The Central Consumer Protection authority (CCPA) under the Department of Consumer Affairs 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. The CCPA has been established under Section 10 of the Consumer Protection Act, 2019 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 the powers conferred by Section 18 of the Consumer Protection Act, 2019, to CCPA, the Guidelines were notified and have come into effect from 9th June, 2022. These Guidelines apply to all advertisements regardless of form, format or medium;

View Guidelines here.

Section 2(28) of the Consumer Protection Act, 2019 defines “misleading advertisement” to mean: in relation to any product or service, means an advertisement, which— (i) falsely describes such product or service; or (ii) gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or (iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or (iv) deliberately conceals important information;

The Guidelines additionally introduce definitions of:

  • bait advertisement” means an advertisement in which goods, product or service is offered for sale at a low price to attract consumers;
  • surrogate advertisement” means an advertisement for goods, product or service, 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, product or service, the advertising of which is not prohibited or restricted by law.
  • advertiser” means a person who designs, produces and publishes advertisements either by his own effort or by entrusting it to others in order to promote the sale of his goods, products or services and includes a manufacturer and service provider of such goods, products or services;
  • advertising agency” means a person or an establishment providing services in designing and production of advertisements or other related services for a commission or fee;
  • endorser” includes 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;
  • service provider” means a person who provides service of any description to a potential user;

Highlights of the Guidelines:

  • Due diligence required for endorsement of advertisements:

The Guidelines require that 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.

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. Explanation. – For the purposes of this paragraph, “foreigner professional” means a person who is not a citizen of India.

This would essentially entail that brands may require their endorsers to give an undertaking that they have utilized the products/ services and affirm what they are endorsing. From a liability perspective endorsers would need to be mindful of the statements they are making while endorsing the brand. It would be interesting to see if the Guidelines result in ASCI Advisory being sought by endorsers on advertisements prior to their airing.

  • Disclosure of material connection: The Guidelines require that 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 shall be fully disclosed in making the endorsement.

There are several celebrities who have equity stakes in brands. This requirement under the Guidelines will require celebrities to disclose their stakes in brands, failing which advertisement will be considered to be misleading.

  • Prohibition of surrogate advertising: The Guidelines provide that 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.

An advertisement shall be considered to be a surrogate advertisement or indirect advertisement, if– (a) 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; (b) such advertisement uses any brand name, logo, colour, layout and presentation associated with such goods, product or services whose advertisement is prohibited or restricted

However, the proviso clarifies that mere use of a brand name or company name which may also be applied to goods, product or service whose advertising is prohibited or restricted shall not be considered to be surrogate advertisement or indirect advertisement, if such advertisement is not otherwise objectionable as per the provisions set out in these guidelines.

Alcohol brands would particularly have to be mindful of this restriction. Most of the alcohol brands have a line-up of products like mineral water where surrogate advertisements are shown.

  • Children targeted advertisements: Keeping in view the sensitiveness and vulnerability of children and severe impact advertisements make on the younger minds, several pre-emptive provisions have been laid down on advertisements targeting children. Guidelines forbid advertisements from exaggerating the features of product or service in such manner as to lead children to have unrealistic expectations of such product or service and claim any health or nutritional claims or benefits without being adequately and scientifically substantiated by a recognized body.  Guidelines states that advertisement targeting children shall not feature any personalities from the field of sports, music or cinema for products which under any law requires a health warning for such advertisement or cannot be purchased by children. An advertisement for junk foods, including chips, carbonated beverages and such other snacks and drinks shall not be advertised during a program meant for children or on a channel meant exclusively for children.

The restrictions for children targeted advertisements seem to be highly sensitive. This would result in celebrities not being featured in any advertisement targeting children where the product requires a health warning. The intent of this restriction is not entirely clear as it states that celebrities cannot feature in children targeted advertisements for products which cannot be purchased by children. (Presumably children targeted advertisements would be for products which can be purchased by children)

  • Conditions for non-misleading and valid advertisement: The Guidelines stipulate the conditions when an advertisement shall be considered to be valid and not misleading such as truthful and honest representation; no exaggeration on  the accuracy, scientific validity or practical usefulness or capability or performance or service of the goods or product; not presenting rights conferred on consumers by any law as a distinctive feature of advertiser’s offer; not suggesting 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; not misleading 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; ensuring that the claims that have not been independently substantiated but are based merely on the content of a publication do not mislead consumers; compliance with the provisions contained in any other sector specific law and the rules and regulations made thereunder.  It further provides a non-obstante clause on any occasional and unintentional lapse in the fulfilment of an advertised promise or claim occurs 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.
  • Conditions for bait advertisements: The Guidelines stipulate conditions for bait advertisement such as the advertisement 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 that the advertiser is able to meet the foreseeable demand generated by such advertisement; advertisement requiring to state the reasonable grounds which the advertiser has for believing that he might not be able to supply the advertised goods, products or services within a reasonable period and in reasonable quantities such as in cases where estimated demand exceeds the supply, such advertisement shall make clear that the stock of the goods or services is limited; Further that any restrictions including geographic restrictions and age-limit on the availability of the goods, products or services should be highlighted. Such advertisement does not mislead consumers about the market conditions with respect to the goods, products or services or the lack of their availability in order to induce consumers to purchase such goods, products or services at conditions less favourable than normal market conditions.
  • Free claims advertisements: A free claims advertisement shall – (a) 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; (b) make clear the extent of commitment that a consumer shall make to take advantage of a free offer; (c) not describe any goods, product or service to be free, if– (i) the consumer has to pay for packing, packaging, handling or administration of such free goods, product or service; (ii) the cost of response, including the price of goods, product or service which the consumer has to purchase to take advantage of such offer, has been increased, except where such increase results from factors unrelated to the cost of promotion; or (iii) the quality or quantity of the goods, product or service that a consumer shall purchase to take advantage of the offer has been reduced; (d) not describe an element of a package as free if such element is included in the package price; (e) 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.
  • Disclaimers in Advertisements: 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.
  • Duties of manufacturer, service provider, advertiser and advertising agency– the Guidelines stipulate certain duties on manufacturer, service provider, advertiser or advertising agency to ensure compliance in advertisements.

The Guidelines thus seek to ensure that consumers are not being fooled with unsubstantiated claims, exaggerated promises, misinformation and false claims.

Penalty for false and misleading advertisements is provided under Section 21 the Consumer Protection Act, 2019. 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 Authority 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.

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