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Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022

Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022
Trade & Regulatory Compliance Practice | Kainat Singh

Introduction

In furtherance of the powers of the Central Consumer Protection Authority (“CCPA”) under Section 18 (2)(l) of the Consumer Protection Act, 2019 (“CPA 2019”), the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 (“Advertisement Guidelines”) were notified on 9th June 2022 with an objective to “curb misleading advertisements and protect the consumers, who may be exploited or affected by such advertisements”.

Important Definitions:

- Advertiser: Any person who designs, produces and publishes advertisements either by his own effort or through others for promoting sale of goods/products/services. The term includes a manufacturer or service provider of such goods/products/services.

- Bait Advertisement: An advertisement in which goods/products/services are offered for sale at a low price to attract consumers.

- Endorser- Individual/group/institution making endorsement of any goods/products/services in an advertisement whose opinion, belief, finding or experience gets reflected in the advertisement.

Applicability: The Advertisement Guidelines apply to:

  • all advertisements regardless of form, format or medium;
  • a manufacturer/service provider/trader whose goods/product/service is the subject of an advertisement; and
  • an advertising agency or endorser whose service is availed for the advertisement of goods/product/service which is the subject of an advertisement.

Salient features:

- Conditions for valid advertisement: An advertisement will not be considered misleading if it:

  • Contains truthful and honest representation;
  • Does not mislead consumers by exaggerating accuracy, scientific validity, practical usefulness, capability or performance of goods/product;
  • Does not present rights conferred by law as a distinctive feature of advertiser’s offer;
  • Does not suggest universal acceptance of claim if there is a significant division of informed/scientific opinion pertaining to such claims;
  • Ensures that claims that are based on the content of publication, and have not been independently substantiated, are not misleading;
  • Does not mislead about the nature or extent of risk of consumers’ personal security or of their family if they fail to purchase the advertised goods/product/service;
  • Complies with other sector specific laws and rules and regulations made thereunder.

- Bait Advertisement: Under the Advertisement Guidelines, an advertisement shall not seek to entice consumers to purchase goods/product/services without reasonable prospect of selling such advertised goods/product/services at the price offered. The advertisement should not mislead consumers about the market condition or the lack of availability of the goods/products/services to induce consumers to purchase at less favourable market conditions. An advertiser must also ensure adequate supply of goods/product/services to meet foreseeable demand generated by the advertisement.

- Advertisements prohibited by law and Surrogate advertisements: In addition to the advertisements prohibited under the Advertisement Guidelines (which includes ‘Surrogate Advertisements’ i.e. an advertisement where the brand name, logo, colour, layout and presentation associated with the goods/product/services, whose advertisement is prohibited/restricted, is used in the advertisement), no advertisement shall be permitted in respect of goods, products or services which are either prohibited from being produced or sold under law or which are prohibited from being advertised under law. An advertisement will also be considered a surrogate advertisement if the brand name, logo, colour, layout and presentation associated with the goods/product/services, whose advertisement is prohibited/restricted, is used in the advertisement.

- Free Claims Advertisements (“FCA”): Under the Advertisement Guidelines, a FCA shall:

  • not describe any good/product/service as ‘free’/ without charge, if a consumer is required to pay any cost other than the unavoidable cost for responding to such an advertisement and collecting or paying for the delivery of such item.
  • Make clear the extent of commitment that a consumer shall make to avail the free offer must;
  • Not describe an element of a package which is included in the package price as free;
  • Not use the term ‘free trial’ to describe a ‘satisfaction or your money back’ offer or an offer that requires a non-refundable purchase.

Moreover, a FCA shall not describe any goods/products/service as free if:

  • the consumer has to pay for packaging or administration of such free products/goods/services,
  • cost of response (including price of good which has to be purchased to take advantage of the offer) has been increased (except when the increase results from factors unrelated to cost of promotion),
  • quality/quantity of goods/products/service has been reduced.

- Disclaimers: A disclaimer in an advertisement may:

  • expand/clarify a claim or make qualifications or resolve ambiguities to explain the claim made in the advertisement.
  • A disclaimer shall not contradict/hide material claims, correct a misleading claim made in the advertisement, or change the dictionary meaning of the words used/perceived by the consumer, in a manner that would make the advertisement deceptive.

