertisements were modified or withdrawn, Upadhyay emphasised that these actions have not provided any tangible relief to homebuyers.
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Call for stricter guidelines and consumer restitution
The FPCE has urged the Ministry of Consumer Affairs to establish robust, sector-specific guidelines with stricter penalties for misleading advertisements. Recommendations include:
- Allowing homebuyers misled by false advertising to withdraw from projects with interest.
- Mandating substantial compensation for misrepresentation.
- Expanding advertisement screening criteria to include a broader range of deceptive practices from a consumer’s perspective.
The organisation has also criticised the lack of focus on consumer restitution, noting that affected buyers currently have no means to reclaim their investments or seek compensation.
The FPCE’s appeal highlights the urgent need for stronger consumer protection measures in the real estate sector. While ASCI’s pact with MahaRERA earlier this year marked progress, FPCE insists that tackling this issue on a national scale is essential to safeguarding homebuyers’ interests and ensuring accountability in the sector.
The issue also highlights the need for stricter guidelines and penalties on misleading ads which gained a lot of attention earlier this year in the healthcare industry, specifically around Patanjali Ayurved. However, the issue is a much larger concern spanning industries which puts consumers at risk.
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