Earlier this month, on June 9, 2022, the Central Consumer Protection Authority (“CCPA”) , issued the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 (“Guidelines”), pursuant to the powers bestowed on the CCPA under Section 18 of the Consumer Protection Act, 2019.
Applicability
The applicability of these Guidelines is wide and all encompassing, as they apply to all advertisements irrespective of the form, format or medium. Further, the Guidelines applies to a manufacturer, service provider or trader whose goods, product or service is the subject of an advertisement, or to an advertising agency or endorser whose service is availed for the advertisement of such goods, product or service.
Conditions
The Guidelines provides for various conditions in relation to non-misleading and valid advertisements; bait advertisements; surrogate advertising; free claims advertisements; children targeted advertisements; and disclaimer in advertisements.
Condition for non-misleading and valid advertisements
– An advertisement shall be considered to be valid and not misleading, if–
– it contains truthful and honest representation;
– it does not mislead consumers by exaggerating the accuracy, scientific validity or practical usefulness or capability or performance or service of the goods or product;
– it does not present rights conferred on consumers by any law as a distinctive feature of advertiser’s offer;
– it does not suggest that the claims made in such advertisement are universally accepted if there is a significant division of informed or scientific opinion pertaining to such claims;
– it does not mislead about the nature or extent of the risk to consumers’ personal security, or that of their family if they fail to purchase the advertised goods, product or service;
— it ensures that the claims that have not been independently substantiated but are based merely on the content of a publication do not mislead consumers;
– it complies with the provisions contained in any other sector specific law and the rules and regulations made thereunder.
Conditions of bait advertisements
A bait advertisement shall fulfil the following conditions, namely:
– such advertisement shall not seek to entice consumers to purchase goods, products or services without a reasonable prospect of selling such advertised goods, products or services at the price offered;
– the advertiser shall ensure that there is adequate supply of goods, products or services to meet foreseeable demand generated by such advertisement;
– such advertisement shall state the reasonable grounds which the advertiser has for believing that he might not be able to supply the advertised goods, products or services within a reasonable period and in reasonable quantities, and in particular:
a) if the estimated demand exceeds the supply, such advertisement shall make clear that the stock of the goods or services is limited;
b) if the purpose of the advertisement is to assess potential demand, it shall be clearly stated such advertisement; and
c) the advertisement shall not mislead consumers by omitting restrictions, including geographic restrictions and age-limit on the availability of the goods, products or services;
– such advertisement does not mislead consumers about the market conditions with respect to the goods, products or services or the lack of their availability in order to induce consumers to purchase such goods, products or services at conditions less favourable than normal market conditions.
Prohibition of surrogate advertisement
No surrogate advertisement or indirect advertisement shall be made for goods or services whose advertising is otherwise prohibited or restricted by law, by circumventing such prohibition or restriction and portraying it to be an advertisement for other goods or services, the advertising of which is not prohibited or restricted by law.
Free claims advertisements
A free claims advertisement shall:
– not describe any goods, product or service to be ‘free’, ‘without charge’ or use such other terms if the consumer has to pay anything other than the unavoidable cost of responding to such advertisement and collecting or paying for the delivery of such item;
– make clear the extent of commitment that a consumer shall make to take advantage of a free offer;
– not describe any goods, product or service to be free, if:
a) the consumer has to pay for packing, packaging, handling or administration of such free goods, product or service;
b)the cost of response, including the price of goods, product or service which the consumer has to purchase to take advantage of such offer, has been increased, except where such increase results from factors unrelated to the cost of promotion; or
c) the quality or quantity of the goods, product or service that a consumer shall purchase to take advantage of the offer has been reduced;
– not describe an element of a package as free if such element is included in the package price;
– not use the term ‘free trial’ to describe a ‘satisfaction or your money back’ offer or an offer for which a non-refundable purchase is required.
