21 September 2020

 CONSUMER PROTECTION ACT | DRAFT GUIDELINE FOR MISLEADING ADVERTISEMENT

The Government of India issued draft Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 2020 (Guidelines) under the Consumer Protection Act, 2019 (Act).This update summarizes and analyses the Guidelines for prevention of misleading advertisements with an aim to protect the consumers.

Scope and Applicability of the Guidelines

• The Guidelines cover all advertising/marketing communications regardless of form, format, or medium.
  
  
• The Guidelines apply to the manufacturer/service providers whose products/services are subject of the advertising/marketing communications, as well as to advertisement agencies and endorsers (wherever applicable) of the product/service.
  

Conditions for a valid Advertisement

• The advertisement must contain truthful and honest representations; and not mislead consumers by exaggerating. The advertisement should not suggest that the claims made in it are universally accepted and must not mislead about the nature or extent of the risk to consumers’ personal security.
  
  
• Advertisements should not be offensive to generally accepted standards of the public.
  
  
• An advertisement should not be similar in terms of layout, slogans, music, visual presentation, etc. and should also be not similar to the previous advertisements that may have been published by another advertiser.

Types of Advertising

• Comparative advertising: It shall be permissible only if it is factual, accurate, and capable of substantiation.
  
  
• Bait advertising: The manufacturers have to ensure that there is an adequate supply of the goods or services to meet the demand that such advertisements generate. If supply is short, the advertisements have to say that the stock is limited. The Guidelines add that advertisements cannot entice customers to buy something without a ``reasonable prospect`` of selling it at the price offered.
  
  
• Surrogate advertising: Advertisements for goods or services whose advertising is otherwise prohibited or restricted by law shall not circumvent such restrictions by purporting to be advertisements for other goods or services, the advertising of which is not prohibited or restricted by law.
  
  
• Puffery: Advertisement can make a claim in the nature of obvious exaggeration, in the nature of a claim that a reasonable consumer is unlikely to take literally.
  
  
• Free claims: An advertisement shall not describe a good or service as `free`, `without charge` or other similar terms if a consumerhas to pay anything other than the unavoidable cost of responding to the advertisement and collecting or paying for the delivery of the item.
  
  
• Advertisement targeted at children: The Guidelines prescribe a long list of rules and guidelines for advertisements that target children. Advertisements targeted at children cannot in any way condone, encourage or emulate behaviour dangerous to children; take advantage of children's inexperience, condone or encourage bullying; feature children for tobacco or alcohol-based products.
  
  
• Prohibited advertisement: Advertisement that is likely to incite persons to commit crime and promotes disorder, violence or intolerance; encourages or propagates the use of products which are banned under any law for the time being in force; or shows, glorifies, or refers to a dangerous practice, or manifests a disregard for safety or encourages negligent behavior are prohibited.

Disclaimers

• Any disclaimer that has a small font size in advertisements and comparative advertising and is not factual, will be considered to be misleading and may carry a penalty with it.

Endorser

• It is stated that the honesty of statements and due diligence is to be made by an endorser in support of the advertisements.
  
  
• This provision is more of a mandatory provision rather than a directive. The draft Guidelines have divided endorsements into three major provisions namely, honest statements by endorsers, personal use of products and consumer endorsement that also includes celebrity endorsement and expert endorsements.

MHCO Comment:

The Guidelines area welcome move by the government. They propose to regulate advertisements and hold manufacturers, service providers, advertising agencies as well as brand endorsers accountable for any misleading claims for misleading advertisements. Further, as these Guidelines cover all formats, including print, television and social media, advertisers and endorsers have to be more careful with what they associate themselves with. These Guidelines shall majorly hold accountable those celebrities who endorse products without much accountability.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.comfor any assistance