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Summary: Indian government issues new guidelines to curb misleading ads

CCPA on June 9 notified Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022.

In a bid to curb misleading ads, the Central Consumer Protection Authority (CCPA) on June 9 notified Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022.

“The 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,” CCPA stated in an accompanying press release.

The Consumer Protection Act, 2019, under which the new guidelines have been issued, already defines and prohibits misleading ads, but the guidelines get into the specifics by regulating surrogate, free claims, and bait advertisements and ads targeting children. The guidelines also lay out dos and don’ts for advertisers and endorsers, as well as what disclaimers in ads should contain.

Why it matters: Complaints against misleading advertisements have risen considerably over the last couple of years, especially against companies in the edtech and crypto sectors. While the Advertising Standards Council of India (ASCI) has tried to address some of these complaints by issuing guidelines, these are voluntary codes of conduct, unlike CCPA’s guidelines, which carry the force of law.

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Who is covered by these guidelines?

  1. All advertisements regardless of form, format or medium
  2. A manufacturer, service provider or trader whose goods, product or service is the subject of an advertisement
  3. An advertising agency or endorser whose service is availed for the advertisement of goods, products or services

Conditions for advertisements promising low prices

The guidelines outline the following conditions for a bait advertisement, defined as an advertisement in which goods, products or services are offered for sale at a low price to attract consumers:

  1. the advertisement should not seek to entice consumers to purchase something without a reasonable prospect of selling the product at the price offered
  2. the advertiser should ensure that there is an adequate supply of the advertised product to meet foreseeable demand generated by the advertisement
  3. the advertisement should state the reasonable grounds under which the advertiser might not be able to supply the advertised product within a reasonable period and in reasonable quantities. In particular:
    • if the estimated demand exceeds the supply, the advertisement should make clear that the stock is limited
    • if the purpose of the advertisement is to assess potential demand, it should be clearly stated
    • the advertisement should not mislead consumers by omitting restrictions, including geographic restrictions and age-limit on the availability of the product
  4. the advertisement should not mislead consumers about the market conditions with respect to the products or the lack of their availability in order to induce consumers to purchase products less favourable than normal market conditions

Conditions for “free claims” advertisements

An advertisement making claims of offering something for free should:

  1. not describe any product or service to be “free,” “without charge” or use such other terms if the consumer has to pay anything other than the cost of responding to such advertisement and collecting or paying for the delivery of such item
  2. make clear the extent of commitment that a consumer should make to take advantage of a free offer
  3. not describe anything to be free, if
    • the consumer has to pay for packaging, handling or administration of such free goods, products or services
    • the cost of response, including the price of the product or service that the consumer has to purchase to take advantage of such an offer, has been increased, except where such increase results from factors unrelated to the cost of promotion
    • the quality or quantity of the product that a consumer should purchase to take advantage of the offer has been reduced
  4. not describe an element of a package as free if such element is included in the package price
  5. 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

Conditions for advertisements targeting children

“Keeping in view the sensitiveness and vulnerability of children and severe impact advertisements make on the younger minds, several preemptive provisions have been laid down on advertisements targeting children.” – CCPA

An advertisement that addresses or targets or uses children should not:

  1. condone, encourage, inspire or unreasonably emulate behaviour that could be dangerous for children
  2. take advantage of children’s inexperience, credulity or sense of loyalty
  3. exaggerate the features of products in such a manner as to lead children to have unrealistic expectations of such products
  4. condone or encourage practices that are detrimental to children’s physical health or mental wellbeing
  5. 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 products
  6. include a direct exhortation to children to purchase any product or to persuade their parents, guardians or other persons to purchase such products
  7. use qualifiers such as “just” or “only” to make the price seem less expensive where such advertisement includes additional cost or charge
  8. feature children for advertisements prohibited by any law for the time being in force, including tobacco or alcohol-based products
  9. feature personalities from the field of sports, music or cinema for products that under any law requires a health warning for such advertisement or cannot be purchased by children
  10. make it difficult for children to judge the size, characteristics and performance of advertised products and to distinguish between real-life situations and fantasy
  11. exaggerate what is attainable by an ordinary child using the product being marketed
  12. exploit children’s susceptibility to charitable appeals and shall explain the extent to which their participation will help in any charity-linked promotions
  13. resort to promotions that require a purchase to participate and include a direct exhortation to make a purchase addressed to or targeted at children
  14. 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
  15. claim any health or nutritional claims or benefits without being adequately and scientifically substantiated by a recognized body
  16. be published in any mass media, including advertisements 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
  17. be such as to develop negative body image in children
  18. give any impression that a product is better than the natural or traditional food which children may be consuming.
  19. should not offer promotional gifts to persuade children to buy something without necessity or promotes illogical consumerism

Furthermore, an advertisement for junk foods, including chips, carbonated beverages and other such snacks and drinks should not be advertised during a program meant for children or on a channel meant exclusively for children.

Surrogate advertising is prohibited

The guidelines prohibit surrogate advertisement or indirect advertisement of goods or services whose advertising is otherwise prohibited or restricted by law. A surrogate advertisement circumvents prohibitions or restrictions by appearing to be an advertisement for something that is not prohibited or restricted by law.