Children targeted advertisements
The Guidelines provide elaborate provisions pertaining advertisements target to children, including certain directions relating to programs aired in / around children’s programs. The negative lists in relation to the foregoing are as follows:
– condone, encourage, inspire or unreasonably emulate behaviour that could be dangerous for children;
– take advantage of children’s inexperience, credulity or sense of loyalty;
– exaggerate the features of goods, product or service in such manner as to lead children to have unrealistic expectations of such goods, product or service;
– condone or encourage practices that are detrimental to children’s physical health or mental wellbeing;
– imply that children are likely to be ridiculed or made to feel inferior to others or become less popular or disloyal if they do not purchase or make use of such goods, product or service;
– include a direct exhortation to children to purchase any goods, product or service or to persuade their parents, guardians or other persons to purchase such goods, product or service for them;
– use qualifiers such as ‘just’ or ‘only’ to make the price of goods, product or service seem less expensive where such advertisement includes additional cost or charge;
– feature children for advertisements prohibited by any law for the time being in force, including tobacco or alcohol-based products;
– feature personalities from the field of sports, music or cinema for products which under any law requires a health warning for such advertisement or cannot be purchased by children;
– make it difficult for children to judge the size, characteristics and performance of advertised products and to distinguish between real life situations and fantasy;
– exaggerate what is attainable by an ordinary child using the product being marketed;
– exploit children’s susceptibility to charitable appeals and shall explain the extent to which their participation will help in any charity-linked promotions;
– resort to promotions that require a purchase to participate and include a direct exhortation to make a purchase addressed to or targeted at children;
– claim that consumption of a product advertised shall have an effect on enhancing intelligence or physical ability or bring exceptional recognition without any valid substantiation or adequate scientific evidence;
– claim any health or nutritional claims or benefits without being adequately and scientifically substantiated by a recognized body;
– be published in any mass media, including advertisement on network games in respect of medical services, drugs, dietary supplements, medical instruments, cosmetic products, liquor or cosmetic surgery which are adverse to the physical and mental health of children.
– Should not develop negative body image in children;
– give any impression that such goods, product or service is better than the natural or traditional food which children may be consuming;
– An advertisement for junk foods, including chips, carbonated beverages and such other snacks and drinks shall not be advertised during a program meant for children or on a channel meant exclusively for children
Disclaimers in Advertisements
The Guidelines also provides for the requirements with respect to the disclaimers in advertisements, which not provide for the do’s and don’ts in relation of the disclaimers but also provides for the requirements to be fulfilled for the disclaimers, such the language of the disclaimers should be the same as that of the advertisements, the font size of the disclaimers, placement and visibility of the disclaimers. The Guidelines provide that while the disclaimer in an advertisement may clarify, expand or qualify, but it should not contradict the claim being made or even correct a claim being made. The disclaimer should also not attempt to hide any material information that is likely make the advertisement deceptive or conceal its commercial intent.
Duties of manufacturer, service provider, advertiser and advertising agency
The Guidelines provide for the duties of manufacturer, service provider, advertiser and advertising agency, which include that all assertions made in an advertisement should be capable of substantiation, basis is claims based on any research should be clearly stated, without requisite prior permission no reference to person, firm or institution should be made that tends to bring disrepute / ridicule to such person / entity; the advertisements should be mislead or exploit the trust or lack of experience of the consumers.
Due Diligence and disclosure of material connection
The Guidelines provide that any endorsement in an advertisement must reflect the genuine, reasonably current opinion of the individual, group or organisation making such representation and must be based on adequate information about, or experience with, the identified goods, product or service and must not otherwise be deceptive.
Further, if there exists a connection between the endorser and the trader, manufacturer or advertiser of the endorsed product that might materially affect the value or credibility of the endorsement and the connection is not reasonably expected by the audience, such connection shall be fully disclosed in making the endorsement
Our thoughts…
As mentioned in Press Information Bureau’s website dated June 10, 2022, these Guidelines seek to ensure that consumers are not being fooled with unsubstantiated claims, exaggerated promises, misinformation and false claims. Such advertisements violate various rights of consumers such as right to be informed, right to choose and right to be safeguarded against potentially unsafe products and services.
Section 2 (28) of the Consumer Protection Act, 2019, defines “misleading advertisement” as “in relation to any product or service, means an advertisement, which— (i) falsely describes such product or service; or (ii) gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or (iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or (iv) deliberately conceals important information;
The Guidelines now define “bait advertisement”, “surrogate advertisement” and provides what constitutes as “free claim advertisements”, as well.
