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”.
– 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:
– Conditions for valid advertisement: An advertisement will not be considered misleading if it:
– 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:
Moreover, a FCA shall not describe any goods/products/service as free if:
– Disclaimers: A disclaimer in an advertisement may:
The Advertising Guidelines mandate the following requirements for the disclaimers:
– Duties of manufacturer, service provider, advertiser and advertising agency: The Advertisement Guidelines require that advertisements:
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:
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:
This article was first published on Saikrishna & Associates