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An advertisement will be considered to be a surrogate advertisement or indirect advertisement, if:

  1. such advertisement indicates or suggests directly or indirectly to consumers that it is an advertisement for the goods, product or service whose advertising is prohibited or restricted by law
  2. such advertisement uses any brand name, logo, colour, layout and presentation associated with such goods, products or services whose advertisement is prohibited or restricted

Duties of advertisers

All entities to whom these guidelines apply should ensure that:

  1. all descriptions, claims and comparisons in an advertisement which relate to matters of objectively ascertainable facts should be capable of substantiation if required by the CCPA
  2. the advertisement indicates the source and date of independent research or assessment in cases where claims are expressly stated to be based on such research or assessments
  3. the advertisement should not contain any reference to a person, firm or institution in a manner which confers an unjustified advantage on the product so advertised or tends to bring such person, firm or institution to ridicule or disrepute, unless requisite permission has been obtained by the advertiser
  4. the advertisement should not contain statements or visual presentations which directly or by implication, omission, ambiguity, or exaggeration are likely to mislead consumers about the product advertised, the advertiser, or any other product or advertiser
  5. advertisement is so framed as not to abuse the trust of consumers or exploit their lack of experience or knowledge and for this purpose:
    • such advertisement may not make claims which use expressions such as “up to five years guarantee” or “Prices from as low as Rs.“Y”, instead shall clearly indicate a fixed period of guarantee of the product or a fixed price at which the product is being offered; And in case, the product has different periods of guarantee for different parts or components, it shall clearly indicate the minimum and maximum of such periods of guarantee applicable to the relevant part or components
    • if such advertisements invite the public to take part in lotteries or prize competitions permitted under any law or hold out the prospect of gifts, it should clearly set out all pertinent material terms and conditions so as to enable consumers to obtain a true and fair view of their prospects in such activities

Exception for humour and hyperbole: Obvious untruths or exaggerations that are intended to amuse or catch the eye of consumers are permissible provided that they are clearly seen as humorous or hyperbolic.

Rules for endorsers

  1. 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.
  2. Where, Indian professionals, whether resident in India or otherwise, are barred under any law for the time being in force from making an endorsement in any advertisement pertaining to any profession, then, foreign professionals (non-Indian citizens) of such professions should also be not permitted to make an endorsement in such advertisement.
  3. Where 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 should be fully disclosed in making the endorsement.

Disclaimers in advertisements: dos and don’ts

A disclaimer in an advertisement:

  1. may expand or clarify a claim made in such advertisement or make qualifications or resolve ambiguities therein in order to explain such claim in further detail, but such disclaimer should not contradict the material claim made in the advertisement or contradict 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
  2. 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
  3. shall not attempt to correct a misleading claim made in an advertisement

Furthermore, disclaimers must fulfil the following requirements:

  1. a disclaimer shall be in the same language as the claim made in the advertisement
  2. the font used in a disclaimer shall be the same as that used in the claim
  3. the placement of the disclaimer shall be at a prominent and visible place on the packaging and ideally be on the same panel of the packaging as that of the claim
  4. if the claim is presented as voice over, the disclaimer shall be displayed in sync with the voice-over and at the same speed as that of the original claim made in the advertisement
  5. a disclaimer shall be so clear, prominent and legible as to make it clearly visible to a normally-sighted person reading the marketing communication once, from a reasonable distance and at a reasonable speed

What is a “non-misleading and valid advertisement”?

According to the guidelines, an advertisement is considered to be valid and not misleading, if:

  1. it contains a truthful and honest representation
  2. 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
  3. it does not present rights conferred on consumers by any law as a distinctive feature of an advertiser’s offer
  4.  it does not suggest that the claims made in such advertisements are universally accepted if there is a significant division of informed or scientific opinion pertaining to such claims
  5. it does not mislead about the nature or extent of the risk to consumers’ personal security, or that of their families if they fail to purchase the advertised goods, products or service
  6. 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
  7. it complies with the provisions contained in any other sector-specific law and the rules and regulations made thereunder

Any unintentional lapses on the above conditions will be excused provided:

  1. such promise or claim is capable of fulfilment by a typical specimen of the product advertised
  2. the proportion of product failures is within the generally acceptable limits
  3. the advertiser has taken prompt action to make good the deficiency to the consumer

Penalty for violation

While the guidelines themselves don’t mention any penalties for violations, the parent Act does. According to the Consumer Protection Act, 2019, CCPA can impose a penalty of up to 10 lakh rupees on manufacturers, advertisers and endorsers for any misleading advertisements. For subsequent contraventions, CCPA can impose a penalty of up to 50 lakh rupees.

The Authority can also prohibit the endorser of a misleading advertisement from making any endorsement for up to 1 year and for subsequent contravention, prohibition can extend up to 3 years.

This post is released under a CC-BY-SA 4.0 license. Please feel free to republish on your site, with attribution and a link. Adaptation and rewriting, though allowed, should be true to the original.

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