The penalties on violation of these Guidelines as have provided as well. CCPA can impose penalty of upto Rs 10,00,0000 (approx. USD 12,700) on manufacturers, advertisers and endorsers for any misleading advertisements. For subsequent contraventions, CCPA may impose a penalty of upto Rs 50,00,000 (approx. USD 64,100). The Authority can prohibit the endorser of a misleading advertisement from making any endorsement for upto 1 year and for subsequent contravention, prohibition can extend upto 3 years.
It must be noted that the applicability of these Guidelines extends to “all advertisements regardless of form, format or medium”, which in would then also include social media influencers as well.
While these Guidelines are aimed towards protection of consumer interest in light of the advertisements and the related claims being made therein, a number of the provisions under the Guidelines appear to have been taken from the “The Code of Self-Regulation of Advertising contents in India” (“ASCI Code”) issued by the Advertising Standards Council of India (“ASCI”), which is registered as a not-for-profit company While it may be noted that ASCI is a self-regulatory body, wherein its members which include advertisers, advertising agencies, media (including broadcasters and the press), and market research companies who have agreed to abide by the ASCI Code. Further, it must also be noted that the Courts in India in its various judgements have recognized ASCI as a self-regulatory body to control advertisements in India. Additional, fairly recently, under the Cable Television Networks (Amendment) Rules, 2021, ASCI has been recognized as regulator as well.
For instance, specifically, the ASCI Code provides for truthful and honest representations of advertisements which is some form and manner have been included now under the Guidelines as well. Elements from the self-regulation guidelines on advertising for food and beverage relating advertising; disclaimers, including the manner of their presentations and the need for due diligence being under by the endorser, such as celebrities have been provided under the ASCI Code as well.
While ASCI Code did lack an effective bite until these guidelines were recognized by the courts and the rules as mentioned above, with the Guidelines being made effected, it would make these provisions, including the ones which the ASCI Code provides for as well, more effective and stringent from a compliance standpoint.
Further, on the extant Guidelines, some the requirements need further clarification and perhaps examples should be included in the Guidelines to avoid interpretation issues.
For instance, the Guidelines pertaining to “Free claims advertisement” provides that such advertisement shall “not describe any goods, product or service to be ‘free’, ‘without charge’ or use such other terms if the consumer has to pay anything other than the unavoidable cost of responding to such advertisement and collecting or paying for the delivery of such item”. Does this infer that “Buy1 get 1 free” schemes cannot be advertised in the manner as it has been advertised thus far, as a consumer will be charged for one product, or would such products will need to bundled together for single price, without using the words such as “free” or “without charge” etc.?
Another example in relation to the foregoing, under the Guidelines, is with respect to “Children targeted advertisements”. The Guidelines here, inter alia, states “An advertisement that addresses or targets or uses children shall not feature personalities from the field of sports, music or cinema for products which under any law requires a health warning for such advertisement or cannot be purchased by children”. While the topic is sensitive, however, such requirements need to clarified. Does this mean that if a celebrity through an advertisement discourages smoking of cigarettes (which are prohibited to be sold to children), such celebrity cannot featured in advertisements of products targeted towards children (ex. games / toy advertisements) ?
The Guidelines provide that due diligence required to be undertaken so that any endorsement in an advertisement must reflect the genuine, reasonably current opinion of the individual, group or organization making such representation and must be based on adequate information about, or experience with, the identified goods, product or service and must not otherwise be deceptive. While that may be so, the Guidelines should also provide for the requirements to satisfy the prescribed requirements here including guidelines in relation to the checks that need to be undertaken by the endorsers, especially in light of penalty provisions provided.
The Guidelines also required discloser of “material” connection of the endorser in an endorsement. The threshold of such “material” connection should be expanded upon and clarified under the Guidelines, as any non-disclosure in this context may be construed as a misleading advertisement.
These Guidelines will have a major impact on brands whose names as more popular as an alcoholic beverage than a music album, drinking soda, water etc, as the Guidelines prohibit surrogate advertisements. Entertainment channels and programs that are focused on children may be affected in light of the Guidelines as applicable to children targeted advertisements.
Overall, compliance costs and change in advertisement strategy of brands in light of the Guidelines , will lead to increase in costs by the brands, etc. These Guidelines many of which, in some form, were present under the ASCI Code, but with its issuance by the CCPA would make the compliance and enforceability stricter and more effective.
– Dhwani Shah and Anupam Prasad