The Advertising Guidelines mandate the following requirements for the disclaimers:

  • Must be made in the same language and font as the claim made in the advertisements and;
  • must be placed at a prominent and visible place on the packaging and (ideally) on the same panel of the packaging as that of the claim;
  • such that it is clearly visible to a normally sighted person reading the marketing communication once from a reasonable distance and at a reasonable speed.
  • A voice-over disclaimer must be displayed in sync with the voice over and at the same speed as the claim made in the advertisement.

- Duties of manufacturer, service provider, advertiser and advertising agency: The Advertisement Guidelines require that advertisements:

  • do not contain any misleading statements or visual representation;
  • are not framed to abuse the trust of consumers or exploit their lack of experience or knowledge,
  • do not contain any references to a person/firm/institution in a manner that confers an unjustified advantage on the product or ridicules such person/firm/institution (unless requisite permission has been obtained) or
  • confers unjustified advantage on the product.

Notwithstanding the above, the guidelines specify that the obvious untruths/exaggerations that are intended to “amuse or catch the eye of consumers” are permitted so long as they are seen as such and not likely to be understood as making literal or misleading claims.

- Due Diligence in Endorsements: An endorsement in an advertisement should reflect the “genuine” and “reasonably” current opinion of the individual/group/organisation making such representation and must be based on adequate information about or experience with the goods/products/service. Further, a foreign profession (a person who is not a citizen of India) shall not be permitted to make endorsement in any advertisement pertaining to any profession if an Indian professional is barred under law from making endorsement in such advertisement.

- Disclosure of Material Connection: While making an endorsement, there should be a disclosure of “connection” in case such a connection exists between an endorser and manufacturer/advertiser of the endorsed product which:

  • might materially affect the value or credibility of the endorsement and,
  • if such connection is not reasonably expected by the audience.

This provision seeks to give statutory backing to disclosure of “material connection” between endorser and advertiser which is required under the self-regulatory regime of the ASCI’s Guidelines for Influencer Advertising in Digital Media. However, the Advertising Guidelines are silent on the manner in which such a disclosure is to be made.

- Children Targeted Advertisements: The Advertising Guidelines stipulate that advertisements targeting children must not, inter alia, feature personalities from the field of sports, music or cinema for products that cannot be purchased by children. The Guidelines also discourage advertisements that offer promotional gifts to persuade children to purchase goods/products/service without necessity or promoting illegal consumerism. Further, advertisements that inspire or unreasonably emulate behaviour that could be dangerous for children or offer promotional gifts to persuade children to purchase goods/products/service without necessity have also been prohibited.

- Penalties: The CCPA can impose a penalty of up to INR 10 Lakhs on manufacturers, advertisers and endorsers for any misleading advertisements that may go up to INR 50 Lakhs for subsequent contraventions. The CCPA can also prohibit an endorser of a misleading advertisement from making any endorsement for up to 1 year and the prohibition can extend up to 3 years for every subsequent contravention.

Our Take:

The Advertising Guidelines have brought about strict requirements to be implemented by stakeholders with the objective to curb misleading advertisements. The Guidelines have been issued by the CCPA in furtherance of its powers under Section 18 (2)(l) of the Consumer Protection Act, 2019 and in effect provide statutory legitimacy to the general advertising regulations in India which were otherwise within the “self-regulatory” regime under the Advertising Standards Council of India’s Code of advertising content in India.

Under the Guidelines, relevant stakeholders will have to exercise caution while using the terms ‘free’, ‘free trial’, and ‘without charge’ or making claims/misleading statements in their advertisements. Furthermore, in addition to complying with the language, size and manner requirements mandated for disclaimers, stakeholders will have to ensure that endorsement agreements accommodate the requirements under the Guidelines. Owing to the sensitive nature of the Guidelines, generally, advertisements would have to be revised in a manner that does not take advantage of the lack of knowledge/expertise of an average consumer with a higher threshold of caution for advertisements directed towards children. While the object of the Guidelines is rightfully vested in safeguarding consumer awareness and interest, its vague nature may result in over-monitoring/regulation of advertisements that will strongly impact industries.

Link to Advertisement Guidelines:
https://consumeraffairs.nic.in/sites/default/files/file-uploads/latestnews/CCPA%20Notification.pdf

Practice Contacts

Ameet Datta - Partner (Practice Lead) | ameet@saikrishnaassociates.com

Suvarna Mandal - Partner | suvarna@saikrishnaassociates.com

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