Introduction

The Central Consumer Protection Authority (CCPA) of India issued Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022, on 9th June 2022 (‘Guidelines’), to curb misleading advertisements and protect the consumers, who may be exploited or affected by such advertisements. These guidelines seek to ensure that consumers are not being fooled by unsubstantiated claims, exaggerated promises, misinformation and false claims.

Guidelines primarily cover the following aspects in respect of advertising:

1. The guidelines define “bait advertisement” and “surrogate advertisement” and clearly provide what constitutes “free claim advertisements”. Misleading advertisement has already been defined under section 2(28) of the Consumer Protection Act, 2019 and such misleading advertisements violate various rights of consumers such as the right to be informed, the right to choose, and the right to be safeguarded against potentially unsafe products and services, which have been granted under Section 2(9) of the Consumer Protection Act, 2019.

• According to Section 5 of the guidelines, to classify as bait, the advertisement should fulfil the following conditions:

1. Not seek to entice consumers to purchase without any reasonable prospect of selling the advertised goods, products, or services at a price offered;
2. The advertiser must ensure that there is an adequate supply of the advertised goods, products, or services to meet the foreseeable demand generated by such advertisement;
3. State the reasonable grounds that 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;
4. Not mislead consumers about the market conditions with respect to the advertised goods, products, or services or the lack of their availability in order to induce consumers to purchase in conditions less favourable than normal market conditions.

• According to Section 6 of the guidelines, an advertisement shall be considered to be a surrogate advertisement or indirect advertisement, if:

1. such advertisement indicates or suggests that it is an advertisement for the goods, product, or service whose advertising is prohibited or restricted by law;
2. such advertisement uses any brand name, logo, colour, layout, and presentation associated with such goods, products, or services whose advertisement is prohibited or restricted, provided 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 a surrogate advertisement or indirect advertisement if such advertisement is not otherwise objectionable.

However, the guidelines have now prohibited surrogate advertisements and all such indirect advertisements that circumvent such prohibition or restriction by portraying to be as advertisements for other goods or services, the advertising of which is not prohibited by law. The CCPA can impose a penalty of up to 10 lakh rupees on manufacturers, advertisers, and endorsers for any misleading advertisements. For subsequent contraventions, CCPA may impose a penalty of up to 50 lakh rupees. The Authority can prohibit the endorser of a misleading advertisement from making any endorsement for up to 1 year and for subsequent contravention, prohibition can extend up to 3 years.

• The guidelines require a free claim advertisement to:

1. not to describe any goods, products, 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
2. make clear the extent of commitment that a consumer shall make to take advantage of a free offer;
3. not to describe any goods, products, or service to be free, if–
4. the consumer has to pay for packing, packaging, handling, or administration of such free goods, products, or services;
5. the cost of response, including the price of goods, products, or services 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 and that the quality or quantity of the goods, products, or services that a consumer shall purchase to take advantage of the offer has been reduced.
6. not to describe an element of a package as free if such element is included in the package price;
7. not to use the term ‘free trial’ to describe a ‘satisfaction or your cash back offer or an offer for which a non-refundable purchase shall be required.

• According to guidelines advertisement targeting children shall not feature any personalities from the field of sports, music or cinema for products that under any law requires a health warning for such advertisement or cannot be purchased by children. Further, the disclaimers in advertisements play a pivotal role from a consumer’s perspective since in a way it limits the responsibility of the company and the disclaimer shall not attempt to hide material information with respect to any claim made in such an advertisement, the omission or absence of which shall be likely to make the advertisement deceptive or conceal its commercial intent and shall not attempt to correct a misleading claim made in any such advertisement.

Conclusion:

The guidelines aim to protect consumers’ interests by bringing more transparency and clarity to the way advertisements are being published, so that, consumers are able to make informed decisions. The Guidelines apply to advertisements published on all platforms including print, television, and digital platforms. The advertising guidelines for self-regulation issued by the Advertising Standards Council of India (ASCI) will also be instrumental in parallel.

The official document is available here.