The Central Consumer Protection Authority (‘CCPA’) has been established under Section 10 of the Consumer Protection Act, 2019 (‘Act’) for regulating matters relating to violation of the rights of the consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers as a class. In exercise of these powers, the CCPA has notified ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’ (‘Guidelines’) with an objective to curb misleading advertisements and protect the consumers, who may be exploited or affected by such advertisements. Given that advertisements play an enormous role in facilitating sale of products or services across all ages and diverse backgrounds, there has been concern around advertisements that make untruthful or false or deceptive claims or seek to influence the public, especially children, through misleading claims. Thus, these guidelines have been notified detailing several principles and parameters to identify what is permissible and what is prohibited.
WHAT IS A MISLEADING ADVERTISEMENT?
Misleading advertisement has already been defined under Section 2(28) of the Act. However, as per Section 4 of the Guidelines, an advertisement shall be considered to be valid and not misleading, if:
- It contains truthful and honest representation
- does not mislead consumers by exaggerating the accuracy, scientific validity or practical usefulness or capability or performance or service of the goods or product
- does not present rights conferred on consumers by any law as a distinctive feature of advertiser’s offer
- 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
- 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
- ensures that the claims that have not been independently substantiated but are based merely on the content of a publication do not mislead consumers
Section 5 of the Guidelines states that ‘Bait Advertisement’ must fulfil certain conditions such as that it 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 and the advertiser shall ensure that there is adequate supply of goods, products or services to meet foreseeable demand generated by such advertisement. It must be noted that the Guidelines do not bar bait advertisements if they are in consonance with the above-mentioned requirements.
Section 6 of the Guidelines expressly prohibits ‘Surrogate Advertisements’. 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.
Section 7 of the Guidelines states that 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.
GUIDELINES REGARDING MARKETING TO CHILDREN
Section 8 of the Guidelines has specifically been included as a pre-emptive rule on children-targeted marketing, taking into account the sensitivity and vulnerability of children, as well as the serious impact advertisements have on their minds. Per the provision, advertisements cannot exaggerate the attributes of a product or service in such a way that children develop unreasonable expectations of it, nor can they make any health or nutritional claims or benefits that have not been thoroughly and scientifically established by a recognised body. According to the guidelines, advertisements targeting children must not include any celebrities from the fields of sports, music, or film for products that require a health warning or cannot be purchased by children under any legislation. The provision also deals with the concept of peer pressure as it categorically states that advertisements cannot 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. It actively dissuades advertisements for junk foods and states that an advertisement for junk foods, including chips, carbonated beverages and such other snacks and drinks cannot be scheduled during a program meant for children or on a channel meant exclusively for children. It also warns against advertisements that may cause negative body-image in susceptible children or allude to the fact that their product is better than their traditional food.
GUIDELINES REGARDING DISCLAIMERS IN ADVERTISEMENTS
Disclaimers in advertisements play a pivotal role from consumer perspective since, in a way it limits the responsibility of the company. Therefore, Section 11 of the Guidelines stipulates that disclaimer shall not attempt to hide material information with respect to any claim made in such advertisement, the omission or absence of which is likely to make the advertisement deceptive or conceal its commercial intent and shall not attempt to correct a misleading claim made in an advertisement. Further, it provides that, a disclaimer shall be in the same language as the claim made in the advertisement and the font used in a disclaimer shall be the same as that used in the claim. These are similar to the disclaimer related provisions in Chapter I (4) of the ASCI Code.
GUIDELINES REGARDING ROLE OF PLAYERS
Section 12 of the Guidelines lays down rules for duties of manufacturer, service provider, advertiser and advertising agency, due diligence to be carried out before endorsing and others. The provision aims to protect consumer’s interest through bringing in more transparency and clarity in the way advertisements are being published, so that, consumers are able to make informed decisions based on facts rather than false narratives and exaggerations.
GUIDELINES REGARDING ENDORSEMENT OF ADVERTISEMENTS
Section 13 of the Guidelines states that an endorsement must reflect the genuine, reasonably current opinion of the endorser and must be based on adequate information about, or experience with, the identified goods, product or service and must not otherwise be deceptive. To avoid the possibility of biased reviews, Section 14 of the Guidelines states that any connection between the endorser of an advertisement and the advertiser, manufacturer or trader must be fully disclosed whilst making the endorsement if it can impact the perceived value of the product or service in terms of the credibility of the endorsement.
PENALTY FOR VIOLATION OF GUIDELINES
The Guidelines do not separately set out penalties for non-compliance, however, on reading Section 21 of the Act it becomes clear that the CCPA can impose penalty of upto 10 lakh rupees on manufacturers, advertisers and endorsers for any misleading advertisements. For subsequent contraventions, CCPA may impose a penalty of upto 50 lakh rupees. The CCPA 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.
IMPACT OF GUIDELINES
- Social Media Influencers
The ASCI Code requires influencers to exercise their own due diligence to ensure that the advertiser is capable of substantiating the claims made in an advertisement. Given that influencers are the ones publishing the advertisement, they are the ones in the ‘limelight,’ vis-à-vis a product or service. However, since influencers are not members of ASCI, ASCI may be unable to enforce the Guidelines against the influencer. In such a case, the Guidelines cover within their ambit all forms of endorsers and therefore, extend the provisions of the penalty to all social media influencers. Since these Guidelines increase the onus on celebrities endorsing brands, they need to undertake due diligence regarding any misleading claims and must disclose any material connection with the manufacturer or advertiser of the endorsed product.
- Advertising Agencies
From an advertiser’s standpoint, these guidelines may result in substantial changes to the formats of the advertisement, especially in relation to ads targeting children. Therefore, advertisers must incorporate appropriate creative controls and approval clauses in their agreements with influencers, to allow them to edit, modify and approve content before it is published. Many brands with pre-existing advertisements targeted towards children must review their content. This would mitigate advertisers’ liability for misleading advertisements.
- Alcohol and Tobacco Brands
Apart from the ASCI Code, the Guidelines also prohibit surrogate advertising which provides teeth to the enforcement of such regulation in the form of the above-mentioned penalties. The issue of prohibition of surrogate advertising has the potential to adversely impact the liquor and tobacco players since they typically resort to such advertising for their products. However, Rule 7(2)(viii) of the Cable Television Network Rules, 1994 lays down rules for a brand used for ‘prohibited’ goods/services to be used for other goods so long as it does not otherwise violate the Guidelines. The Proviso to Section 6 of the Guidelines also states that that mere use of a brand name which may also be applied to goods or service whose advertising is prohibited shall not be considered to be surrogate advertisement, if such advertisement is not otherwise objectionable.
Although the ASCI Code provides for self-regulation, these Guidelines will allow the CCPA to enforce the same rules in a much stricter fashion. It must be noted that advertising is a highly subjective area, so the effectiveness of the Guidelines will depend entirely on its enforcement and how a violation is detected in the first place.
This Article has been authored by Ms. Ananya Agarwal.