Primer on Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022
Re: Primer on Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022.
On June 9, 2022, the Central Consumer Protection Authority notified the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements (Guidelines) and have been brought into force with immediate effect. The Guidelines apply to (a) all advertisements across all form, format or medium; and (b) an entity whose goods, product or service forms the subject of an advertisement, or to any advertising agency or endorser whose service is availed for placing of the advertisements.
In view of the increased incidence of advertisements related to non-conventional products or services, across all modes and media, there has been a lot of debate around what must be regulated and the extent of it, which has led to the culmination of these Guidelines. The Guidelines have aligned themselves with the self-regulation mechanism prescribed by the Advertising Council of India (ASCI). While ‘misleading advertisement’ has been defined in the Consumer Protection Act, 2019 (CP Act), the Guidelines have introduced a regulatory mechanism for misleading advertisements, bait advertisements, surrogate advertisements, free claim advertisements, children targeted advertisements and prohibited advertisements.
The key compliance requirements of the Guidelines are discussed as below:
Conditions for a non-misleading / valid advertisement – The Guidelines inter alia stipulate that for an advertisement to be considered valid and not misleading, the same shall have truthful and honest representation; without any exaggeration on the accuracy, scientific validity or practical usefulness or capability or performance or service of the goods or product; and must not claim to afford rights to consumers which are already afforded in law. These are not the only considerations imposed by the Guidelines, but also that in case where claims cannot be independently substantiated, or where claims purport to be universally accepted, even where there is division of informed/ scientific opinion, the law considers such claims to be misleading too. However, in case of any occasional or unintentional lapse in fulfilment of any an advertised claim while carrying out mass manufacture and distribution of goods, products and services, such unintentional lapse may not invalidate the advertisement, provided (a) such promise or claim is capable of fulfilment by a typical specimen of the product advertised; (b) the proportion of product failures is within the generally acceptable limits; (c) the advertiser has taken prompt action to make good the deficiency to the consumer. These exceptions have been provided with the intention of allowing the advertiser to not be apprehended for any occasional and unintentional lapse.
Bait advertisement means an advertisement in which goods, product or service is offered for sale at a low price to attract consumers. While allowing for bait advertisements to be made available for communication to public, the Guidelines impose certain conditions that must be additionally met with. Such advertisements shall not entice consumers to buy such products without a reasonable prospect of selling such advertised goods, products or services at the price offered. The advertisement shall state the reasonable grounds in the event the advertiser believes that he may not be able to supply the advertised goods, products or services within a reasonable period and in reasonable quantities. The advertisement shall not mislead consumers about market conditions regarding the availability and demands of such goods, products or services. It is clear that the intent is not to prohibit this form of advertisement, but only to ensure that there is nothing grossly inaccurate communicated to the consumers, in terms of viability of existing products in the market, or towards the availability of the products being advertised at a rate different than what is claimed to entice them in the first place. The concepts of age-gating, and geographical restrictions (in products and services, as applicable) have been reinforced, where the advertiser must communicate such shortcomings related to the sale of their goods and services to the consumers.
Surrogate advertisements/ indirect advertisements, i.e., which advertise goods or services, whose advertising is otherwise prohibited or restricted by law, by circumvention of such prohibition in law, is now explicitly prohibited by these Guidelines. There is an exception to this too, and where mere use of the same brand name or company name is applied to market goods or service whose advertising is prohibited or restricted shall not be considered as surrogate advertisement or indirect advertisement if such advertisement is not otherwise objectionable as per the provisions set out in the Guidelines. It can be expected that the emphasis on what qualifies to be mere use of names, will have to be most likely reviewed on a case-by-case resolve, to be able to ascertain if there has been violation of these present Guidelines.
A free claims advertisement shall not describe any goods, product or service to be ‘free’ or ‘without charge’ if the consumer is made to pay for anything other than the advertisement, collection and delivery costs. A product, goods or services cannot be advertised as ‘free’ if the consumer is made to pay for packaging, handling, etc. of the goods; or if the cost of response including the price of goods, product or service which the consumer has to purchase to take advantage of the offer, has been increased as a result of factors unrelated to the cost of promotion. The advertisement shall not use the term ‘free trial’ to describe a ‘satisfaction or your money back’ offer or an offer which requires a non-refundable purchase. To this end, the Guidelines prescribe a negative list, and the entities must adhere to the same to be able to assess what must be done away with.
