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September 8, 2020

Govt finalizing guidelines to prevent misleading advertisements

Govt finalizing guidelines to prevent misleading advertisements

Advertising is seen as misleading if it involves false,or deceptive information that is likely to cause the average consumer to act in a way they might otherwise not.  Advertising may also be considered misleading if important information that the average consumer needs to make an informed decision is left out.

The Central Consumer Protection Authority has issued draft guidelines for the prevention of false or misleading advertisements and the due diligence to be carried out for endorsements. These guidelines will be called the Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 2020.

Applicability of these guidelines

  • These guidelines cover all advertising/marketing communications regardless of form, format or medium.
  • These guidelines are applicable to the manufacturer/service provider whose products/services are the subject of the advertising/marketing communications, as well as to advertisement agency and endorser (wherever applicable) of the product/service

What are the conditions of a valid advertisement as per the said guidelines?

In order to be considered valid, an advertisement shall:-

  • contain truthful and honest representations
  • not mislead consumers by exaggerating the capability or performance or service of the product
  • not present rights given to consumers by virtue of law as a distinctive feature of the advertiser’s offer
  • not suggest that the claims made in it are universally accepted of there is a significant division of informed or scientific opinion pertaining to such claims
  • 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 product or service
  • while carrying out mass manufacture and distribution of goods and services, if an occasional, unintentional lapse in the fulfilment of an advertised promise or claim occurs, then such unintentional lapse may not invalidate the advertisement in terms of these guidelines, only if:-
  • the claim or promise is capable of fulfilment by a typical specimen of the product advertised
  • the proportion of product failures is within generally acceptable limits
  • the advertiser has taken prompt action to make good the deficiency to the consumer
  • Advertisements should not be offensive to generally accepted standards of public decency in India and should not contain material which is likely to cause grave and widespread offence to the public.

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What are the guidelines on comparative advertising?

Comparative advertisement will be permitted if it:-

  • shall be factual, accurate and capable of substantiation
  • shall not present a good or service as an imitation or replica of a good or service with a protected trademark or trade name

Advertisements containing comparisons with other manufacturers, suppliers, producers or with other products, including where a competitor is named, shall be permitted in the interest of promoting competition, where:-

  • the features of the competitor’s product being compared to the features of the advertiser’s products are specified clearly within the advertisement
  • the subject matter of the comparison is not of such nature so as to confer an artificial or unjustifiable advantage upon the advertiser
  • the nature of comparisons is such that they are factual, accurate and capable of being substantiated

The guidelines also cover bait advertising:-

  • an advertisement shall not seek to entice consumers to purchase a good or service without a reasonable prospect of selling the advertised good or service at the price offered
  • an advertiser shall ensure that there is adequate supply of goods or services to meet foreseeable demand generated by such advertisement
  • an advertisement shall state any reasonable grounds that the advertiser has for believing they might not be able to supply the advertised good or service within a reasonable period and in reasonable quantities
  • an advertisement shall not mislead consumers about market conditions or the possibility of finding the good or service elsewhere to induce consumers to purchase the good or service at conditions less favourable than normal market conditions

Are there any advertisement restrictions on free claims?

  • An advertisement shall not describe a good or service as ‘free’, ‘without charge’ or other similar terms if a consumer has to pay anything other than the unavoidable cost of responding to the advertisement and collecting or paying for the delivery of the item.
  • An advertisement shall make clear the extent of the commitment that a consumer shall make to take advantage of a free offer.
  • An advertisement shall not describe a good or service as free if:
  • consumers have to pay for packing, packaging, handling or administration of the free good or service
  • the cost of response, including the price of a good or service that a consumer shall purchase to take advantage of the offer, has been increased, except where the increase results from factors that are unrelated to the cost of the promotion
  • the quality or quantity of the good or service that a consumer shall purchase to take advantage of the offer has been reduced.
  • An advertisement shall not describe an element of a package as free if that element is included in the package price, unless consumers are likely to regard it as an additional benefit because it has recently been added to the package without increasing its price.
  • Advertisements shall 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.

The draft guidelines also aim to address issues concerning:-

  • Advertisements targeted at children
  • Prohibited advertisements
  • Disclaimers made in supporting, limiting or explaining claims made in Advertisements
  • Duties of manufacturer, service provider and advertising agency
  • Personal use of products and consumer endorsements
  • Expert endorsements
  • Surrogate Advertising

The guidelines also said that an endorsement is required to take legal opinion or opinion from an advertising self-regulatory organisation which would be considered as “due diligence”. 

Every endorser endorsing a product or service shall take due care to ensure that all descriptions, claims and comparisons that they endorse are capable of being objectively ascertained and are capable of substantiation. Any endorser who obtains advertising advice from an advertising self-regulatory organisation or a legal opinion from an independent legal practitioner regarding the honesty of statements in their endorsement and its compliance with these guidelines and the Act may be considered to have carried out due diligence for the purposes of his liability under the Act.

Disclosure of material connection also has to be made

Where there exists a connection between the endorser and the trader, manufacturer or advertiser of the endorsed product that might materially affect the weight 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.

Despite a number of laws to curb false and misleading advertisements and protect consumer interest, consumers continue to be victims of such advertisements. Here’s hoping that the guidelines which are to be set out by the Centre would deal with false and misleading advertisements which would in turn help the consumers.

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