The Central Consumer Protection Authority, in exercise of the powers granted to it by Section 18 of the Consumer Protection Act, 2019 (“CPA”), has, on June 09, 2022, issued the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 (“Guidelines”). The Guidelines are in effect from June 10, 2022 (i.e., the date of publication in the Official Gazette). An overview of the Guidelines is provided below.

Background

• The Guidelines are fairly comprehensive and have been issued with an objective to curb false and misleading advertisements and protect consumer interest.
• Whilst the CPA already contains general provisions for prevention of misleading advertisements, these Guidelines expand the scope of the existing provisions by setting out the detailed parameters of what is permissible and what is prohibited.

Applicability

• The Guidelines apply to all advertisements regardless of form, format or medium, and to all manufacturers/ service providers/ traders whose goods, product or service are the subject of an advertisement.
• Advertising agencies or endorsers who provide services for such advertisements are also covered within the ambit of the Guidelines.

Key highlights

• Conditions for valid advertisements that are not misleading. The Guidelines prescribe conditions and ingredients for non-misleading and valid advertisements, such as advertisements which:

(a) which contain truthful and honest representation;
(b) do not mislead consumers by exaggerating the benefits;
(c) do not suggest the claims as universally accepted when there exists a significant informed view to the contrary;
(d) ensure that unsubstantiated claims do not mislead consumers; and
(e) complies with sector specific rules and regulations.

The Guidelines however provide an exception in the form of a non-obstante clause for ‘occasional and unintentional lapse’ in the fulfillment of an advertised claim, if such claim is capable of being fulfilled by a typical specimen of the advertised product, the proportion of failure is within acceptable limits, and if the advertiser has taken prompt action to correct the deficiency.

• Introduction of new concepts. The Guidelines have introduced concepts relating to ‘bait advertisements’, ‘free claims advertisements’, and ‘children targeted advertisements’.

• Bait advertisements – mean those advertisements in which goods, products, or services, are offered for sale at a low price to attract consumers. Bait advertisements will need to satisfy, amongst others, the following conditions:

(a) not seek to entice customers without the intent of selling the advertised goods, products, or services, at the offered price;
(b) ensure adequate supply to meet the foreseeable demand;
(c) state reasonable grounds that the advertiser has for believing that goods, products, or services might not be supplied within a reasonable period and in reasonable quantities; and
(d) should not mislead consumers regarding market conditions concerning the goods, products, or services.

• Free claims advertisement – should, inter-alia:

(a) not describe goods, products, or services as ‘free’ or ‘without charge’ if consumer has to pay anything over the unavoidable cost;
(b) clearly state the extent of commitment required from consumer to avail a free offer;
(c) not describe goods, products, or services as free, if consumer has to pay for packaging/ handling, or if the free element is included in the package price, etc.; and
(d) not represent a ‘satisfaction or your money back’ offer as a free trial.

• Children targeted advertisements – considering the vulnerability of children’s minds and the severe impact of advertisements on them, specific steps have been laid down to be followed for children targeted advertisements. Among other conditions, such advertisements shall not:

(a) encourage or condone dangerous behavior;
(b) exaggerate features of goods, products, or services;
(c) feature children for advertisements prohibited by applicable law;
(d) claim consumption of goods, products, or services to have positive effects on intelligence or physical abilities and other health/ nutritional benefits, in absence of scientific evidence;
(e) develop negative body image in children; and
(f) represent goods, products, or services, as being better than natural or traditional food.

It is pertinent to note that, advertisements of junk food have specifically been prohibited from being aired during a program meant for children, or on a channel meant for children.

• Surrogate advertising. The Guidelines have prescribed a prohibition on surrogate or indirect advertising. The Guidelines clearly state that no advertisements can be made suggesting directly or indirectly that it is for goods, products, or services whose advertising is otherwise prohibited/ restricted by law. The Guidelines however provide an exception, whereby, a brand used for ‘prohibited’ goods/ products, services could be used for other goods so long as it does not otherwise violate the Guidelines. This exemption is however vague, and it is unclear whether the prohibition on surrogate advertising is absolute or not.
• Disclaimers. The Guidelines provide clarity on the requirement and purpose of disclaimers in advertisements. Disclaimers may expand or clarify a claim in an advertisement but shall not contradict the material claim made therein. Disclaimers shall not attempt to hide material information with respect to claims, nor correct a misleading claim. Besides, other requirements such as language, font size, prominence, clarity, of the disclaimer have been prescribed in detail.
• Duties of advertisers, services providers, manufactures, or advertising agencies.

• The Guidelines lay down duties of manufacturers /service providers, advertisers, and advertising agencies in relation to advertisements. Advertisements should indicate the source and date of independent research, wherever claims are stated to be based on such research.

• Further, it a duty on all the aforementioned category of persons that advertisements should not contain references to any person or institution so as to confer any unjustified advantage or disrepute to such person or institution. The consumer’s lack of experience and trust it not to be misused, and clear indications about maximum/ minimum figures in advertisements must be made. For invitation to participate in lotteries (where permitted by law), material terms and conditions are to be clearly set out.

• Due Diligence measures. The Guidelines provide for due diligence measures that must be adopted for endorsement of advertisements to reflect that the advertisement is genuine and not deceptive.
• Disclosure of material connection. In the event, the endorser and the trader, manufacturer or advertiser of the endorsed product have some material connection which may materially affect the value or credibility of the endorsement, and if the connection is not reasonably expected by the audience, this must be disclosed.