CCPA penalizes Vajirao & Reddy Institute for misleading advertisements, first case since new IAS coaching guidelines

It fined Vajirao & Reddy Institute ₹7 lakh and Shubhra Ranjan IAS Study ₹2 lakh.

The former said it will appeal the order – the first penalty imposed by the regulator since issuing final guidelines for misleading advertisements by IAS coaching centres on 13 November.

According to the CCPA order, seen by Mint, the coaching centre claimed that 617 out of 933 successful candidates in UPSC CSE 2022 were associated with its programmes and that it held the top position among all UPSC coaching centres in India.

However, a CCPA investigation revealed that all 617 candidates mentioned were only enrolled in the institute's free interview guidance programme and not in its full coaching services.

“The CCPA found these claims to be misleading and a violation of consumer protection laws," the first person said.

This penalty serves as a warning against deceptive advertising practices in the competitive coaching industry. As of now, the CCPA has imposed penalties on over 15 IAS coaching institutes, totaling over ₹50 lakh.

Also read: IAS coaching centres face closure, licence cancellation for false advertising

In response to an emailed query, Vajirao & Reddy Institute confirmed that it had received the CCPA order on 27 November.

“As per Section 24 of the Consumer Protection Act, 2019, we have the right to appeal against the order before the National Consumer Disputes Redressal Commission, New Delhi. Our legal counsel is in the process of challenging the order because, in our opinion, it is incorrect and has ignored over 600 pages of voluminous material that we submitted to the CCPA," Vajirao & Reddy Institute stated.

“We have fully cooperated with the CCPA and believe we are not liable for any penalty imposed. We are hopeful for a favourable consideration of our case by the higher authorities," the institute added.

Vajirao & Reddy Institute claimed in its advertisement that it achieved 617 selections out of 933 in the UPSC CSE 2022, with highlights such as 7 candidates in the top 10 AIR (All India Ranks), 16 in the top 20, 39 in the top 50, and 72 in the top 100. The institute also asserted that it was ranked first among the top UPSC coaching institutes in India.

The CCPA found that the institute prominently displayed the names and photos of successful candidates alongside advertisements for various courses offered on its official website. However, the advertisement failed to disclose which specific courses these successful candidates had opted for in preparation for the UPSC Civil Services Exam 2022.

"Consumers have the right to know which specific courses successful candidates took to clear the CSE. Without this information, the institute misled potential aspirants by implying all its courses had the same success rate," the second person said.

"Successful candidates cleared the preliminary and mains exams on their own, with no help from Vajirao & Reddy Institute. By hiding this, the institute misled UPSC aspirants," the person said.

This lack of transparency misled potential aspirants into believing that the institute's role was instrumental in achieving success across all stages of the examination.

Also read: Crackdown on IAS coaching centres: No candidate details in ads without consent

Guidelines for advertisement

As per the Guidelines for the Prevention of Misleading Advertisement in Coaching Sector, 2024, IAS coaching institutes will face closure and license cancellation if found violating new norms. The guidelines hold coaching centres accountable for false claims regarding course duration, which may mislead students into believing they can complete a programme within an unrealistically short timeframe. 

Mint was the first to report on 28 November 2023 that IAS coaching institutes would no longer be allowed to use photos of successful candidates to attract potential aspirants.

As per the new rules, coaching institutes will have to give refunds if they fail to deliver the services claimed in their advertisements. Additionally, coaching facilities will be mandated to sign agreements with aspirants for using their credentials only after they have cleared the prestigious exam, giving successful candidates more bargaining power in advertising contracts.

The CCPA has already served notices to 45 coaching institutes for allegedly violating consumer rights with misleading advertisements and unethical tactics. These actions are part of the CCPA's broader initiative to protect consumers, including students and aspirants, from deceptive practices that violate the Consumer Protection Act, 2019. Of these, 15 institutes have been penalized, with total fines amounting to ₹38.60 lakh.

The UPSC Civil Services Exam is conducted in three phases. The first phase is the Preliminary Test (PT), which is a screening test, and the marks obtained in PT are not counted in the next two phases – mains and a personality test.

The marks obtained in both the mains exams and the personality test are counted for final selection. The total marks for the mains exams and the personality test are 1,750 and 275, respectively. This means that the contribution of the personality test is 13.5% of the total marks.

Queries emailed to the Consumer Affairs Ministry remained unanswered till press time.

In a related development, the CCPA has also imposed a penalty of ₹2 lakh on Shubhra Ranjan IAS Study for publishing misleading advertisements about its success in the UPSC Civil Services Examination (CSE) 2023. 

The institute claimed in its advertisements that “13 students in the top 100," “28 students in the top 200," and “39 students in the top 300" of UPSC CSE 2023 were its students. These advertisements prominently featured the names and photographs of successful candidates but failed to disclose the specific courses these individuals had opted for, the Ministry of Consumer Affairs said in a statement on Sunday.

Also read: Mint Primer: Will new ad rules kill coaching centres?

The investigation revealed that the majority of these students had enrolled in the Political Science and International Relations (PSIR) crash course and test series, a program primarily utilized after clearing the Preliminary examination, the ministry stated.

Although Shubhra Ranjan IAS Study offers over 50 courses, the advertisements created the impression that all courses had equal success rates. By omitting critical details, the institute misled prospective students, depriving them of the information needed to make informed choices, the ministry said.