Children targeted advertisements have been given due consideration, where the Guidelines have provided a detailed list of restrictions which an advertisement shall follow in the interest of a child’s physical health and mental well-being. Attributes and characteristics typical of children have been stressed upon, to explain the tendencies which may be impacted by undue advertisements being targeted at this vulnerable demographic. To stimy concerns around instances which may lead to impacting body image of children, there has been express bar on advertisements related to the same. Unfortunately, we notice that the Guidelines become overzealous, when they have not allowed advertisements for junk food, carbonated beverages and such other snacks to be aired during programs meant for children or channels exclusively concerning children. One will have to look at the applicable food safety and standards laws to ascertain what may constitute as junk food, for guidance. There is another instance where the Guidelines state that advertisements which offer promotional gifts to persuade children to buy goods or services, without necessity or promoting illogical consumerism, shall also be discouraged. It is again left to the interpretation of the entities to make subjective evaluation of what may be considered to be lacking necessity or what may actually be considered to be illogical consumerism from the perspective of children, to whom such goods or services may cater to.
The Guidelines prohibit any advertisement which is designed, produced and published in respect of goods, products or services which are prohibited from being produced, sold or provided or which are prohibited from being advertised under any law for the time being in force or under any rules or regulations made thereunder.
The Guidelines also prescribe the format of providing a Disclaimer in advertisements. A disclaimer may expand or clarify a claim made in an advertisement or resolve in ambiguities in order to explain such a claim however, such a disclaimer shall not contradict the material claim made in the advertisement or the main message conveyed by the advertiser or change the dictionary meaning of the words used in the claims received or perceived by a consumer. A disclaimer shall not attempt to conceal or omit any material information with respect to a claim made in the advertisement which may render the advertisement to be deceptive. This also seems to reinforce the requirements that have been set out by ASCI and may allow the entities acting in compliance with the self-regulatory codes of ASCI to align themselves better with the Guidelines, for they are more deliberate and nuanced, than the new prescriptions made presently.
There are several duties which have been imposed on the entities (manufacturers, service providers, advertisers, advertising agencies, alike) whereby they shall ensure that all descriptions, claims and comparisons in an advertisement which relate to matters of objectively ascertainable facts shall be capable of substantiation. The advertisement shall indicate the source and date of independent research or assessment in cases where claims in the advertisement are expressly stated to be based on or supported by such research or assessments. The advertisement shall not contain statements or visual presentations which directly, or by implication, or by omission, or by ambiguity, or by exaggeration are likely to mislead consumers about the product advertised, or the advertiser, or about any other product or advertiser. The only exception to this provision is in case of the advertisements which state the obvious untruths or exaggerations which are intended to amuse or catch the eye of consumers subject to the condition that they are clearly seen as humorous or hyperbolic and not likely to be understood as making literal or misleading claims for the advertised product. While this concerns advertisements in general, from what has been already discussed at Guideline 8 of these Guidelines, it does not seem that advertisements targeted at children can enjoy the same leeway, for puffery.
Due Diligence - Any endorsement in an advertisement must reflect the genuine, reasonably current opinion of the endorser making such representation and must be based on satisfactory information about the goods, product or service and must not be deceptive. An endorser has been defined as an “an individual or a group or an institution making endorsement of any goods, product or service in an advertisement whose opinion, belief, finding or experience being the message which such advertisement appears to reflect.” Read with the requirement under the CP Act, there is a requirement for an endorser to establish that they have conducted due diligence to make determination of veracity of the claims made, prior to endorsement. However, we did not find any guidance on what sufficient due diligence in this regard can be, within the parent legislation, which has changed with this provision being introduced here. It will be interesting to witness, how this plays out in the context of a child being the endorser in the context of advertisements, where only a natural corollary would be for the parent or the legal guardian (entering into the contractual engagement) to also become responsible for the due diligence.
Where, Indian professionals, whether resident in India or otherwise, are barred under any law for the time being in force from making endorsement in any advertisement pertaining to any profession, then, foreigner professionals of such profession shall also be not permitted to make endorsement in such advertisement.
Where there is a material 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. In the event where the endorser has any interest in the brands they endorse, there lies a degree of suspicion with respect to the motivation they may have for making such promotions.
Key Takeaways
The Guidelines seem to be in the right direction and have accounted for the practice which was being followed [considerably] by the self-regulatory mechanism. The Guidelines do not partake in explaining the consequences of non-compliance, for we presume that the mandatory applicability of these Guidelines would yield in the triggering of the CP Act’s provisions for non-compliance. Under the parent legislation, non-compliance for separate incidents ranges between INR 10-50 Lacs, and punishable with imprisonment, where the dereliction qualifies for the same.