Will the new guidelines issued by the Union Government help to curb misleading advertisements?

Misleading advertisements tend to misrepresent the product or service in a positive light, due to which the consumer may be duped and ends up having an experience not in line with the raised expectations brought about by the advertising.

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TO curtail the issue of deceptive marketing, the Central Consumer Protection Authority ('CCPA'), a statutory regulatory authority, issued 'Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022' on June 9.  These guidelines prohibit surrogate advertisements and impose tough standards for promotions that seek to attract customers with discounts and free offers.

Section 2(28) of the Consumer Protection Act, 2019 already defines misleading advertisements. The current guidelines define "bait advertisement" under Guideline 2(d), "surrogate advertisement" under Guideline 2(h), and also lays out what constitutes "free claim ads" under Guideline 7.

The guidelines are applicable to all advertisements, regardless of their type, format or mode, as well as to any manufacturer, service provider or trader whose goods, products or services are advertised, as well as any advertising agency or endorser whose services are used to advertise such goods, products or services. According to Vikram Jeet Singh, partner at BTG Legal, these new guidelines also address specific areas of concern such as advertisements targeted at children, the use of disclaimers, and endorsement by celebrities and influencers.

Also Read: One click and a million hits: analysing the ASCI guidelines for influencer advertising on digital media

What are the key provisions?

The notification establishes standards to be followed when issuing bait advertisements and free claims commercials, as well as a list of elements to consider when publishing advertisements aimed towards minors.

The guidelines prohibit marketers from exaggerating the product features or service in such a way that children develop false expectations of it, and also from making any wellbeing or nutritious claims, or perks that have not been sufficiently and scientifically attested by a competent body.

As per the guidelines, advertisements intended for children should not feature sportspersons, musicians or movie stars for products that require a health warning or cannot be purchased by minors, according to any legislation.

They also state that a disclaimer must be written in the same language as the advertisement's claim, and that the font used in the disclaimer must match that used in the claim. As the disclaimers in advertisements are important from the consumer's perspective, the guidelines state that disclaimers should not attempt to conceal material information with regard to any assertion made in such advertisement, the omission or absence of which is likely to deceive or disguise the advertisement's commercial intent, and should not attempt to correct a misleading claim made in an advertisement.

Specific standards are established for the manufacturers', service providers', advertisers', and advertising agencies' responsibilities, as well as the due diligence to be performed prior to endorsing, among other things. This is important, since a lot of advertising today is 'invisible', done under the guise of a consumer test/review on platforms such as YouTube or Instagram.

Any recommendation must reflect the genuineness and relatively the personal viewpoint of the individual, group or organisation making the endorsements, and it must be based on accurate knowledge about, or experiences with, the identified goods, items or services, among other things.

Where Indian professionals are prohibited by law from endorsing advertisements, international experts in the same profession are not authorised to do so.

No surrogate or indirect advertisement for goods or services whose advertising is otherwise banned or restricted by law will be made by misrepresenting such a ban or constraint as an advertisement for other goods or services whose advertising is not forbidden or restricted by law. Furthermore, no advertisement shall be authorised that is created, produced, or published in relation to items, products or services that are forbidden from being manufactured, sold or delivered, or from being promoted, by any current legislation, or any rules or regulations enacted thereunder.

The standards have been designed to safeguard consumers' interests by increasing transparency and clarity in the way advertisements are released, allowing customers to make better and more knowledgeable decisions based on facts, rather than relying on misleading narratives and exaggerations.

What are the penalties for violation of the guidelines?

The guidelines explicitly state the penalties that would be levied if they are not followed. Violations of the new regulations will be prosecuted under the Consumer Protection Act, 2019 which carries a penalty of Rs. 10 lakhs for the first infringement, and Rs. 50 lakh for subsequent violations, in addition to jail terms of upto five years. The CCPA has the ability to prevent the endorser for a misleading advertisement from making any endorsement for up to a year, and the restriction can be extended to three years for further violations.

Also Read: Advertisements and majoritarian morality: a dangerous precedent

Why are these guidelines important?

"Advertising laws in India have historically been lacking in enforcement. These new guidelines now have the force of law, and are mandatory (and not merely voluntary like the ASCI code). They carry the threat of punishment if their mandate is not followed," said Vikram Jeet Singh. 

Advertising is considered misleading under the consumer law if it contains false, misleading, or deceptive information that is likely to influence the ordinary consumer to behave in a way they would not otherwise. In other words, it can be said that if any vital information that the customer requires to make an informed decision is omitted from advertising, it may be called deceptive. Misleading advertisements tend to misrepresent the product or service in a positive light, due to which the consumer may be duped and ends up having an experience not in line with the raised expectations brought about by the advertising.

Advertisements have a significant impact on how consumers make decisions. They may even establish the consumer's requirements and wants. Hence, to reduce the number of complaints against deceptive advertising and to standardize advertisements, the issuance of these guidelines will provide the stakeholders belonging to this industry a framework to avoid misleading advertisements, and also enables consumers to register complaints against the same.

(with editorial inputs)